Maryland's unique rate-setting system for hospital services is getting a one-year extension from the federal government, Gov. Larry Hogan announced Monday.
The state's current all-payer hospital model contract will be extended from an expiration date of Dec. 31, 2018 to Dec. 31, 2019. The extension will give federal officials time to complete a review and consider four years of performance through the end of 2017.
"We're pushing to get it done," Hogan said. "They say in the next three or four months, but they wanted the extension just in case they had delays on their end."
In Maryland, under a federal waiver, Medicare payments are based on rates set by a state commission, instead of national federal payment principles. Maryland operates the nation's only all-payer hospital rate regulation system.
Maryland's plan is called an all-player model. Rates are the same for all patients who receive the same service or treatment from the same provider.
The model aims to coordinate medical treatment for patients served in hospital- and non-hospital settings, to improve health outcomes and to rein in the growth of healthcare costs. Proponents say it helps maintain financial stability in rural hospitals and enables healthcare providers to provide better quality services.
Hogan, a Republican, said the state has been working to finalize the contract with federal officials. However, when HHS Secretary Tom Price resigned in September, the acting secretary didn't want to make final decisions until the new secretary is confirmed, Hogan said. He noted that the president's appointee to head the department, Alex Azar, is a Maryland native.
The one-year extension maintains the current system and gives the incoming secretary time to review it "rather than it blowing up because they had a personnel change and it didn't get done by the end of the year," Hogan said. "It's very significant."
He also said state officials expect the new secretary will be receptive.
Hogan, who said he attended meetings in Washington on the program, said Price and Seema Verma, administrator for the Centers for Medicare and Medicaid Services, were positive about the program.
"In our discussions with Secretary Price and with the CMS Administrator Seema Verma, they were thrilled with the program we had and said this is kind of an example of something creative that we ought to look at for the rest of the country," Hogan said.
Maryland modernized its one-of-a-kind Medicare waiver four years ago to move the system away from reimbursing hospitals on a fee-for-service basis to a fixed budget.
"The hard work of the administration is paying dividends," said Gene Ransom, CEO of the Maryland State Medical Society. "The extension is great news as a positive step toward a new all-payer contract for Maryland."
"It's critically important," Hogan said. "We're really a national leader and the only state in the country that has this waiver, which enables us to kind of manage costs and provide better services."