The CMS approved Maryland's requests to continue and expand its unique all-payer model.
The model has been in place since 2014, and the state received federal approval to extend it through 2023, with the option of another five-year renewal at that time.
Under the model, the state is exempt from typical Medicare regulations and has the unique ability to set its own rates for hospitals. Starting Jan.1, doctors' offices and nursing homes can voluntarily participate in the program as well.
"Improving health starts in the community and we were at a point where we needed to move outside of hospitals and after a healthcare event has happened and focus more on prevention," said Donna Kinzer, executive director of Maryland Health Services Cost Review Commission.
As part of the model, Maryland officials aim to coordinate care better across hospital and non-hospital settings, including mental health and long-term care services.
Maryland will offer care management fees for patients with chronic illnesses to give physician practices an incentive to participate in the model. Participation will also count as an alternative pay model under MACRA, making those physicians eligible for CMS bonuses, Kinzer said.
Maryland's current model saved Medicare more than $586 million through 2016, compared with national spending, and the new model is expected to provide an additional $300 million in savings per year by 2023 and a total of $1 billion over five years.