In the past 10 years, the Center for Medicare and Medicaid Innovation (Innovation Center) has piloted more than 50 payment models in various jurisdictions aimed at decreasing spending and increasing quality. Of all the pilots, only five have actually delivered savings, including Maryland’s hospital rate setting system.
For decades, Maryland has operated under a unique Medicare waiver that allows Maryland’s Health Services Cost Review Commission to set the rates paid by all payors at each hospital in the state. The program has evolved over time, most recently shifting to a global budget model in 2014, pursuant to an Innovation Center pilot program.
Under this model, a total revenue ceiling is established for each hospital based on the hospital’s annual revenue in 2013. Those budgets are then periodically adjusted to reflect inflation, the results of quality indicators and service changes.
Under this pilot, Maryland’s total Medicare spending declined by more than $25 per Medicare beneficiary per month since 2014. Those savings were driven by significant reductions in hospital outpatient expenditures and inpatient admissions. As a result, Maryland is credited with saving Medicare approximately $679 million over three years, which far exceeds the pilot’s minimum savings target.