Mid-Atlantic Health Law TOPICS

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Total Cost of Care

The State of Maryland and the Centers for Medicare and Medicaid Services (CMS) recently announced agreement on a new Maryland Total Cost of Care Model that will allow Maryland to continue to set hospital rates for all payers, including Medicare.  

Under Maryland’s existing agreement with CMS, which agreement was set to expire at the end of this year, the Maryland Health Services Cost Review Commission (HSCRC) had already implemented a global budget payment cap for each Maryland hospital. 

The new Total Cost of Care Model reaches beyond just hospital payments, and consists of several separate programs.  The new arrangement is designed to save Medicare over one billion dollars over the next five years, compared to the growth of Medicare spending nationwide. It also targets population level improvements on six high-priority issues, from substance-use disorders to obesity.

The Total Cost of Care Model will begin on January 1, 2019, and run for a ten-year term. At or before the sixth year, CMS and the State will determine if they should ultimately expand the Total Cost of Care Model, try a new model, or transition to the national Medicare fee-for-service payment system. The Total Cost of Care Model sets a per capita limit on Medicare spending for Maryland residents, not just in hospitals, but across care settings.

The Total Cost of Care Model itself only outlines a general framework of this new system, leaving the State and CMS to negotiate specific financial targets and measurements in a document referred to as the Progression Plan.

B. The Hospital Payment Program

A part of the Total Cost of Care Model is a continuation of the existing hospital specific global budgets. These global budgets provide predictability and financial stability for hospitals. They also incentivize efficient care, for example, by rewarding hospitals that decrease unnecessary hospital utilization and readmissions. Specifically, hospitals can keep the savings if they provide quality care while remaining below their allocated budgets.

These budgets have kept per capita hospital spending by all insurers to a much lower growth rate than the national average, which the State and CMS hope to continue under the Total Cost of Care Model.

C.  The Care Redesign Program

The Total Cost of Care Model will also continue the successful Care Redesign Program (CRP), a voluntary program that encourages hospitals to collaborate with non-hospital based providers. The CRP allows hospitals to give incentive payments to other providers for activities that improve the quality of patient care and contribute to savings. As of July 1, 2018, 42 Maryland hospitals participate in the program.

The CRP encourages innovation in areas such as transitions of care, management of inpatient resources, and primary care support for patients with chronic conditions to reduce avoidable hospital utilization.

Participating hospitals may only make incentive payments if the hospital has attained savings under its fixed global budget, and the payments cannot exceed the amount of the savings.

D.  Maryland Primary Care Program

The Maryland Primary Care Program is a new and novel piece of the new Total Cost of Care Model.  It is designed to incentivize Maryland primary care providers by CMS giving those doctors an additional per beneficiary per month payment for participating in care management services.

Participating providers will partner with Care Transformation Organizations (CTOs) to help Medicare patients receive care coordination services and access to services from nutritional to social work counseling.

This program, in conjunction with the other aspects of the Total Cost of Care Model, intends to keep patients healthier and receiving more patient-centered care in communities, rather than in hospital emergency rooms.

E. Outcomes-Based Credits

In addition to saving money on Medicare spending, the new Total Cost of Care Model is intended to improve outcomes on six key health issues on a population level: substance-use disorders, diabetes, hypertension, obesity, smoking, and asthma. The State will set targets for improvement in each area, and can receive Outcomes-Based Credits for hitting those targets.

These Credits can be used by the State to discount the total cost of Medicare spending, which will help the State meet the financial targets set in the Progression Plan.


Alexandria K. Montanio
410-576-4278 • amontanio@gfrlaw.com

A version of this article was published by The Daily Record on January 4, 2019.


September 25, 2018




Montanio, Alexandria K.
Rosen, Barry F.


Health Care