Getting Health Care Costs Under Control While Improving Quality of Care: The Maryland Way

Abstract

The cost of health care in the United States has soared to astronomical amounts that are unsustainable.[1] In 2017 national healthcare spending reached $3.5 trillion dollars, the per capita was $10,739, and the largest percentage of this money was spent on hospital services.[2]^,[3] CMS’s Office of the Actuary has predicted that national health care spending will grow by 5.5 percent for each year from 2017-2026.[4]

While one can debate what has caused health care costs to rise year after year, the fact remains that health care costs are projected to continue to rise.[5] Controlling the rising costs of healthcare, along with how to reform the U.S. health care system, is continuously being debated at both a national and state level, and has been for decades.[6] While the debates will continue, many states are taking initiatives to develop state health care delivery systems that states hope will, or have led, to reductions in health care costs, in addition to improving quality of care and the health of their population; with any one of these states possibly having the answer to transforming health care.[7]

The passage of the Patient Protection and Affordable Care Act (PPACA), in 2010, brought a renewed interest in achieving the “‘Triple Aim’:  improving the individual experience of care; improving the health of populations; and reducing the per capita costs of care for populations.”[8] While achieving the Triple Aim may seem far reaching to some, 38 states were awarded funding from the Centers for Medicare and Medicaid Services (CMS), between 2013 and 2014, to either design, test, or implement health care delivery systems that deliver better care, improve quality, and reduce health care costs.[9] Three of the states awarded funding, Maryland, Vermont, and Pennsylvania, have implemented their models.[10] While all three of these models are different, the Maryland All-Payer Model stands out since it is a model that was built upon Maryland’s previous all-payer hospital rate setting system.[11]    

The Maryland All-Payer Model is a CMS alternative payment model (APM), a payment model that incentivizes providers to “provide high-quality and cost-efficient care”, that has been successful in controlling health care costs and improving quality of care through hospital rate setting and global budgets. [12]^,[13],[14] While this model cannot be replicated completely, due to its unique history, other states would benefit greatly from implementing a similar alternative payment model. 

In Section II, this article will provide the history of Maryland’s unique rate setting system, review the terms of the Maryland All-Payer Model, and briefly discuss Maryland’s plans for further transformation. In Section III, this article will analyze the successes of Maryland’s unique rate setting system, including the Maryland All-Payer Model; discuss the elements of Maryland’s rate setting system that are key for other states to successfully implement a model like the Maryland All-Payer Model; and will discuss why other states could benefit from implementing an alternative payment model similar to the Maryland All-Payer Model. In Section IV, this article will discuss challenges that other states may face when implementing a model like Maryland’s All Payer Model and how those challenges may be overcome. 

[1] “Historical.” Centers for Medicare & Medicaid Services, www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html. Accessed 3 Mar. 2019.

[2] “CMS National Health Expenditures 2017 Highlights.” Centers for Medicare & Medicaid,  www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf. Accessed 3 Mar. 2019.

[3] “National Health Expenditures by type of service and source of funds, CY 1960-2017”. Centers for Medicare and Medicaid Services, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/PieChartSourcesExpenditures.pdf. Accessed 3 March 2019.

[4] “CMS Office of the Actuary releases 2017 – 2026 Projections of National Health Expenditures.” Centers for Medicare & Medicaid, 14 Feb. 2018, www.cms.gov/newsroom/press-releases/cms-office-actuary-releases-2017-2026-projections-national-health-expenditures. Accessed 6 Nov. 2018.

[5] “CMS Office of the Actuary releases 2017 – 2026 Projections of National Health Expenditures.” Centers for Medicare & Medicaid, 14 Feb. 2018, www.cms.gov/newsroom/press-releases/cms-office-actuary-releases-2017-2026-projections-national-health-expenditures. Accessed 6 Nov. 2018.

[6] “Timeline: History of Health Reform in the U.S.” Kaiser Family Foundation,  kaiserfamilyfoundation.files.wordpress.com/2011/03/5-02-13-history-of-health-reform.pdf. Accessed 6 Nov. 2018.

[7] “State Innovation Models Initiative: General Information.” Centers for Medicare & Medicaid Services, https://innovation.cms.gov/initiatives/state-innovations/. Accessed 6 Nov. 2018.

[8] Berwick, Donald M., et al. “The Triple Aim: Care, Health, And Cost.” Health Affairs, vol.27, no. 3, 2008, p.760,  www.healthaffairs.org/doi/10.1377/hlthaff.27.3.759. Accessed 14 Nov. 2018.

[9] “State Innovation Models Initiative: General Information.” Centers for Medicare & Medicaid Services, innovation.cms.gov/initiatives/state-innovations/.  Accessed 29 Oct. 2018.

[10] “Innovation Models.” Centers for Medicare & Medicaid Services, innovation.cms.gov/initiatives/index.html#views=mod.  Maryland All-Payer Model; Vermont All-Payer ACO Model; Pennsylvania Rural Health Model. Accessed 29 Oct. 2018.

[11] “Maryland All-Payer Model.” Centers for Medicare & Medicaid, innovation.cms.gov/initiatives/Maryland-All-Payer-Model/. Accessed 11 Nov. 2018.

[12] Quality Payment Program APMs Overview. Centers for Medicare & Medicaid, qpp.cms.gov/apms/overview. Accessed 24 Nov. 2018.

[13] “HSCRC All-Payer Model Results, CY 2014 – 2017.”  The Maryland Health Services Cost Review Commission, www.hscrc.state.md.us/Documents/Modernization/Updated%20APM%20results%20through%20PY4.pdf. Accessed 18 Oct. 2018.

[14] Haber ScD, Susan, et. al. “Evaluation of the Maryland All-Payer Model First Annual Report.” Centers for Medicare & Medicaid Services, Oct. 2016, pp. 42-48, https://downloads.cms.gov/files/cmmi/marylandallpayer-firstannualrpt.pdf.Accessed 30 Nov. 2018.