Governor Hogan Announces Federal OK of “Maryland Model” Healthcare Payment System, $1 Billion in Savings Expected

Governor Larry Hogan announced on May 14^th the federal approval of Maryland's Total Cost of Care All-Payer Model, known as the “Maryland Model,” contract.  

“The new Maryland Model will expand health care access and affordability – and ultimately improve quality of life – for Marylanders, especially those with chronic and complex medical conditions,” said Governor Hogan. “Maryland continues to lead the nation in innovative health care delivery, and the expansion of our successful model is a huge step forward in our efforts to ensure that every Marylander has access to quality care.”

Under Maryland’s current All-Payer Model, approved in 2014, hospitals have successfully reduced unnecessary readmissions and hospital-acquired conditions while decreasing the growth in hospital cost per capita. The new Maryland Model will expand this successful approach across the health care system when it takes effect on January 1, 2019 and will extend through the end of 2023. The contract can then be extended for an additional five years, pending a review of the terms.

This innovative approach to health care provider payment is unique to Maryland and made possible via a contract between CMS and the state. Maryland’s current model has already saved Medicare more than $586 million through 2016, compared to 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.

The Maryland Model aims to control the growth in health care costs, both at hospitals and community providers, while improving patient outcomes and quality of care. To achieve this comprehensive coordination across the entire health care system, the Maryland Model will:

• Coordinate care across both hospital and non-hospital settings, including mental health and long-term care
• Invest resources in care that is focused on the patient and enhance primary-care teams to improve individual patient outcomes ​
• Set a range of quality and care improvement goals and provide incentives for providers to meet them
• Concentrate system and community resources on population health goals to help address opioid use and deaths, diabetes, hypertension, and other chronic conditions
• Encourage and facilitate programs focusing on the unique needs of Marylanders across geographic settings and other key demographics

This comprehensive approach ensures the patient is at the center of decision making and their needs are being met with greater transparency and accountability.  The Maryland approach has enjoyed bipartisan support:

• Democratic Senator Ben Cardin: “This approval is the result of a sustained and coordinated federal-state effort to recognize the success of Maryland’s system that manages the total cost of patient care in a cost-effective way, while maintaining quality and results. There is no one-size-fits-all answer, but the Maryland Model can show other states how to successfully reward quality over quantity by moving away from ‘per admission’ and concentrating on best managing a patient’s short-term and long-term care.”
• Republican Congressman Andy Harris, M.D: “For 36 years, the Maryland All-Payer Model has been transformative in delivering affordable, high quality health care to Maryland’s families. Once again, Governor Hogan is demonstrating his commitment to helping Maryland families and to driving Maryland innovation. The new, extended version of the Maryland Model will be even more effective in controlling the cost of health care while maintaining access, and in improving the quality of outcomes for Maryland patients.”