Starting in January 2019, Maryland’s hospitals will operate under a new contract with the federal government, designed to test whether the improvements hospitals have made under the All-Payer Model can be expanded to all health care providers.

The Total Cost of Care Model builds on the work of the All-Payer Model and on Maryland’s more than 40-year history of innovation in hospital payment systems. For four decades in Maryland, hospital rates have been regulated by an independent state body, and all payers – private, commercial, Medicare, Medicaid, self-pay – are charged the same rate for the same service at the same hospital.

For the past five years, from 2014 to 2018, that system was further enhanced via the utilization of global budgets for hospitals – fixed annual amounts that hospitals could spend to care for patients and communities. The results were impressive:

  • The cost of hospital care for has been held to a cumulative 11.16 percent increase (less than half of the model’s target)
  • Maryland has saved the federal Medicare program more than $940 million on hospital care
  • Readmissions rates, an important quality measure that shows patient care does not end with a hospital discharge, are down nearly 8.5 percent and are now below the national average
  • Hospital-acquired infections and other complications, measures that demonstrate a hospital’s attention to safety, are down more than 47 percent

Now, the Total Cost of Care Model will bring non-hospital health care providers into the fold. Rather than focusing on how hospitals alone can deliver efficient, high-quality care, physicians, skilled-nursing facilities, home health providers, and others, will be incentivized to improve how they coordinate care for patients and on societal health problems such as diabetes, heart disease, and opioid use disorders. In doing so, Maryland’s entire health care system will work to ensure that patients receive the right care, at the right time, in the right setting.