How to achieve meaningful value-based payment reform, part 1

Maryland leads the way

This GoozNews post on Maryland’s All-Payer pricing system was the impetus for this article, the first of a two-part series on the Health Affairs website by Ezekiel J. Emanuel, David W. Johnson, Matthew Guido and Merrill Goozner.

The mission of the Center for Medicare and Medicaid Innovation (CMMI) is to "identify ways to improve health care quality and reduce costs in the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) programs." However, after 10-plus years of experimentation with dozens of new payment programs, there have been few system-wide successes. Maryland’s “All-Payer model,” with global hospital budgets and now total cost of care limits, is the most notable exception. Indeed, as a recent review demonstrated, Maryland’s All-Payer model with global budgets produced the most savings of any demonstration project launched by CMMI, including all the accountable care organization (ACO), primary care, and bundled payment models. 

Unique among American states, Maryland requires that hospitals receive the same payment for specific treatments delivered to Medicare, Medicaid, commercially insured, or self-pay patients under a global budget covering all hospital and non-hospital costs. Over the five-year period 2015 through 2019, Maryland’s standardized per-capita Medicare spend declined from 1 percent above the national average to 1 percent below, with improvement in many quality metrics. Global budgets create powerful incentives for hospitals not to overcharge or overtreat.

To continue reading the article, go to the Health Affairs website by clicking here.