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Study shows Maryland meets goals of cutting health care costs without achieving changes in care delivery

Maryland’s ambitious program to curb health care spending is meeting that main goal but not transforming how patients are treated.

Those are the findings of a study published Tuesday of the state’s hospitals, which operate under a unique federally sanctioned system that U.S. regulators hope will be a national model of cutting costs and improving care.


Under the system, 46 Maryland hospitals shifted from a traditional fee-for-service model to one that encourages facilities to keep people well and out of the hospital. The state capped each hospital’s budget — meaning it cannot generate more revenue than allowed — with the aim of reducing admissions and readmissions and increasing physician visits.

As part of the program, the hospitals are allowed to charge the same of all payers — from individuals to insurers, including the government. That means far higher reimbursements from the federal Medicare and Medicaid programs for older and lower-income Americans, revenue that amounts to about $1.7 billion annually.


The study is among the first to look at the Maryland program, and the findings, published Tuesday in JAMA Internal Medicine, suggest the hospitals didn’t significantly reduce admissions or readmissions and didn’t increase use of outpatient or primary care services, or at least not much more than would have been expected without the program. The hospitals also met their budgetary goals by tweaking prices during the year.

“The takeaway so far may be that when hospitals change the way the health care delivery system works you don’t necessarily get a broader transformation that people had hoped for,” said Eric T. Roberts, assistant professor of health policy and management in the University of Pittsburgh’s Graduate School of Public Health. “At least not right away.”

Roberts, the lead author of the study, and colleagues from Harvard Medical School’s department of health care policy compared Maryland’s hospitals to those in other states and found little difference in hospital or primary care use.

He said there may be several reasons, including that doctors are not yet widely provided incentives to participate in Maryland’s program.

The Morning Sun

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The study also may not reveal all the benefits because it was limited to Medicare patients, for whom data is more readily available. But a large swath of the Medicare population faces chronic medical conditions, which may have skewed the data, he said.

It was also tough finding appropriate hospitals to compare to Maryland, which officially adopted the global budgets in 2014, Roberts said. What’s more, all U.S. hospitals have been given some incentives under the Affordable Care Act to reduce hospital use and lower readmissions.

The Maryland Hospital Association did not respond to a request for comment.

In an editorial that accompanied the study, the authors said the state’s program has shown value in another study, particularly in reducing readmissions to the hospital.


One of the authors of the editorial is Dr. Joshua M. Sharfstein, a former state health secretary who supported the hospital budgeting program and is now associate dean for public health practice and training at the Johns Hopkins Bloomberg School of Public Health.

He said positive results will be apparent over time in Maryland. He reiterated in an interview that the study didn’t cover a full two years because the program’s rollout in hospitals didn’t occur at the same time.

“A critical question is how quickly new payment models should be expected to transform the delivery system,” the editorial stated. “The answer is likely at least 5 to 10 years.”