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Maryland health care delivery experiment saves Medicare more than half a billion dollars in hospitals

Hospitals in Maryland have saved millions of dollars in health care costs by eschewing the tradition fee-for-service model for one that emphasizes overall health, a report released by state regulators shows.

Three years into a unique five-year agreement with the U.S. Centers for Medicare and Medicaid Services that began in 2014, the hospitals saved $586 million for the federal health care programs, above a major goal of the program.


“I applaud Maryland’s care partners on their outstanding efforts to transform and expand patient-care delivery, while improving the quality of care at lower costs to the consumers,” said Maryland Health Secretary Robert R. Neall in a statement.

The goals of the experiment were to reduce increases in spending below the national average and also improve care, as measured by readmissions and hospital-acquired infections and other means. The hospitals were each given budgets that they could not exceed.


The change had hospitals taking steps to better coordinate patients’ chronic conditions with nursing and rehabilitation facilities, primary care doctors and others inside and outside of the hospitals.

“Coordination and alignment among the various health care sectors is vital to driving down costs and improving care in the State of Maryland,” said Nelson Sabatini, chairman of Maryland’s Health Services Cost Review Commission, which released the report, in a statement.

The deal with the feds is worth billions in extra payments to the hospitals from Medicare, which pays the same rates to hospitals as all other insurers under the program. The overall rates each hospital charges for services are regulated by the state.

The agreement, started under the Obama administration but continued by Trump officials, was designed to be a model for other states to curb spending and improve care. The next step is to include doctors under the program.