Health-care costs are rising. As states prepare to implement provisions of the federal health-care reform overhaul, officials are crafting ideas they hope will combat this trend.
Maryland is no exception. For more than 40 years, it created a measure unique to the state aimed at lowering and regulating health-care costs. That means, according to several officials, that Maryland is well-poised to work to better health care, increase preventative measures and decrease costs.
"I think we're comparable to other states in our region," said Joshua Sharfstein, Maryland Department of Health and Mental Hygiene secretary, "but I think that we have some tools that they don't have. And our goal is to improve the tools to improve health outcomes, improve patient experience and lower costs."
President Barack Obama's Affordable Care Act calls for all Americans to have health insurance. By expanding Medicaid - the state-federal program for low-income people - and requiring many others to purchase insurance or pay a fee, it's anticipated that coverage will be extended to many of the roughly 50 million uninsured Americans.
But there's another goal that's not often in the limelight: the law's aim to halt the rising cost of health care.
The U.S. spent about $2.7 trillion on health care in 2011, which equates to $8,700 per person, according to the Centers for Medicare and Medicaid Services. It predicts that that number will climb to $14,000 per person in a decade.
In Maryland, annual health-care costs per person from 1991 to 2009 increased about 6.6 percent on average each year, according to the Centers for Medicare and Medicaid.
There are several reasons behind these climbing costs, said Jim Reiter, the Maryland Hospital Association's senior vice president of communications.
"That's a pretty natural increase considering the cost of care has gone up," he said, "because of labor, because of technology, because of advances in medicine and drugs, and all that comes at a cost."
These rising costs mean higher premiums for businesses, which tend to pass more expenses onto their employees. It also means out-of-pocket costs for individuals.
So, states are creating and implementing measures officials hope will curb these costs without jeopardizing the quality of care.
In Maryland, this began in 1971, when the Maryland General Assembly created a seven-member board called the Health Services Cost Review Commission. The officials were tasked with reviewing and approving the rates hospitals can charge for their services.
Known as the all-payer system, this approach essentially did just that - set rates for all different payers, such as private insurance companies, Medicare, Medicaid and health maintenance organizations, according to the Maryland Health Care Commission's website.
"The all-payer system keeps everything equitable across the board," Reiter said, "and that is really one of the key cost controls in Maryland."
This helped curb Maryland's health-care costs for a time. But forward-thinking programs cost money, so Maryland is on par with the nationwide trend of rising health-care costs, Reiter said.
One such example is the state beginning to focus on taking people out of inpatient units into care outside the hospital, he said.
The general approach is based on a theory, Sharfstein said. Instead of paying more for the volume of patients a hospital or facility receives, it's now about rewarding them for the value of services.
And there are two major examples of that in Maryland, according to Sharfstein.
The first surrounds patient-centered medical homes in the state, he said. These began in January 2011 as a three-year pilot program overseen by the Maryland Health Care Commission, according to the commission's website. They aim to form a partnership between patients and a personal health-care team to provide continuous and coordinated care.
The second approach describes a shift in hospital incentives. Before, hospitals received incentives for a higher volume of patients, but that's now shifted to rewarding hospitals for keeping their patients healthier, Sharfstein said.
In the late spring, the Department of Health and Mental Hygiene released a draft of a proposal that would limit inpatient and outpatient hospital costs for all payers to a rate tied to the state's economy for the next five years. The state already regulates the cost of procedures, but this proposal, if adopted, essentially would cap the growth of how much the hospital system spends per person in Maryland.
"This would be one way in Maryland to hold costs down," Reiter said.
Additionally, preventative care is important for keeping people healthy and out of hospitals.
"One of the long-term goals is to improve our prevention in the state," Sharfstein said. "I think there's a lot of work around the state right now to reduce smoking, obesity."
In May, The Partnership for a Healthier Carroll County announced an educational campaign aimed at targeting three major local health problems: obesity, heart disease and diabetes.
Health reform means rewarding hospitals for a healthy community. So that means pharmacists, doctors, outside organizations and other officials need to work together to improve the overall health of the community, Reiter said.
Barb Rodgers, of The Partnership and the Carroll County Health Department, has been attending the State Innovation Models Local Health Improvement Coalition. Meetings started in May and are aimed at creating local plans to meet health targets and address disparities.
Carroll Hospital Center also has been looking at measures to cut costs while maintaining a high quality of care. During the past five years, it has implemented $17 million worth of cost-saving measures, including proactively managing staff vacancies and expenses, renegotiation of contracts, product standardization and more, hospital President Leslie Simmons said.
Staff members formulated the ideas for more than $2 million worth of techniques during its Bright Ideas initiative, where employees submitted money-saving ideas, Simmons said.
Other states are experimenting with cost-cutting measures, as well.
Oregon health officials are working on coordinating services and preventing hospital stays. Doctors who save money without putting patient care at risk are being rewarded at New Jersey medical centers. Massachusetts is expanding physician assistants' and nurse practitioners' roles.
Yet, these are just experiments. It's too soon to tell if they actually are working. But one thing's for sure: The rising cost of health care is unsustainable, Larry Levitt, senior vice president of the Kaiser Family Foundation, told the Associated Press.
"It has to end eventually," he said, "because we can't have an economy driven entirely by health care."