Editorial: Expansion, extension of 'Maryland Model' to reduce health care costs a win-win

In medicine, most people would likely agree that the goal should be making sure the patient is healthy and well, not earning revenue. Yet, in many places that isn’t necessarily the case when it comes to hospital admissions.

Since 2014 when Maryland entered into a special four-year agreement with federal agencies, the state has put an emphasis on keeping hospital patients healthier and reducing errors and readmission. The approach has saved Medicare $586 million in the first three years.


Now, because of that success, the state and the federal Centers for Medicare and Medicaid Services, have entered into an extension and expansion of that agreement, known as the Total Cost of Care All-Payer Model, once the current deal expires in December. The expansion of the so-called “Maryland Model” includes incentivizing primary care physicians, nursing homes and other providers in addition to hospitals to reduce total costs for Medicare patients.

Here’s how it works for hospitals. Rather than charging fees for more services provided to earn revenue, Maryland hospitals instead are given a set pot of money each year, determined by the Maryland Health Services Cost Review Commission. Hospitals were then incentivized to reduce overall healthcare spending by keeping patients healthier, reducing the need for additional hospital visits.

And it seems to be working. In addition to the costs savings, a report from the Maryland Department of Health noted hospitals across the state have reduced readmissions by 6 percent from 2014 to 2016. The rate of complications and infections from hospital visits have nearly been halved in the same time frame.

The new contract, a five-year deal that begins in January and with an option to renew for another five years in 2023, does not require that other community health care providers follow the hospitals’ lead, but will likewise incentivize them to work with hospitals to coordinate with preventative care for patients. One of the criticisms of the Maryland Model and the use of global budgets at hospitals was that it did not previously incentivize physicians.

It’s important that piece of the puzzle falls into place. After all, the key to good health is being proactive, so providers ensuring patients are taking care of themselves, not falling behind on prescriptions and identifying potentially chronic ailments such as diabetes or hypertension will help keep them from coming back to the hospital.

The expansion of the program is also expected to save a lot of money, to the tune of approximately $300,000 each year of the expansion. That’s a win-win.

“We are going to save about a billion dollars over the next five years, but we are also providing better quality health care,” Gov. Larry Hogan told us during a recent visit to Westminster. “So it’s going to affect real people in Maryland and it helps us keep the whole health care system from collapsing, quite frankly.”

Other states could learn something from Maryland, we think, and the Maryland all-payer system could eventually become the standard nationwide. Much of that will depend on this expansion and getting primary care physicians and other providers outside the hospital to buy in. If it continues to reduce the rising costs of health care and improves patient health and outcomes, federal lawmakers and other states will be hard-pressed not to give the Maryland Model a good look.