Maryland Gov. Larry Hogan and CMS Administrator Seema Verma enacted the state's Total Cost of Care All-Payer Model on July 9, which puts the state fully at risk for Medicare beneficiaries' cost of care and is expected to save $1 billion over five years.
The new five-year contract goes into effect in 2019, expanding the state's previous all-payer model beyond hospitals to the entire healthcare system, including mental health, long-term care, primary care and community resources for population health. The contract extends through 2023 and can be extended for an additional five years.
"This model is a step toward aligning the entire delivery system toward paying for value over volume," Ms. Verma said in a press release. "Maryland has led the way by adopting the first alternative payment model to shift hospital payments to full global budgets. Success under this new model will require both hospitals and physicians to be equally committed to payment transformation and care redesign."
Maryland is the only state in the U.S. to operate on an all-payer hospital rate system. The state's 36-year-old Medicare waiver allows it to set hospital rates for inpatient and outpatient care and requires all insurers to pay the same rates. This model saved more than $586 million between 2014 and 2016 compared to national spending. The expansion is expected to save an additional $300 million per year by 2023.
For more on the Total Cost of Care All-Payer Model, click here.
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