CMS Approves Plan to Cap Hospital Revenue Growth in Maryland

CMS and Maryland have finalized a new hospital payment initiative in the state focused on the triple aim: health outcomes, patient satisfaction and cost controls.

The five-year initiative will replace Maryland's 36-year-old Medicare waiver. Maryland has been the only state to set its own reimbursement rates for all payers, including Medicare and commercial insurers, on the condition the state hospitals' Medicare inpatient payment per admission growth rate didn't exceed the national average.

According to the new all-payer model — which Maryland submitted to CMS for approval this past October — the state will limit its annual all-payer per capita total hospital cost growth to 3.58 percent, or the 10-year average growth rate of the state's economy. Additionally, hospitals in the state will commit to achieving quality improvements, including an annual 6.89 percent reduction in the 65 most potentially preventable hospital-acquired conditions and a reduction in Medicare 30-day readmissions to the national rate.

Furthermore, hospitals will be paid based on Medicare per-beneficiary total hospital cost growth, and the state's Medicare per-beneficiary hospital cost growth must be at least $330 million less than the national benchmark during the next five years. The exact start date for the initiative was not specificed.

"By shifting away from traditional fee-for-service payment, Maryland’s new model encourages collaboration between hospitals and physicians to improve patient care, promotes innovative approaches to prevention, and accelerates efforts to avoid unnecessary admissions and readmissions,"  said Joshua M. Sharfstein, MD, secretary of Maryland’s Department of Health and Mental Hygiene, in a news release. "We appreciate the support of CMS for creative approaches to addressing the challenges of the healthcare system."

More Articles on Hospital Reimbursement:
Maryland Pitches New Global Payment Payer System to CMS
Legislation Seeks to Increase Telemedicine Reimbursement in Montana, Florida
Paying for Population Health: Why Rewarding Value is Key 

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