Maryland State Wire

A new five-year contract has been signed and put will be put into effect in 2019 involving Maryland's all-payer model.

The contract will save money, lower costs and improve quality. Gov. Larry Hogan and Seema Verma, the administrator for the federal Centers for Medicare and Medicaid Services, signed and enacted the contract, called Maryland's Total Cost of Care All-Payer Model.

Joseph DeMattos Jr., the president and CEO of Health Facilities Association of Maryland, said the model will help residents by allowing Maryland to continue its unique work in the nation to better integrate care while also striving to reduce the total cost of care.

“Dating back to 1977, and updated with the contract this week, the Maryland Model includes provisions for hospitals, physicians, skilled nursing and rehabilitation centers, and others to better partner in providing quality care, as well as in incentives for that care to result in patients being healthier," DeMattos said in an interview with Maryland State Wire.

Bob Atlas, the president and CEO of Maryland Hospital Association, said in the short-term, it's really a continuation of many elements of an existing system that has been in place since 2014 that fixes hospital rates and budgets and produces savings to consumers in the form of improved quality and efficiency in the delivery of hospital services.

"In the long term, the new model adds a very significant feature which places hospitals under an incentive with some risk for what is referred to as the total cost of care," Atlas said in an interview with Maryland State Wire. "What that means is that hospitals under the system that is now wrapping up, hospitals had what are called global budgets that govern just hospital inpatient and outpatient care and the new model will actually have accountability for non-hospital services like physician services, skilled nursing facilities, things that arise after someone has left the hospital and other services that are not actually delivered by the hospital themselves."

Atlas said the idea is, as far as the federal government is concerned, to get the arms around the total spending and not just the hospital spending.

"That is intended to benefit the consumers by having accountable parties actually engage in a way that generates efficiencies," Atlas said.

DeMattos said the Maryland Model should be successful.

“I am optimistic and bullish on the Maryland Model, and with it, Gov. Hogan and his team may have created a roadmap for the nation," DeMattos said. "To the extent that the Maryland Model operates under the dual mandate to reduce costs while producing better health care outcomes for patients, focuses on increasing robust primary care by physicians, pushes care to lower cost per day settings, reduces unnecessary duplication of services and overutilization, it will be successful in its dual mandate.”

Atlas said the incentives are to save money and if the total spending fails to meet certain benchmarks, and there are several, then hospitals will suffer financially.

"It incentivizes saving money, and then there are a variety of ways hospitals engage to actually produce the savings," Atlas said. "Essentially, reaching out to patients and helping to coordinate their care, not just when they're in the hospital, but to try to prevent the need of a hospitalization and to coordinate their care after a hospitalization so that they don't have any rebounds or undue excess care for failing to meet their aftercare plan."

The Maryland Medicare population is the focus of the Maryland Model.

"The system broadly covers everyone in Maryland, but under this contract, the incentives are focused on the Medicare population and specifically the Medicare population that is in the fee-for-service Medicare System," Atlas said.

Atlas said of the just over 1 million Medicare beneficiaries in Maryland, about 920,000 of them are in the fee-for-service category.

"This model very directly focuses the financial incentives on those 920,000 people, which is almost one out of every six people in Maryland," Atlas said.

DeMattos said the most challenging aspect of the model is possible resistance.

“What keeps me up at night about the Maryland Model is possible resistance by hospitals and other providers to moving to a model of partnership from the current model of vendorship," DeMattos said. "Currently, in Maryland and across the nation, hospitals manage and benefit from models that bundle and integrate care. For the Maryland Model to work in reducing the total cost of care while achieving better health care outcomes for patients, hospitals and other providers must share in the financial risk, decision-making, care integration and benefit; that said, I am confident that the contract signed this week provides a framework for success."

Atlas said he thinks the most challenging aspect is that hospitals have to engage with non-hospital care partners to control the total cost of care for the population because, while hospitals certainly work with non-hospital care providers on a day-to-day basis, they have not had as powerful as an incentive as they do now in the past.

"There's not any mandate that the other providers do anything specifically, so the challenge will be with the hospitals to reach out to these other providers and work out collaborations that will lead to these desired outcomes in terms of total cost of care being controlled and quality being elevated as well to generate a healthier population," Atlas said.

Atlas said it's a very significant recognition by the federal government that Maryland has a truly unique and innovative system doing something never tried before in the country.

"It's a vote of confidence by the federal government and tremendous support by the Maryland governor and legislative leaders to entrust the hospital industry in Maryland with both the opportunity and responsibility to deliver on this concept," Atlas said.

Maryland’s previous All-Payer Model, approved in 2014, saved more than nearly $600 million through 2016.

The new model begins Jan. 1, 2019 and extends through the end of 2023. The contract can then be extended for an additional five years.