How Maryland's all-payer system transforms traditional payment models

For the past 18 months, Maryland has been implementing an all-payer system that shifts away from the fee-for-service (FFS) reimbursement model and instead focuses on capped payments and rewards to providers who deliver quality healthcare at lower costs.

Initially, the state told the Centers for Medicare & Medicaid Services that by the end of 2018, 80 percent of Maryland's hospital revenue for residents would transition away from FFS. However, by July 1, 2014, 95 percent of hospital revenue shifted to alternative payment models, according to an article in the Journal of the American Medical Association (JAMA).

The full results of Maryland's unique approach to a health information exchange won't be available for at least several months, JAMA points out, but in the meantime here are some challenges and opportunities to keep in mind:

Aligning with providers who maintain FFS

There is an urgent need for better alignment and consistency with providers who still use the old FFS model, the JAMA article states. Because payers direct medical homes in the state, primary care clinicians struggle to adopt quality measures.

Additionally, the state is working to implement Medicare's new chronic care management fee, which would enable hospitals to share savings with physicians.

Establishing new partnerships

Maryland's all-payer success may rely on the program's ability to form effective partnerships with local community-based organizations.

To encourage new relationships, the state's health department and rate-setting commission are dishing out $2 million in grants for regional collaboration that works to prevent hospital admissions.

Additionally, under its all-payer model, the state plans to launch an accountable care organization for Baltimore residents who are dually enrolled in Medicaid and Medicare plans, according to an article from the consulting firm Open Minds. Because this targeted population tends to have high utilization of hospital care--which is received on a FFS basis--Maryland will shift all of its hospital revenue to global payment models; all third-party payers will pay the same rates to hospitals.

Currently, Maryland is the only state that uses an all-payer system that brings together insurers to negotiate hospital prices.

For more:
- here's the JAMA article (subscription required)
- check out the Open Minds piece

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