Policymakers had high hopes for an innovative payment program in Maryland aimed at incentivizing providers to reduce costs and keep patients out of the hospital.
But recent research shows the approach hasn’t necessarily paid off.
The policy initiative known as the global budget program was rolled out to rural hospitals in Maryland in 2010. Under the model, hospitals were given an annual budget for inpatient, emergency department and outpatient services from all payers, including Medicare, Medicaid and commercial insurers.
The idea behind the payment model was hospitals would take more steps to avoid readmissions and keep patients out of the ED. The program was expanded to urban and suburban hospitals in 2014.
But data published in Health Affairs found no substantial change in patient populations that received care from hospitals participating in the global budget program compared to those that weren’t. Although the researchers found that metrics like inpatient admissions and 30-day readmissions declined over a three-year period, they saw similar declines in a control group that didn’t participate in the payment model.
The Health Affairs study adds to a similar study, led by the same group of researchers, that found the global budget program had almost no impact on hospital or primary care use.
“There is widespread interest in moving to alternative payment models that contain healthcare spending while still ensuring robust health outcomes,” lead author, Eric Roberts, an assistant professor at the University of Pittsburgh Graduate School of Public Health told Harvard Medical School earlier this month. “Unfortunately, with the Maryland experiment, we didn’t find meaningful changes in care that policymakers had hoped this program would achieve.”
While some have said the ambitious Maryland initiative has helped reduce per capita spending across the state, the program doesn’t appear to be making a dent in key metrics like readmissions. But researchers say the initiative may need more time to develop. Maryland recently made changes to include physicians in the program, which could create stronger incentives to reduce hospital uses.
“By focusing incentives on hospitals while excluding physicians, Maryland’s global budget program might not have provided sufficiently strong incentives for providers to reduce hospital use,” the authors wrote in Health Affairs.
Meanwhile, Pennsylvania is planning to roll out a similar payment model for its rural health providers through a program that will receive $25 million from the federal government over the next five years.