Study: Maryland’s value-based care program controlled costs but didn’t necessarily improve care

Doctor and nurses wheeling patient in gurney through hospital corridor
It may take 5 to 10 years for the new payment model to transform the delivery system, according to a commentary in JAMA Internal Medicine. (Image: Getty/Sam Edwards)

A new study finds mixed results for an innovative program in Maryland to cut healthcare spending while improving outcomes.

Four years ago, the state instituted a new payment system that gives the majority of acute care hospitals an annual all-payer global budget for inpatient, emergency department and outpatient department services. The program aimed to control spending while reducing unnecessary hospital services and encouraging greater use of primary care.

Under the program, the state gives hospitals a fixed payment for all patients they care for in a year. If there are cost overruns, hospitals are responsible for making up the shortfall. But if there is a surplus, hospitals can keep the revenue. These incentives are meant to encourage hospitals to treat patients efficiently as possible and strive to avoid readmissions.

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To determine whether the program met its goals, a study in JAMA Internal Medicine looked at the results of the first two years of the state initiative. Researchers used data from a 20% random sample of Medicare beneficiaries and matched data from eight Maryland counties where hospitals switched to global budgets in 2014 to compare it with outcomes at 27 non-Maryland counties across the country.

Researchers didn’t find consistent evidence that the Old Line State’s global budgeting program reduced hospital admissions or observation stays, readmissions, ER visits or outpatient use. Nor did it increase visits with primary care physicians.

“The takeaway so far may be that when hospitals change the way the healthcare delivery system works you don’t necessarily get a broader transformation that people had hoped for,” lead author Eric T. Roberts, Ph.D., assistant professor of health policy and management in the University of Pittsburgh’s Graduate School of Public Health told the Baltimore Sun. “At least not right away.”

Indeed, it may take 5 to 10 years for the new payment model to transform the delivery system, according to an accompanying commentary in JAMA Internal Medicine by Joshua M. Sharfstein, M.D., and Elizabeth A. Stuart, Ph.D., both from the Johns Hopkins Bloomberg School of Public Health, and Joseph Antos, Ph.D., of the American Enterprise Institute.

The authors noted that the next phase of Maryland’s model will address nonhospital costs and new incentives for physicians to support value-based care. They said it will be important to track the experiences of different patient groups and high-risk local populations to see whether improvements in care and public health outcomes occurred as anticipated.

“In this case,” they wrote, “there is ample reason for many in the healthcare system to watch the continued evolution of Maryland’s efforts as they seek to control costs, improve outcomes, and raise expectations for what state-based reform can achieve."