What You Should Know About Maryland's Unique Healthcare Payment Model
Did you know that Maryland pays for and delivers care differently than most states? If not, you're not alone. Only 14% of adult Marylanders who consumed healthcare within the past year know that healthcare payment in Maryland is different. This fact is one of the primary findings from research activities—commissioned by CareFirst BlueCross BlueShield (CareFirst) and conducted by NORC at the University of Chicago—to understand the perceptions and experiences of healthcare consumers in Maryland.
The Maryland Model
Under Maryland's "all-payer" system, a hospital service costs the same for every patient from the same facility, no matter what insurance coverage the patient may hold. Maryland is the only state that sets hospital rates for services rather than relying on Medicare's national fee schedules and negotiated rates between each hospital and each insurance carrier which can vary widely. The unique payment system (Maryland Model) is touted by some experts as a template to reform the U.S. healthcare system. Still, most Maryland residents do not know it exists and are unaware of its benefits.
The Maryland Model aims to control the growth in healthcare costs at hospitals and community providers while improving patient outcomes and quality of care. Maryland's hospitals have adopted global budgets under this model, establishing a total revenue cap for each hospital. This reimbursement mechanism aims to remove the incentive to grow hospital admissions and instead focuses hospitals and health systems on the following:
- Coordinating care across hospital and non-hospital settings, including mental health and long-term care
- Enhancing primary-care teams to improve individual patient outcomes
- Setting a range of quality and care improvement goals
- Concentrating system and community resources on population health goals to address opioid use and deaths, diabetes, hypertension and other chronic conditions
- Encouraging and facilitating programs focusing on the unique needs of Marylanders across geographic settings and other key demographics
The federal government periodically evaluates the Maryland Model to determine whether this different payment structure generates savings, better quality and improved outcomes over time. Its performance has been uneven in recent years, but data from earlier evaluations suggest that the system has the potential to save billions of dollars. However, there's still a question about if the Maryland Model delivers what people need and want from their healthcare experience.
The contracted test period for the Maryland Model expires in 2023, but the default provision to extend the model through 2026 has already been exercised. Policymakers are discussing how best to move forward with healthcare payment in Maryland, and whatever they decide will impact how Maryland residents pay for and receive healthcare. CareFirst believes consumer insights are essential to choosing the path forward, which motivated us to commission the research study from NORC.
To learn more about how CareFirst advocates for healthcare consumers, visit Advocacy & Public Policy.