CMS, Maryland partner to evaluate new all-payer payment model

CMS and the state of Maryland partnered to update the state's Medicare payment model, the nation's only "all-payer" hospital rate regulation system where the same rates are used by public and private payers. The new model will replace the cap on payments per hospital admission with a 3.58% annual limit on the growth in per capita hospital expenditures over the next five years. Annual Medicare per capita growth will be limited to 0.5% less than the national Medicare average growth rate over those five years, a move expected to save Medicare $330 million. The state will also commit to reducing 30-day hospital readmissions and hospital acquired conditions rates.

CMS said that if the model fails, the state will have two years to adopt the national Medicare payment system. Maryland has used an all-payer system since the 1970s under a waiver of CMS' inpatient and outpatient fee schedules. Writing about the agreement in the New England Journal of Medicine, CMS and state officials including Maryland Secretary of Health & Mental Hygiene Joshua Sharfstein said the state's "historical performance in containing payments per admission for all payers has been notable," but that Maryland's per capita Medicare hospital costs are currently among the country's highest. ...