New Five-Year Contract for Innovative Healthcare Provider Payment System to Save $1 Billion, Lower Costs & Improve Quality for Consumers

ANNAPOLIS, MD– Governor Larry Hogan, together with Seema Verma, Administrator of the federal Centers for Medicare and Medicaid Services (CMS), today signed and officially enacted Maryland’s Total Cost of Care All-Payer Model, known as the “Maryland Model,” in a signing ceremony at the Maryland State House.

Governor Hogan and Administrator Verma were joined by Maryland Department of Health Secretary Robert Neall, Senate President Thomas V. “Mike” Miller, Speaker of the House Michael Busch, as well as numerous healthcare industry representatives and advocates. The Maryland Model is an innovative approach to healthcare provider payment that is unique to Maryland and made possible via a contract between CMS and the state. The new model contract is expected to provide an additional $300 million in savings per year by 2023, totaling $1 billion in savings over five years.

“We are thrilled to be here today to officially execute and enact our unique and innovative Maryland Model, which is the only one of its kind in the nation,” said Governor Larry Hogan. “Today, we are taking another major step forward in our efforts to ensure that every Marylander has access to quality healthcare. It is my hope that these actions will be an example to the nation that when both sides of the aisle and all levels of government come together to develop innovative solutions, we can make real progress toward addressing our healthcare challenges and making care more accessible and more affordable.”

Governor Hogan recognized and thanked Administrator Verma, along with Department of Health and Human Services Secretary Alex Azar, Secretary Neall, Maryland Department of Health COO Dennis Schrader, Health Services Cost Review Commission Chairman Nelson Sabatini, the presiding officers, and the stakeholders and advocates who worked to make this important achievement possible.

Photo courtesy of the Office of the Governor of the State of Maryland; Photographer: Joe Andrucyk

“This Model is a step towards aligning the entire delivery system toward paying for value over volume,” said CMS Administrator Seema Verma. “Maryland has led the way by adopting the first alternative payment model to shift hospital payments to full global budgets. Success under this new Model will require both hospitals and physicians to be equally committed to payment transformation and care redesign. We look forward to seeing the great work to come and to continuing to partner with you Governor Hogan, and the whole state of Maryland in this bold initiative.”

“This new agreement is the result of a sustained and coordinated federal-state effort to recognize the success of Maryland’s system that manages the cost of patient care in a cost-effective way, while maintaining quality and results,” said U.S. Senator Ben Cardin, a member of the Senate Finance Health Care Subcommittee, which has oversight responsibility for CMS. “There is no one-size-fits-all answer, but the Maryland Model can show other states how to successfully reward quality over quantity and concentrate on how to best manage a patient’s care.”

“Maryland has been a leader in the effort to incentivize our health care system to emphasize the quality of care over the quantity of care and to focus on value, not volume. In fact, our unique All-Payer Demonstration Model has met or exceeded every quality and performance measure over the last five years,” said U.S. Senator Chris Van Hollen. “This new agreement between CMS and the state will allow that vital work to continue. I’m committed to working with Maryland officials, health care providers, and the federal government to reduce costs and improve our quality of care and health outcomes for families across our state.”

“The Maryland Model is a testament to Governor Hogan and Administrator Verma’s commitment to helping Maryland families and driving health care innovation,” said Congressman Andy Harris M.D. “Their close work with key stakeholders, including nursing homes, rehabilitation facilities, physicians, and hospitals, delivered a new, extended version of the Maryland Model that will be even more effective in controlling the cost of health care while maintaining access, and in improving the quality of outcomes for Maryland patients.”

“Maryland is leading the nation when it comes to healthcare innovation,” said Congressman Dutch Ruppersberger. “Our state’s healthcare systems have already saved hundreds of millions of taxpayer dollars and, more importantly, improved patient health outcomes. I applaud Team Maryland in making sure the federal government recognizes the amazing work of our healthcare systems by renewing and expanding our all-payer contract.”

“Maryland is uniquely positioned as the only state to operate under an all-payer model that emphasizes value-based, patient-centered care,” said Congressman John Sarbanes. “The newly approved model, which expands the program beyond hospitals to include even more segments of the health system, will continue our leadership on decreasing healthcare costs and prioritizing patient outcomes.”

“By shifting away from simply treating illness and instead focusing on coordinated, quality care, the Maryland Total Cost of Care All-Payer Model encourages prevention and wellness, reduces costs for families and small businesses and makes Maryland a better, healthier place for all,” said Congressman Anthony Brown. “The federal-state partnership to further expand the country’s first all-payer system renews our commitment to develop innovative solutions to our persistent health challenges and ensure every Marylander has access to high-quality care.”

“The Maryland Model Contract is a solid example of bipartisanship and putting the well-being of all Marylanders over politics,” said Congressman John K. Delaney. “Through a holistic approach to healthcare – from preventive to emergency care – we will be able to better coordinate care across hospital and non-hospital settings and save roughly a billion dollars in costs over the next five years. Hopefully, this can serve as an example to those in Congress hoping to create meaningful, long-term solutions to our biggest challenges.”

“The Maryland Model provides a comprehensive approach to ensure people in our state will have access to quality, affordable healthcare,” said Congressman Elijah Cummings. “Once again, Maryland is demonstrating its leadership in providing a healthcare delivery system that puts the patient first, reduces costs, and expands services to those most in need.”

“Once again, Maryland is leading the nation with innovative healthcare solutions,” said Congressman Jamie Raskin. “The Maryland Model continues our commitment to high-quality, patient-focused care, while also working to decrease costs and improve outcomes.”

“Maryland’s all-payer waiver has been a model in the nation for decades,” said Speaker Michael E. Busch. “This next phase of the waiver will provide even better healthcare to Marylanders – focusing on improved primary care outcomes for patients and preventive care, while continuing to maintain equivalent hospital rates for patients regardless of income. The renewal of this waiver is an important step in maintaining Maryland’s high quality healthcare system.”

“The Maryland Model is an investment in expanding healthcare access and affordability, especially for Marylanders with chronic and complex medical conditions,” said Secretary Robert Neall. “This comprehensive approach ensures the patient is at the center of decision making and their needs are being met with greater transparency and accountability.”

“MedChi applauds the extension of the Maryland Medicare Waiver as a monumental achievement which is the result of bipartisan leadership and hard work by the Hogan Administration with the Maryland General Assembly and the Maryland Congressional Delegation,” said MedChi CEO Gene M. Ransom. “The Maryland State Medical Society MedChi is particularly excited about the new Maryland Primary Care Program that will expand Medicare service and access to thousands of Marylanders.”

“This new model marks the most significant step in a journey that Maryland began four decades ago: a journey toward equitable, cost-effective, quality healthcare that truly aims to keep people healthy,” said Maryland Hospital Association President & CEO Bob Atlas. “Maryland is moving boldly, and on a scale untried anywhere else in the nation. At its heart, this model is about redirecting health resources to keep people well, to manage whatever conditions they may live with, and to deliver the right care when injuries or acute illnesses arise. Maryland’s hospitals fully embrace their pivotal role in this enterprise. Our hospitals appreciate the support of the governor and health secretary, the state legislature, our federal partners, and fellow healthcare providers, all of whom have roles to play in ensuring the model’s success.”

“I commend Governor Hogan and CMS Administrator Seema Verma and their teams for their leadership on this critical initiative,” said Health Facilities Association of Maryland President & CEO Joseph DeMattos. “With this new agreement between the State of Maryland and the Federal Government, we have the potential to create a model of healthcare integration that results in better healthcare outcomes for Marylanders while also bending the cost curve. To the extent that this new agreement aligns payment across providers to move from vendorship to partnership, we could here in Maryland create a quality care model for the nation.”

“LifeSpan, Maryland’s leading senior care provider association, is proud to partner with hospitals, physicians and other healthcare leaders as we continue to transform Maryland’s healthcare delivery system,” said LifeSpan Network President Kevin Heffner. “LifeSpan members welcome the opportunity to continue their mission of providing the highest quality of care to our elders and others through new and innovative programs.”

“Demonstrating our ability to effectively manage healthcare costs is critical to ensuring affordability and appropriate access to care,” said CareFirst President and CEO Brian Pieninck. “While much work remains, we appreciate the importance of this step.”

“Maryland can be very proud of our new day in healthcare. Today’s signing strengthens and expands our first in the nation patient-focused health system transformation. The Administration, the General Assembly, providers, insurers, and consumers are all working closely together to build a health system which puts keeping people healthy as our top priority,” said Maryland Citizens’ Health Initiative President Vincent DeMarco.

Maryland’s previous All-Payer Model, approved in 2014, has already saved Medicare more than $586 million through 2016, compared to national spending. Under the current model, hospitals have successfully reduced unnecessary readmissions and hospital-acquired conditions while decreasing the growth in hospital cost per capita. The new Maryland Model will expand this successful approach across the healthcare system when it takes effect on January 1, 2019 and extends through the end of 2023. The contract can then be extended for an additional five years, pending a review of the terms.

The Maryland Model aims to control the growth in healthcare costs, both at hospitals and community providers, while improving patient outcomes and quality of care. To achieve this comprehensive coordination across the entire healthcare system, the Maryland Model will:

  • Coordinate care across both hospital and non-hospital settings, including mental health and long-term care
  • Invest resources in care that is focused on the patient and enhance primary-care teams to improve individual patient outcomes ?
  • Set a range of quality and care improvement goals and provide incentives for providers to meet them
  • Concentrate system and community resources on population health goals to help address opioid use and deaths, diabetes, hypertension, and other chronic conditions
  • Encourage and facilitate programs focusing on the unique needs of Marylanders across geographic settings and other key demographics

The Maryland Model provides a significant incentive across the health system to provide greater coordinated care, expanded patient-care delivery, and collaboration of chronic disease management, while improving the quality of care at lower costs to the consumer.