Maryland hospitals show cost, quality improvement under revamped payment model

Maryland's Medicare patients are among the most costly in the nation and are more likely than those in many states to return to the hospital soon after leaving. That could be changing as Maryland adopts a new payment model under a special agreement with the CMS. 

The state agreed that its hospitals would be paid for inpatient and outpatient care under global budgets by all payers. Last year was the first under the five-year deal. Now, researchers and CMS officials have published early results in the New England Journal of Medicine that estimate Medicare saved $116 million in 2014 as a result. Quality also generally improved from the prior year. 

The results are preliminary but affirm previous research that shows favorable trends in cost and quality under the reimbursement model. In Massachusetts, global budgets under the state's Blue Cross and Blue Shield plan since 2009 saved 6.8% through 2012 and quality gains were bigger than those seen nationally or regionally, a study published last year found. 

Global budgets are considered a more flexible form of financing for hospitals than fee-for-service, which generally limits reimbursement to the treatment of illness and injury. Global budgets may allow hospitals to pay more attention to disease prevention and management, with the aim of ultimately improving health and reducing healthcare costs.