All-Payer Hospital Model Lowers Costs

In 2016, Maryland saved $586 million on hospital expenditures for Medicare beneficiaries.

In 2014, Maryland teamed up with CMS to rein in hospital costs while simultaneously improving quality through a 5-year all-payer model agreement. According to a new report from the Maryland Department of Health on year 3 (2016) performance data, the model is saving hundreds of millions of dollars as it lowers hospital readmissions and steers the state away from a volume-based system.

The All-Payer Hospital Model employs a payment system that holds hospitals responsible for the total cost of care on a per-capita basis and aims to enhance the quality of healthcare delivery, improve population health, and limit the growth in healthcare spending. Under the agreement, the overall rates each hospital charges for services are regulated by the state.

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