Healthcare News & Insights

Feds approve one state’s plan to promote value-based hospital care

Changes to one state’s successful healthcare cost-cutting initiative that promote value-based care have officially gotten approval from the feds. In addition, the new system is being looked at as the future payment model for the nation’s hospitals.

Maryland is the only state in the country that’s set strict hospital price controls, which have helped slow rising healthcare costs. According to a news release from the Maryland Hospital Association, the state’s current pricing system has saved the Medicare program close to $45 billion over the past four decades. (Note: News release courtesy of Businessweek.)

To enhance this system, the state submitted a proposal to the Centers for Medicare & Medicaid Services (CMS) to further limit spending on hospital care. Several federal agencies reviewed the proposal before CMS gave the program its blessing.

Per the news release, the system has been updated to include more of a value-based aspect. Now, the state’s hospitals will be paid for meeting CMS-approved quality measures.

As long as Maryland holds up its end of the bargain, which is to keep healthcare spending low relative to the state’s rate of economic growth for the next five years, Medicare will continue to reimburse hospitals at the rates the state has set for patients rather than using the standard fee structure, said the news release.

Focus on quality

The program also is designed to improve care coordination and the overall health of patients throughout the state. The news release said that “groups of hospitals, doctors and others [will] come together to ensure that patients, especially the chronically ill, get the right care at the right time and in the right setting.”

An article in Kaiser Health News details some more specific goals of the program, including sharply cutting hospital-acquired infections and decreasing 30-day readmission rates. The state also must come up with a general plan to limit the cost of all its Medicare expenditures going forward.

Because the new initiative is more closely tied to value, the pricing structure for Maryland hospitals won’t be influenced by the standard fee-for-service model.

While initiatives like this have taken place on a small scale with a handful of insurance carriers and hospitals, this is the first instance where an entire state’s hospital system is participating in a quality-based payment program. So the system’s success will be closely monitored as a sort of pilot program for value-based care in hospitals.

Depending on the results of this statewide value-based initiative, it could be a game-changer going forward.  What do you think of this revolutionary new program? Let us know in the comments.

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