The escalating costs of healthcare are a significant concern across the United States. In many states, the price for the same medical procedure can fluctuate dramatically between hospitals and payers. This lack of uniformity, coupled with insufficient coordination between hospital services and primary care, can negatively impact patient experiences and health outcomes. Addressing these challenges, the Centers for Medicare & Medicaid Services (CMS) and the state of Maryland have forged a partnership to pioneer a transformative approach: the Maryland Total Cost of Care (TCOC) Model. This groundbreaking initiative aims to establish a per capita limit on the total cost of care for Medicare beneficiaries in Maryland, marking the first Innovation Center model to hold a state accountable for the complete spectrum of healthcare expenses.
Building upon the foundations of the successful Maryland All-Payer Model, which previously capped per capita hospital expenditures, the TCOC Model propels Maryland towards substantial Medicare savings, projected to exceed $1 billion by the end of 2023. Furthermore, it opens new avenues for diverse non-hospital healthcare providers to participate in a statewide effort to curb Medicare spending.
Key Highlights of the Maryland Total Cost of Care Program
- Addressing Healthcare Cost Variability: The Maryland TCOC Model directly tackles the issue of inconsistent healthcare pricing and fragmented care delivery prevalent in many states.
- Statewide Accountability for Cost and Quality: In a unique agreement, Maryland assumes full responsibility for both the cost and quality of care provided to Medicare patients within the state.
- Promoting Coordinated and Patient-Centered Care: The model incentivizes greater collaboration among hospitals, primary care physicians, specialists, and other healthcare providers, fostering a more patient-centric approach.
- Stable Revenue and Investment in Quality: By providing hospitals and healthcare providers with a more predictable revenue stream, the program enables them to dedicate more resources to enhancing care quality through investments in preventative care and health promotion initiatives.
- Improved Health Outcomes and Patient Experience: The overarching goals of the model include enhancing the overall health of Maryland residents, minimizing avoidable hospital readmissions and emergency department visits, and improving the patient journey within healthcare settings.
Background: Evolving from the Maryland All-Payer Model
Launched in 2014, the Maryland All-Payer Model laid the groundwork for the current TCOC program. It introduced global budgets for select Maryland hospitals, effectively reducing Medicare hospital expenditures and elevating the quality of care for beneficiaries.
Global budgets, a core component of this model, provide hospitals with a predetermined fixed revenue for the upcoming year. This financial structure motivates hospitals to prioritize preventative care and reduce unnecessary hospitalizations, among other benefits. The All-Payer Model demonstrably generated significant savings for Medicare while simultaneously improving care quality in Maryland. However, its primary focus on the hospital setting limited the state’s capacity to sustain its rate of Medicare savings and further enhance quality improvements.
The Maryland TCOC Model strategically expands upon the achievements of the All-Payer Model. It fosters stronger incentives for diverse healthcare providers to collaborate and deliver patient-centered care. Crucially, it commits the State to maintaining a sustainable growth rate in per capita total cost of care spending for Medicare beneficiaries, ensuring long-term fiscal responsibility and improved healthcare delivery.
Alt text: Map of Maryland highlighting its participation in the Total Cost of Care Model, demonstrating statewide healthcare innovation and cost management.
Decoding the Model Details: Three Core Programs
The TCOC Model is structured around three interconnected programs, each designed to address specific aspects of healthcare delivery and cost management:
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Hospital Payment Program: This program implements population-based payments for Maryland hospitals. Instead of traditional fee-for-service models, each hospital receives a predetermined payment to cover all hospital services provided throughout the year to a defined population. This innovative payment structure incentivizes hospitals to deliver value-based care and proactively reduce unnecessary hospitalizations and readmissions, as these would be financially detrimental under a fixed budget.
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Care Redesign Program (CRP): The CRP facilitates collaboration between hospitals and non-hospital healthcare providers to enhance care quality. It allows hospitals that achieve savings under their global budgets to make incentive payments to non-hospital partners who engage in care redesign activities. This program ensures that savings generated are reinvested into improving the broader healthcare ecosystem without increasing overall Medicare expenditure, as incentive payments are capped by the hospital’s achieved savings. Hospitals must enter into a CRP participation agreement with CMS and the State to participate.
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Maryland Primary Care Program (MDPCP): The MDPCP focuses on strengthening primary care, recognizing its crucial role in preventative care and overall health management. It incentivizes primary care practices and Federally Qualified Health Centers (FQHCs) in Maryland to offer advanced primary care services to their patients. Participating practices receive a per beneficiary per month payment directly from CMS to support care management services. Furthermore, in Tracks 2 and 3 of the MDPCP, performance-based incentive payments are offered to providers who successfully reduce hospitalization rates and improve care quality for their attributed Medicare beneficiaries. Track 3, introduced in January 2023, further enhances accountability by incorporating both upside and downside financial risk based on performance metrics, mirroring aspects of the Primary Care First (PCF) Model. Care Transformation Organizations (CTOs) also receive payments to support practices in meeting care transformation requirements, acting as vital partners in this program.
In 2019, CMS initiated collaborations with third-party payers in Maryland to align with the advanced primary care principles of MDPCP. CareFirst was selected as an aligned payer, commencing their partnership in January 2020.
The TCOC Model also incorporates an Outcomes-Based Credits framework. This allows Maryland to select population health measures and targets for CMS approval, earning credits based on performance against these targets. These credits are structured as a discount applied to the state’s actual TCOC when evaluating performance against savings targets. The value of these credits is determined by the anticipated return on investment (ROI) for Medicare resulting from Maryland’s improved population health outcomes. Diabetes prevention was the first Outcomes-Based Credit selected in 2019, with further credits finalized in 2021.
The TCOC Model’s performance period spans from January 1, 2019, to December 31, 2026. Looking ahead, CMS and Maryland will collaborate to determine the future of the model, considering options such as expansion, a new model iteration, or a return to the national prospective payment systems.
For further inquiries regarding the Maryland Total Cost of Care Model, please contact [email protected].
