Update on Maryland’s All-Payer Waiver

The Milbank Memorial Fund (MMF) supports efforts for states to learn from one another about current policy developments—and one topic that states are eager to know about is ways to measure and contain health care costs. In 2014, the state of Maryland received federal approval for a groundbreaking waiver designed to cap growth in health care spending. Two years later, Maryland’s work on its waiver serves as an example of how a state can forge ahead on delivery and payment reform.

Maryland’s initiative is based on three general concepts:

• Reducing total all-payer per capita hospital spending by expanding the existing all-payer hospital rate setting system to include limits on increases in global hospital revenue;
• Establishing a target rate for growth in the total hospital cost of care for Medicare beneficiaries that will ensure savings to the Medicare program; and
• Improving the health care system’s performance on key measures relating not only to cost, but also to utilization and quality.

Health care cost and quality metrics are a major focus of the waiver. To achieve those goals, the state worked extensively with stakeholders to build a health care system that could effectively reduce cost growth and improve outcomes. These systemic initiatives included:

• Promoting new models of care coordination and care management matched to patient and community needs;
• Building a sturdy health information infrastructure that includes clinical and claims data; and
• Promoting robust alternative payment models that reinforce incentives to better manage care and cost.

During the first two years of operation, the state developed stronger data capacity to measure and monitor total cost and implemented global budgets for all acute general hospitals in the state. Combined with strict limits on hospital revenue growth, the state succeeded in limiting all-payer hospital costs and Medicare total cost growth below the national average.

However, national Medicare growth rates have also come down, and, in its second year. the state’s growth rate for non-hospital services (primarily physician and post-acute care) exceeded the national average for comparable services.

In order to maintain compliance with the current waiver terms and successfully negotiate a future waiver extension, Maryland is taking a number of steps to closely monitor and manage its Medicare cost trends. This includes:

• Stronger alignment of hospital and physician performance measures and incentives to increase the share of revenue that is performance based;
• Promoting shared care coordination resources between health care systems including development of a geographic population-based model focused on total cost and population health improvement;
• Enhancing access to more detailed levels of Medicare claims data.

Regarding Medicare data, many states and regions are testing new delivery and payment models, but Maryland is pushing the envelope to obtain an unprecedented degree of access to Medicare data in order to support its program. Since acquiring the waiver, the state worked with a de-identified Medicare data set to publish state-level Medicare cost trend reports. This provided an overall snapshot to monitor the state’s performance but it did not allow for regional- or hospital-specific levels of analysis. The state has now obtained Medicare approval to provide hospitals with access to a larger de-identified Medicare claims dataset. Under this model, the state’s health information exchange entity can receive the data and produce reports for the hospitals, or the hospitals can apply to receive the data directly. In addition, the state has requested federal approval to grant hospitals’ access to identifiable Medicare claims data specifically to support care management initiatives.

“There is a lot of additional work ahead for Maryland and its stakeholders to rapidly implement new care and payment models that are strong enough to hold down Medicare total cost of care growth and create a more coordinated health care system,” says Rachel Block, project coordinator for the MMF. “The state’s leadership is key to sustaining the focus and aligning the policy levers, but it will be the system’s performance as a whole that will determine how Maryland’s efforts fare.”