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Five Questions About the Medicare Waiver

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Five Questions About the Medicare Waiver

Date: 05/01/2015

Why is it called the Medicare waiver? What is being waived? 

Federal Medicare rules are being waived. Instead of following federal Medicare rules for payment, hospitals in Maryland follow Maryland-specific rules. Maryland is the only U.S. state with a Medicare waiver

Does the Medicare waiver affect only Medicare patients? 

The Medicare waiver affects all patients, regardless of age or Medicare eligibility, treated in Maryland hospitals. Under its rules, every payer—whether an individual, Medicare, Medicaid or a private insurer—pays the same charge for the same care. In other states, cost-shifting is common—that is the practice of charging some payers higher amounts to compensate for Medicare’s and Medicaid’s low reimbursement rates. 

Why have a waiver? What are the benefits? 

There are financial benefits—with a catch. Because of the waiver, hospital services rendered to Medicare patients in Maryland are paid by the federal government at a higher rate than would be the case without the waiver. The catch is that, to keep the waiver, Maryland must slow the rate at which total hospital costs are increasing. The goal of the new waiver is to simultaneously improve health, quality and affordability. If Maryland is successful, other states may adopt its model. 

Does the Medicare waiver change how The Johns Hopkins Hospital, Johns Hopkins Bayview Medical Center, Howard County General Hospital and Suburban Hospital are paid for care? 

Yes. Under the old waiver, hospitals were paid based on admissions: More admissions equaled more revenue. Under the new Maryland Medicare waiver, hospitals have a revenue target that they cannot exceed. If admissions grow, the amount paid per admission drops. The new waiver rewards preventive care that keeps patients out of the hospital. 

What are its implications for out-of-state and international patients? 

Revenue generated from such patients does not count toward the set revenue target. So while these patients are still charged the same rate as other patients, there is no limit on the number of patients. Hence, there is no cap on the revenue that Johns Hopkins Medicine hospitals in Maryland can derive from out-of-state and international patients.

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