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Maryland’s Medicare Waiver Updated and Extended Another 5 Years

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Maryland’s Medicare Waiver Updated and Extended Another 5 Years

Maryland’s Medicare Waiver Updated and Extended Another 5 Years
by Christina DuVernay

Date: 06/18/2018

The Centers for Medicare & Medicaid Services (CMS) has approved an extension and modernization of Maryland’s unique Medicare waiver. Set to go into effect Jan. 1, 2019, the updated waiver will aim to lower health care costs by shifting more care out of hospitals and into lower-cost settings, aligning incentives among various health care providers and improving care coordination.

The new waiver will update the current one — which began Jan. 1, 2014, and ends Dec. 31 of this year — in two major ways. It will measure the total cost of care rather than simply hospital spending. And it will extend the global budget revenue (GBR) model — a key feature of the waiver. Under the GBR system, although hospitals in Maryland receive payment in traditional fee-for-service fashion, they are also capped on the total revenue that can be charged in a given year.

When the new Maryland total cost of care model goes live, physician practices and skilled nursing centers will be encouraged to partner with hospitals and possibly share in cost savings. The intent is to create incentives for health care delivery transformations that improve care quality and population health, and help reduce the costs to the patient.

The total-cost-of-care concept, says Ed Beranek, vice president of revenue management and reimbursement for the Johns Hopkins Health System, means Johns Hopkins will be accountable not only for spending within its hospitals but also, to a degree, for spending in other care settings.

“The goal here is to incentivize health systems to partner with nonhospital providers to lower costs and potentially share savings,” Beranek says.

Details on how the total-cost-of-care model will be implemented are still being worked out by CMS and Maryland’s Health Services Cost Review Commission (HSCRC), which establishes hospital rates for the state and reports on hospitals’ financial performance.

John Colmers, senior vice president of health care transformation and strategic planning for Johns Hopkins Medicine, serves on the HSCRC. “Continuation of the waiver is a very positive step in the direction of improving care coordination for our patients, but we must be sure that as the details are developed, they fairly account for the unique circumstances of academic health systems,” Colmers says.

Jonathan Efron, senior vice president of the Office of Johns Hopkins Physicians, says the new waiver will provide Maryland physicians’ new opportunities to help manage patients along the entire continuum of care by aligning incentives to improve value. “Johns Hopkins physicians, hospitals and health care systems will partner to improve quality, reduce costs and continue to provide our highest standard of care,” says Efron.

Maryland enjoys unique benefits under the current Medicare waiver, which, like its successor, was crafted to contain health care costs while improving care quality. Because of the waiver, hospital services delivered to Medicare patients in Maryland are paid by the federal government at a higher rate. But to keep the waiver, Maryland has had to slow the rate at which hospital costs increase while hitting other quality and cost targets, and it has done so.

For instance, in the first three years (2014–2016) of the current waiver:

  • Readmissions to Maryland hospitals dropped by more than 6 percent.
  • Potentially preventable conditions decreased 30 percent.
  • Maryland saved Medicare $586 million compared with average national spending.

The state has had a Medicare waiver in effect since 1977. Its original waiver made Maryland an all-payer state, meaning that all third-party payers — whether Medicare, Medicaid or private insurers — paid the same rate for services. In other states, Medicare reimburses physicians and health systems at a discount compared with private insurers, creating cost-shifting, the practice of charging more to some payers — for example, private insurance companies — to make up for losses incurred by accepting discounted reimbursements from others.

Work to manage population health across Johns Hopkins Medicine’s Maryland-based member organizations has been a step in the right direction toward managing total cost of care, says Beranek, citing the Johns Hopkins Medicine Alliance for Patients accountable care organization and the Johns Hopkins Community Health Partnership. “Now the challenge is making sure that the global budget revenue method allows us to be properly reimbursed for the care we deliver,” says Beranek.