Maryland's Medicare Plan

Published Online: January 13, 2014
Katie Sullivan
Maryland could set a precedent as the Centers for Medicare & Medicaid Services gives approval for a plan that would allow the state to continue setting hospital reimbursement rates for Medicare beneficiaries. The ruling also means that Maryland will be the only state in the country to be exempt from the Medicare rates set by the government.

“This is among the most important changes in the health care delivery system in the state of Maryland in a generation,” said John Colmers, a Johns Hopkins executive.

Under the plan, Maryland would modernize its current rate system so that it can move away from the fee-for-service and volume-based model it currently has to a value-based one that emphasizes quality and controls costs.

“It reflects a paradigm shift in the way that the healthcare system relates to public health. Hospitals, doctors, nursing homes and many community health partners will all share in the same goal of improving health and controlling costs,” said Dr Joshua Sharfstein, Maryland’s health secretary.         
Maryland’s Governor Martin O’Malley said that the state will focus on proactive measures such as prevention efforts and wellness programs. “Such a shift will reduce costs for families and small businesses and will simultaneously keep many Americans from dying of preventable causes,” he said.

If successful, the state’s new rate system could become a model for other states. Maryland was originally granted a waiver nearly 40 years ago. It enabled the state to create a system where private insurance and Medicare rates for procedures were set the same for all hospitals. Usually Medicare only reimburses hospitals at the lowest reimbursement rate they receive, which forces hospitals to charge more for other patients.

Maryland will have 5 years to generate $330 million in Medicare savings, or it will have to transition to the model other states are using.

Around the Web

Feds Approves New Medicare Waiver for Maryland: Is This the New National Model for Reducing Healthcare Costs? [Med City News]

Maryland Eeceives OK for Healthcare Overhaul that Caps Hospital Spending [Modern Healthcare]