​The continuation of Maryland’s all-payer model will allow the system to move beyond hospital walls to change the financial landscape of nursing homes, mental health facilities and other institutions.

A new contract set to start Jan. 1 and approved by the Centers for Medicare & Medicaid Services earlier this month is expected to produce Medicare savings of $1 billion during the next five years, Gov. Larry Hogan (R) said in a press release.

The so-called Maryland Model, an outgrowth of a longstanding federal waiver, looks to limit increases in healthcare costs by providing facilities global budgets, instead of adhering to Medicare’s prospective payment systems.

“This payment approach incentivizes the prevention of acute illness, aligning the hospital’s financial goals with the health of their communities,” Dr. Joshua M. Sharfstein, Elizabeth A. Stuart, and Joseph Antos wrote in a JAMA Network article

The expansion to nursing homes and other community settings will advance the same missions of coordinating care, reducing readmissions and putting outcomes before volume.

According to a state press release, the next iteration will:

  • Invest resources in care that is focused on the patient and enhance primary-care teams to improve individual patient outcomes ​
  • Set a range of quality and care improvement goals and provide incentives for providers to meet them
  • Concentrate system and community resources on population health goals to help address opioid use and deaths, diabetes, hypertension, and other chronic conditions
  • Encourage and facilitate programs focusing on the unique needs of Marylanders across geographic settings and other key demographics

Bloomberg News noted that the expansion had made Maryland a state-to-watch in the shift toward value-based payments.

Bob Atlas, president and CEO of the Maryland Hospital Association blogged about the pilot, saying that other states are primed to “try elements of the Maryland model.”

“That doesn’t mean it will be easy,” he wrote. “The financial targets are aggressive and demand a savings of more than $1 billion over the first five years. Quality targets also will be challenging, as healthcare providers will be expected to control chronic, far-reaching illnesses like diabetes, opioid use disorders, and heart disease.

“To be successful, hospitals will need the state’s legislative and regulatory bodies to break down legal barriers, uphold financial commitments, and fulfill their duty to pave the path toward a high-performing health care system for our state.”