Maryland Total Cost of Care Model

The Centers for Medicare & Medicaid Services (CMS) and the state of Maryland are partnering to test the Maryland Total Cost of Care (TCOC) Model, which sets a per capita limit on Medicare total cost of care in Maryland. The TCOC Model is the first Center for Medicare and Medicaid Innovation (Innovation Center) model to hold a state fully at risk for the total cost of care for Medicare beneficiaries. The TCOC Model builds upon the Innovation Center’s current Maryland All-Payer Model, which had set a limit on per capita hospital expenditures in the State. The Maryland TCOC Model sets the state of Maryland on course to save Medicare over $1 billion by the end of 2023, and the Model creates new opportunities for a range of non-hospital health care providers to participate in this test to limit Medicare spending across an entire state.

Background

The Maryland All-Payer Model, launched in 2014, established global budgets for certain Maryland hospitals to reduce Medicare hospital expenditures and improve quality of care for beneficiaries. Global budgets provide hospitals with a fixed amount of revenue for the upcoming year. A global budget encourages hospitals to eliminate unnecessary hospitalizations, among other benefits. Under the All-Payer Model, Maryland achieved significant savings for Medicare and improved quality. However, the Maryland All-Payer Model historically focused solely on the hospital setting, constraining the State’s ability to sustain its rate of Medicare savings and quality improvements. The Maryland TCOC Model builds on the success of the Maryland All-Payer Model by creating greater incentives for health care providers to coordinate with each other and provide patient-centered care, and by committing the State to a sustainable growth rate in per capita total cost of care spending for Medicare beneficiaries.

Model Details

The TCOC Model sets Maryland on course to achieve fixed amounts of savings to Medicare per capita total cost of care during each model year between 2019 and 2023. The Model’s financial targets are structured to obtain a total of over $1 billion in Medicare total cost of care savings by the fifth performance year of the Model.

The TCOC Model includes three programs:

  1. The Hospital Payment Program tests population-based payments for Maryland hospitals. In Maryland’s Hospital Payment Program, each hospital receives a population-based payment amount to cover all hospital services provided during the course of the year. The Hospital Payment Program creates a financial incentive for hospitals to provide value-based care and to reduce the number of unnecessary hospitalizations, including readmissions.
  2. The Care Redesign Program (CRP) allows hospitals to make incentive payments to nonhospital health care providers who partner and collaborate with the hospital and perform care redesign activities aimed at improving quality of care. A participating hospital may only make incentive payments if it has attained certain savings under its fixed global budget and the total amount of incentive payment made cannot exceed such savings. Thus, the CRP and distribution of incentive payments under the program does not increase overall Medicare expenditures. In order to participate in the CRP, a hospital must enter into a CRP participation agreement with CMS and the State.
  3. The Maryland Primary Care Program (MDPCP) is structured to incentivize primary care providers in Maryland to offer advanced primary care services to their patients. Participating practices will receive an additional per beneficiary per month payment directly from CMS intended to cover care management services. The MDPCP also offers a performance-based incentive payment to health care providers intended to incentivize them to reduce the hospitalization rate and improve the quality of care for their attributed Medicare beneficiaries, among other quality and utilization-focused improvements.

As part of the TCOC Model, Maryland selected six high-priority areas in which it plans to focus on improving population health:

  • Substance-Use Disorder (SUD)
  • Diabetes
  • Hypertension
  • Obesity
  • Smoking
  • Asthma

The State will select its own measures and targets within each of these population health areas for CMS approval. The Model includes an Outcomes-Based Credits framework, which enables CMS to grant the State credits for the State’s performance on the CMS-approved population health measures and targets, structured as a discount to the State’s actual TCOC used in calculating the State’s performance against the Model’s savings targets. The amount of these Outcomes-Based Credits will be based on the return on investment (ROI) that Medicare would expect from the State’s improved performance on the CMS-approved population health measures and targets.

The performance period of the TCOC Model will begin on January 1, 2019 and conclude on December 31, 2026. During the final three Model Years, CMS and the State will negotiate either an expanded model test, a new model test, or a return to the national prospective payment systems.

Additional Information