CMS Announces New Payment Model for Maryland


On January 10, 2014, CMS announced that Maryland is shifting to the “the Maryland All-Payer Model,” a new payment model based on a CMS Innovation Center program that tests payment and delivery models.  See CMS Fact Sheet, available here. Under the terms of the new model, to be measured over a five-year performance period, Maryland will “permanently shift away from its current statutory waiver, based on Medicare payment per inpatient admission, in exchange for the new Innovation Center model based on Medicare per capita total hospital cost growth.” The goal of the new model is “to modernize Maryland’s unique all-payer rate-setting system for hospital services that will improve patient health and reduce costs.” 

The new model provides that Maryland will:

  • Achieve $330 million in Medicare savings;
  • Limit the annual all-payer per capita total hospital cost growth to 3.58%;
  • Shift the majority of its hospital revenue into global payment models, which provides an incentive for hospitals to work with other providers to prevent avoidable hospitalizations and readmissions;
  • Achieve a number of quality targets to promote better care and health and lower costs;
  • Commit to reducing its readmissions rate;
  • Submit an annual report with its performance along numerous population health measures; and
  • Develop a proposal for a new model before the start of the fourth year, based on a Medicare total per capita cost of care test to begin after the performance period.

If Maryland fails to realize these requirements during the performance period, Maryland hospitals will transition over two years to the national Medicare payment systems. 

Reporter, Katy Lucas, Atlanta, +1 404 572 2822,

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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