Healthcare costs in the United States have been a growing concern for decades. The increasing price of medical procedures, hospital stays, and prescription drugs places a significant burden on individuals, families, and the national economy. In response to these challenges, innovative programs are being developed and tested to control costs while maintaining or improving the quality of patient care. One such pioneering initiative is the Maryland Total Cost of Care (TCOC) Model. This program represents a significant shift in how healthcare is funded and delivered, particularly for Medicare beneficiaries within the state. Understanding what a cost of care program entails, and specifically how the Maryland TCOC Model operates, is crucial for anyone seeking to grasp the future of healthcare in the US.
The Maryland Total Cost of Care Model is a groundbreaking agreement between the Centers for Medicare & Medicaid Services (CMS) and the state of Maryland. At its core, this model is designed to manage and limit the total healthcare expenses for Medicare beneficiaries in Maryland. It’s not just about reducing costs in one area, like hospital services, but rather taking a comprehensive approach to the entire spectrum of healthcare services a patient might need. This makes it a true “total cost of care” program. The model sets a predetermined limit on the per-person cost of healthcare within Maryland, holding the state accountable for managing healthcare spending effectively. This is a significant departure from traditional fee-for-service models, where costs can escalate without clear limits or incentives for efficiency.
The TCOC model is not built in isolation. It evolves from a previous successful initiative, the Maryland All-Payer Model. Launched in 2014, the All-Payer Model focused primarily on hospital costs, establishing fixed budgets for hospitals across Maryland. This earlier model successfully curbed hospital expenditure growth and improved the quality of hospital care. However, its scope was limited to hospitals. The TCOC Model expands on this foundation by encompassing all healthcare services, including primary care, specialist care, and hospital services. By broadening the scope, the TCOC Model aims to create a more holistic and sustainable approach to cost containment and quality improvement across the entire healthcare landscape. The goal is ambitious: to save Medicare over $1 billion by the end of 2023 while simultaneously enhancing the health of Maryland residents.
Maryland Total Cost of Care Model Coverage Area: Illustrating the statewide reach of the program in managing healthcare costs for Medicare beneficiaries.
To achieve its ambitious goals, the Maryland TCOC Model is structured around three core programs, each designed to address different facets of healthcare delivery and cost management:
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Hospital Payment Program: This program is the cornerstone of the TCOC model and builds directly on the All-Payer Model’s success. Instead of paying hospitals based on the volume of services they provide (fee-for-service), the Hospital Payment Program utilizes population-based payments. This means each hospital in Maryland receives a fixed budget to cover all hospital services for a defined population over a year. This fundamental shift incentivizes hospitals to prioritize value-based care. The financial incentive is clear: hospitals are motivated to reduce unnecessary hospitalizations, readmissions, and complications because they are responsible for managing costs within their set budget. Efficient and effective care becomes financially advantageous.
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Care Redesign Program (CRP): Recognizing that hospitals are not the only players in the healthcare system, the CRP is designed to foster collaboration and coordination between hospitals and non-hospital healthcare providers. Hospitals that achieve savings under their global budgets are empowered to reinvest a portion of those savings into care redesign initiatives. They can make incentive payments to partner organizations like primary care practices, specialist groups, and community health providers who collaborate with them on projects aimed at improving care quality and efficiency. This program ensures that cost savings are not simply cuts, but rather opportunities to improve the overall system. It encourages hospitals to work with their community partners to proactively manage patient health and prevent costly hospitalizations in the first place. Participation in CRP requires an agreement with both CMS and the State, ensuring accountability and alignment with the model’s objectives.
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Maryland Primary Care Program (MDPCP): Primary care is the foundation of a strong healthcare system, and the MDPCP focuses on strengthening this foundation. This program incentivizes primary care practices and Federally Qualified Health Centers (FQHCs) to deliver advanced primary care services. Participating practices receive an additional per-patient-per-month payment from CMS to support enhanced care management services. This funding enables practices to invest in resources like care coordinators, health coaches, and technology to better manage chronic conditions, provide preventive care, and address patients’ holistic needs. Furthermore, the MDPCP includes performance-based incentives that reward practices for reducing hospitalization rates and improving the quality of care for their Medicare patients. The program has evolved through different tracks, with the current Track 3 introducing a greater emphasis on total cost of care accountability for primary care practices, including both upside and downside financial risk based on their performance. This pushes primary care providers to be active participants in managing overall healthcare costs and improving patient outcomes. Care Transformation Organizations (CTOs) also play a role in the MDPCP, receiving payments to support practices in implementing care transformation initiatives.
Beyond these core programs, the Maryland TCOC Model incorporates innovative mechanisms like Outcomes-Based Credits. This framework allows Maryland to earn credits based on its performance in improving population health outcomes in key areas. The state selects specific population health measures, such as diabetes prevention, and sets targets for improvement. If Maryland achieves these targets, CMS provides financial credits, effectively reducing the state’s overall cost targets. This creates a direct link between investment in population health initiatives and financial benefits for the state, further incentivizing preventive care and community-level health improvements.
The Maryland TCOC Model is not a short-term experiment. Its initial performance period spans from January 1, 2019, to December 31, 2026. This long-term commitment allows for meaningful data collection, evaluation, and refinement of the program. As the model progresses, CMS and Maryland will assess its impact and determine the future direction, potentially leading to an expanded model, a new model iteration, or a transition back to traditional payment systems.
In conclusion, the Maryland Total Cost of Care Model is a pioneering example of a comprehensive cost of care program. By setting statewide spending limits, fostering collaboration across the healthcare spectrum, and incentivizing value-based care and population health improvements, it aims to transform healthcare delivery for Medicare beneficiaries in Maryland. Its focus on total cost of care, rather than just individual service costs, represents a significant step towards a more sustainable, efficient, and patient-centered healthcare system. As healthcare systems nationwide grapple with rising costs and the need for better quality, the lessons learned from the Maryland TCOC Model will be invaluable in shaping the future of healthcare in the United States.
