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Maryland’s innovative approach to hospital care – and implications for work comp

Maryland has long been a leader in intelligent approaches to managing the cost of health care.  The state has had one of the few effective Certificate of Need programs limiting the medical arms race and employs an all-payer fee schedule for facility care.

In partnership with CMS, Maryland will be shifting payment to hospitals from fee-for-service to an outcomes-based reimbursement scheme.

According to Health Affairs;

a Maryland hospital is no longer paid on a per-admission basis but instead receives a global payment based on the number of Maryland beneficiaries cared for by the hospital. Patients and payers are still charged on the basis of services provided, but overall growth of per capita hospital payments by all payers is limited to 3.58 percent by diagnosis related groups, and the Medicare-specific growth rate will be held to 0.5 percent less than the annual national average. [emphasis added]

Couple quick observations;

a) this doesn’t address physician reimbursement, and as docs are the ones who are ordering the care, that should be addressed.  However, as more and more docs are employed by facilities, that may not be as much of an issue as it was historically.  Also, the authors of th HA piece have other recommendations re addressing this issue that make sense.

b) reimbursement for care delivered to patients not covered by the new scheme will likely remain fee-for-service.  This creates a potential conflict that may hamper development of more effective treatment protocols and pathways. More troubling, different financial terms may incent providers to think differently about care based on who’s paying.  While it may be unlikely docs will change their treatment patterns based on what they get paid, the folks that do the billing will almost certainly take payor status into consideration.

What does this mean for workers’ comp?

  • It’s not just about Maryland; while this is more systemic and organized, we can learn a lot by observing what happens in the Old Line State.
  • a fundamental shift in medical care is occurring, one that will have a dramatic impact on how patients are evaluated and monitored and incentivized to pursue health, what care is delivered via what method (telemedicine, care extenders, wearable technology).  This will dramatically affect workers’ comp – patients will be healthier but the bifurcated payment system will cause headaches.
  • Some providers will seek to gain as much revenue as possible from non-core payers such as worker’s comp.  Revenue maximization efforts will become more sophisticated, targeted, and effective.

One thought on “Maryland’s innovative approach to hospital care – and implications for work comp”

  1. Joe, just to clarify here– you are saying that most Certificate of Need programs are ineffective, but Maryland’s is an exception?

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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