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Maryland Submits Application to Modernize All-Payer System

Press Release

Location: Baltimore, MD

Governor Martin O'Malley announced that Maryland today submitted to the Centers for Medicare & Medicaid Services a revised proposal for an unprecedented and innovative model to improve health care outcomes, enhance patient experiences, and control costs across the State.

The proposal, developed and revised over the last year with input from a broad range of stakeholders, will modernize the State's all-payer rate setting system for hospital services. The state is proposing a fundamental shift away from fee-for-service reimbursement towards health care delivery that emphasizes prevention, quality care, and value.

"Our goal is a health care system that enhances patient care, improves health outcomes, and lowers costs," Governor O'Malley said. "As we see around the country, the fee-for-service status quo leads to ever-increasing costs with often mediocre outcomes. In Maryland, we're making better choices. The innovative approach we're submitting today will produce better results at lower costs by incentivizing quality of care, not quantity of care."

Working to expand health care over the past seven years, I have had the opportunity to see first-hand the tremendous impact that quality, affordable healthcare can have on families and businesses," Lt. Governor Brown said. "I want to commend all of the parties who have worked on the application -- by strengthening Maryland's all-payer system, we can make Maryland a leader in the delivery of quality, affordable health care.

The proposed plan includes:

A five year model focused on improving health care quality, delivery of services, and the affordability of health care.

A new approach to Maryland's all-payer hospital waiver, which moves from the current statutory approach to all-payer hospital payment, which is based on Medicare payment per admission, to a new model that focuses on overall hospital expenditures.

Strong incentives for better outcomes at lower cost, by shifting away from fee-for-service reimbursement to models that reward hospitals when care is high quality and fewer admissions are needed.

Improved quality, including substantial reductions in hospital readmissions and potentially preventable complications.

Controls on costs, including an annual limit on the total increase in revenue based on the 10-year average growth in the state's economy and at least $330 million in savings over five years to Medicare. The Health Services Cost Review Commission will be working with payers, providers, and many others to develop innovative approaches to create savings.

The proposal has the support of key stakeholders, including the Maryland Hospital Association, the state's largest insurer CareFirst, and other medical and consumer organizations.

Federal elected officials endorsing the proposal include Senator Barbara A. Mikulski, Senator Benjamin L. Cardin, Congressman Steny Hoyer, Congressman Chris Van Hollen, Congressman Elijah E. Cummings, Congressman John P. Sarbanes, Congressman Donna F. Edwards, Congressman C.A. Dutch Ruppersberger, and Congressman John Delaney. These elected officials sent a letter to Secretary of Health and Human Services Kathleen Sebelius "to express our strong support of Maryland's proposal…to modernize the state's all-payer system of hospital payment." The letter further stated, "If Maryland is successful in meeting the ambitious goals set out in the application, Marylanders will clearly benefit from improved health, better quality care, and lower costs. The federal government will also benefit, not only through savings to Medicare and other federal payers, but also by providing an opportunity to evaluate innovative approaches to reform that may be applied elsewhere."

State Senate President Thomas V. Mike Miller, Jr., and Speaker of the House Michael E. Busch also endorsed the proposal.

"This proposal builds on a foundation of innovation in hospital payment to improve the health and well-being of Marylanders," Speaker Busch said.

"Our shared goal is a health care system that provides better value -- quality health care services at lower cost. Modernizing the all-payer system gives us the opportunity to reach that goal," Senate President Miller said.

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