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Impacts of Maryland's Global Budgets on Medicare and Commercial Spending and Utilization
Marisa Morrison1, Susan Haber1, Heather Beil2
1RTI International, Waltham, MA, USA.
Abstract:
In 2014, Maryland incorporated global budgets into its long-running all-payer rate-setting model for hospitals in order to improve health, increase health care quality, and reduce spending. We used difference-in-differences models to estimate changes in Medicare and commercial insurance utilization and spending in Maryland relative to a hospital-based comparison group. We found slower growth in Medicare hospital spending in Maryland than in the comparison group 4.5 years after model implementation and for commercial plan members after 4 years. We identified reductions in Maryland Medicare admissions but no changes for commercial plan members, although their inpatient spending declined. Relative declines in emergency department and other hospital outpatient spending in Maryland drove slower Medicare hospital spending growth, saving $796 million. Our findings suggest global budgets reduce hospital spending and utilization but aligning incentives between hospital and nonhospital providers may be necessary to further reduce utilization and total spending.
Insights
Maryland
Area of Science:
- Health economics
- Healthcare policy
- Health services research
Background:
- Maryland's all-payer rate-setting model was enhanced in 2014 with global budgets.
- The initiative aimed to improve health, enhance quality, and control costs.
Purpose of the Study:
- To evaluate the impact of Maryland's global budget model on healthcare utilization and spending.
- To compare changes in Medicare and commercial insurance spending in Maryland versus a control group.
Main Methods:
- Difference-in-differences models were employed.
- Analysis focused on changes in utilization and spending for Medicare and commercial insurance members.
- A hospital-based comparison group was used to isolate Maryland's model effects.
Main Results:
- Slower growth in Medicare hospital spending (4.5 years post-implementation) and commercial insurance spending (4 years post-implementation) observed in Maryland.
- Reductions in Medicare admissions but no change for commercial members; however, commercial inpatient spending declined.
- Relative declines in emergency department and outpatient spending contributed to $796 million in Medicare savings.
Conclusions:
- Global budgets in Maryland demonstrated a reduction in hospital spending and utilization.
- Aligning incentives between hospital and nonhospital providers may be crucial for further reducing overall healthcare utilization and spending.
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