The impact of global budget payment reform on systemic overuse in Maryland

Medical overuse is a leading contributor to the high cost of the US health care system and is a definitive misuse of resources. Elimination of overuse could improve health care efficiency. In 2014, the State of Maryland placed the majority of its hospitals under an all-payer, annual, global budget for inpatient and outpatient hospital services. This program aims to control hospital use and spending.

To assess whether the Maryland global budget program was associated with a reduction in the broad overuse of health care services.

We conducted a retrospective analysis of deidentified claims for 18-64 year old adults from the IBM MarketScan® Commercial Claims and Encounters Database. We matched 2 Maryland Metropolitan Statistical Areas (MSAs) to 6 out-of-state comparison MSAs. In a difference-in-differences analysis, we compared changes in systemic overuse in Maryland vs the comparison MSAs before (2011-2013) and after implementation (2014-2015) of the global budget program. Systemic overuse was measured using a semiannual Johns Hopkins Overuse Index.

Global budgets were not associated with a reduction in systemic overuse. Over the first 1.5 years of the program, we estimated a nonsignificant differential change of -0.002 points (95%CI, -0.372 to 0.369; p = 0.993) relative to the comparison group. This result was robust to multiple model assumptions and sensitivity analyses.

We did not find evidence that Maryland hospitals met their revenue targets by reducing systemic overuse. Global budgets alone may be too blunt of an instrument to selectively reduce low-value care.