Maryland’s Innovative Health Reforms Curb Costs While Improving Quality and Equity

Maryland leads the nation in statewide health reforms that combine accountability for health care costs and quality with hospital global budgets and investments in primary care. A new report from Mathematica finds the Maryland Total Cost of Care Model has reduced Medicare fee-for-service spending by 2.1 percent in its first four years. The model also substantially improved all six of the service use and related quality measures examined and narrowed disparities by race and place.

“Maryland’s unique approach to hospital payment and delivery reform has largely been favorable, not only for controlling costs but also for patients,” said Greg Peterson, project director and senior fellow at Mathematica. “State and federal policymakers will be watching to see the impacts of the latest efforts to bring primary care providers and specialists into the global budget model as they consider their own reforms.”

Under the Maryland Total Cost of Care Model, the state has committed to save $2 billion in Medicare spending over eight years and to meet goals for health care quality and population health. This model, which started in 2019, builds on the Maryland All-Payer Model (2014–2018). That model began all-payer hospital global budgets, which provided hospitals with a fixed amount of revenue for the upcoming year. The Maryland Total Cost of Care Model continues global budgets and expands state accountability beyond hospitals to incorporate total Medicare spending and population health goals. This includes new investments in primary care and incentives to a range of providers outside of hospitals.

Mathematica’s analysis found the model reduced hospital spending by 6.1 percent, hospital admissions by 16.2 percent, outpatient emergency department visits by 5.9 percent, and preventable admissions by 16.8 percent over the first four years. The model narrowed disparities between Black and White beneficiaries by 26 to 40 percent for unplanned readmissions, preventable admissions, and timely follow-up. Disparities between those living in areas with higher and lower Social Vulnerability Index scores narrowed by 19 to 31 percent. These effects represent the combined effects of all the changes made by the Centers for Medicare & Medicaid Services and Maryland since 2014. 

The model also sought to strengthen primary care through the Maryland Primary Care Program. The study found this program improved timely follow-up after exacerbation of chronic conditions and might have reduced admissions, but did not result in measurable savings. Many practices interviewed for the study reported the program advanced their long-term capacities to deliver comprehensive primary care, such as assessing health-related social needs.

Though the model generated $689 million in net savings to Medicare in the first three years, the effects on savings have gotten smaller over time. The study attributed the decline in savings to increases in non-hospital spending and insufficient hospital savings after 2019, in part because the model effectively prioritized stability of hospital funding during and after the COVID-19 pandemic over generating larger hospital savings. Similarly, since 2019, the model has maintained, but not significantly improved, service use and quality outcomes.

Maryland’s experience can help guide other states selected to participate in the Centers for Medicare & Medicaid Services’ new States Advancing All-Payer Health Equity Approaches and Development Model, or AHEAD Model. The first group of states will begin the planning phase of their models for all-payer hospital global budgets and primary care investments this summer.

The CMS Innovation Center contracted Mathematica to conduct the evaluation of the Maryland Total Cost of Care Model. Learn more about Mathematica's evaluation and read the full report and a Findings at a Glance summary.