Maryland Total Cost of Care Model

The Centers for Medicare & Medicaid Services (CMS) and the state of Maryland are partnering to test the Maryland Total Cost of Care (TCOC) Model, which sets a per capita limit on Medicare total cost of care in Maryland. The TCOC Model is the first Center for Medicare and Medicaid Innovation (Innovation Center) model to hold a state fully at risk for the total cost of care for Medicare beneficiaries. The TCOC Model builds upon the Innovation Center’s Maryland All-Payer Model, which had set a limit on per capita hospital expenditures in the State. The Maryland TCOC Model sets the state of Maryland on course to save Medicare over $1 billion by the end of 2023, and the Model creates new opportunities for a range of non-hospital health care providers to participate in this test to limit Medicare spending across an entire state.

Highlights

• In most states, the cost of the same medical procedure can vary widely from hospital to hospital and by payer, and there is little to no coordination between hospital-based health care services and primary care services; these gaps in care can negatively impact both the patient experience and their health outcomes.
• The Maryland Total Cost of Care Model (MD TCOC) builds on lessons from the Maryland All-Payer Model to establish pricing of medical services provided by hospitals, primary care doctors and specialists across all payers. In the unique arrangement between Maryland and CMS, the state is fully accountable for the cost and quality of care for each patient with Medicare.
• The model promotes greater coordination between health care providers and patient-centered care. Because hospitals and health care providers have a more stable, predictable source of revenue, they can focus more attention and funds on offering higher quality care through investment in health promotion and disease prevention interventions.
• The model aims to improve the overall health of Marylanders, reduce avoidable hospital readmissions and emergency department visits, and improve the patient experience in health care settings.

Background

The Maryland All-Payer Model, launched in 2014, established global budgets for certain Maryland hospitals to reduce Medicare hospital expenditures and improve quality of care for beneficiaries. Global budgets provide hospitals with a fixed amount of revenue for the upcoming year. A global budget encourages hospitals to eliminate unnecessary hospitalizations, among other benefits. Under the All-Payer Model, Maryland achieved significant savings for Medicare and improved quality. However, the Maryland All-Payer Model historically focused solely on the hospital setting, constraining the State’s ability to sustain its rate of Medicare savings and quality improvements. The Maryland TCOC Model builds on the success of the Maryland All-Payer Model by creating greater incentives for health care providers to coordinate with each other and provide patient-centered care, and by committing the State to a sustainable growth rate in per capita total cost of care spending for Medicare beneficiaries.

Model Details

The TCOC Model sets Maryland on course to achieve fixed amounts of savings to Medicare per capita total cost of care during each model year between 2019 and 2023. The Model’s financial targets are structured to obtain a total of over $1 billion in Medicare total cost of care savings by the fifth performance year of the Model.

The TCOC Model includes three programs:

1. The Hospital Payment Program tests population-based payments for Maryland hospitals. In Maryland’s Hospital Payment Program, each hospital receives a population-based payment amount to cover all hospital services provided during the course of the year. The Hospital Payment Program creates a financial incentive for hospitals to provide value-based care and to reduce the number of unnecessary hospitalizations, including readmissions.
2. The Care Redesign Program (CRP) allows hospitals to make incentive payments to nonhospital health care providers who partner and collaborate with the hospital and perform care redesign activities aimed at improving quality of care. A participating hospital may only make incentive payments if it has attained certain savings under its fixed global budget and the total amount of incentive payment made cannot exceed such savings. Thus, the CRP and distribution of incentive payments under the program does not increase overall Medicare expenditures. In order to participate in the CRP, a hospital must enter into a CRP participation agreement with CMS and the State.
3. The Maryland Primary Care Program (MDPCP) is structured to incentivize primary care practices and FQHCs in Maryland to offer advanced primary care services to their patients. Participating practices and FQHCs will receive an additional per beneficiary per month payment directly from CMS intended to cover care management services. In Tracks 1 and 2 of the MDPCP, CMS also offers a performance-based incentive payment to health care providers intended to incentivize them to reduce the hospitalization rate and improve the quality of care for their attributed Medicare beneficiaries, among other quality and utilization-focused improvements. CMS will retire Track 1 on December 31, 2023 and transition participants into either Track 2 or Track 3 by January 1, 2024. A new track, Track 3, will begin January 1, 2023, for primary care practices. Track 3 increases the total cost of care accountability of participating primary care practices by introducing upside and downside risk based on practice performance on cost and quality metrics. Track 3 is largely modeled after the Primary Care First (PCF) Model. For additional information regarding MDPCP Track 3 please reference the Request for Applications link below. Care Transformation Organizations (CTOs) partnering with participating practices and FQHCs also receive payment from CMS to deploy interdisciplinary care management teams to assist practices and FQHCs in meeting care transformation requirements. CTOs may partner with practices and FQHCs participating in any MDPCP Track.

In Fall 2019, CMS solicited proposals from third-party payers operating in Maryland who were interested in aligning with the principles of advanced primary care in MDPCP. CMS selected and has entered into the MOU with CareFirst as an aligned payer beginning January 2020.

The State will select its own measures and targets within each of these population health areas for CMS approval. The Model includes an Outcomes-Based Credits framework, which enables CMS to grant the State credits for the State’s performance on the CMS-approved population health measures and targets, structured as a discount to the State’s actual TCOC used in calculating the State’s performance against the Model’s savings targets. The amount of these Outcomes-Based Credits will be based on the return on investment (ROI) that Medicare would expect from the State’s improved performance on the CMS-approved population health measures and targets. In 2019, the state selected its first Outcomes-Based Credit which will focus on the prevention of diabetes. Remaining Outcomes-Based Credits including proposed measures, targets, and methodologies will be finalized in 2021.

The performance period of the TCOC Model will began on January 1, 2019 and conclude on December 31, 2026. During the final three Model Years, CMS and the State will negotiate either an expanded model test, a new model test, or a return to the national prospective payment systems.
For additional questions about the Maryland Total Cost of Care Model, please email MarylandModel@cms.hhs.gov.