Maryland Total Cost Of Care Model Reduced Medicare Spending & Decreased Health Disparities

Maryland’s Medicare Total Cost of Care (TCOC) model has reduced Medicare spending in the state and has decreased health-related racial and socioeconomic disparities. The state launched the model in 2019 after receiving approval from the Centers for Medicare & Medicaid Services (CMS). During the model’s first four years (2019 through 2022), the state implemented accountability and incentives for provider organizations, and implemented the Maryland Primary Care Program.

The model aims to save $2 billion in Medicare spending over eight years and meet goals for health care quality and population health. During the first three years, after accounting for non-claims payments, the TCOC generated $689 million in net savings to Medicare, which reduced total Medicare spending by 2.1%. Additional savings outcomes were as follows:

• Hospital spending declined by 6.1%.
• Non-hospital spending increased by 3.1%.
• Hospital admissions declined by 16.2%.
• Outpatient emergency department visits declined by 5.9%.
• Preventable admissions declined by 16.8%.

For unplanned readmissions, preventable admissions, and follow-up care, disparities between Black and White beneficiaries declined by a range of 26% to 40%. Disparities between beneficiaries living in areas with high and low Social Vulnerability Index scores declined by a range of 19% to 31%.

Under the TCOC, the use of observation stays, rather than hospital admission, caused increases for all beneficiaries. The use of observation stays increased more for Black beneficiaries and those living in high vulnerability areas. Up to 40% of the reduction in disparities for admission-related measures were due to the increased use of observation stays.

The Maryland Primary Care Program (MDPCP) provides advanced payments to practices to increase their role in managing chronic diseases and preventing unnecessary hospital use. Currently 508 primary care practices are participating; they serve about half of Medicare beneficiaries in the state. Through the MDPCP, the percentage of beneficiaries who received care management services increased from 1% in 2019 to 14% in 2022. The care management services increased beneficiary contacts with the participating practices, and were estimated to have increased timely follow-up by 1.9% and contribute to a 2.5% decrease in all-cause admissions. The MDPCP had no effect on total spending.

The Maryland TCOC model builds on Maryland’s previous All Payer Model that operated from 2014 through 2018, and featured all-payer hospital global budgets. The model continues global budgets, and introduced a significant investment in primary care through the Maryland Primary Care Program to engage a wider range of provider organizations in care transformation initiatives.

• The all-payer global budgets are an alternative payment model for hospitals that pay a fixed amount per year. The payment is not linked to hospital volume, and is intended to serve as an incentive to prevent unnecessary hospital use. Currently 52 hospitals are participating.
• Episode-based payment programs are intended to improve quality of care and reduce the total cost of care for episodes. Currently 42 hospitals are participating, reaching about one-third of Medicare discharges.  

These outcomes were reported in “Maryland Total Cost of Care Model: Evaluation of the First Four Years (2019-2022),” an issue brief by the Centers for Medicare & Medicaid Services on April 8, 2024.

For more information, contact:

• Office of Communications, U.S. Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244; 202-690-6145; Website: https://www.cms.gov/
• Megan Renfrew, Associate Director of External Affairs, Maryland Health Services Cost Review Commission, 4160 Patterson Avenue, Baltimore, Maryland 21215; 410-764-2605; Fax: 410-358-6217 Email: megan.renfrew1@maryland.gov; Website: https://hscrc.maryland.gov/Pages/tcocmodel.aspx