As of January 2014, the payment model in Maryland began migrating from a traditional fee-for-service model to expenditures per capita for all payers. For the next five years, cost growth is capped at 3.58 percent for inpatient and outpatient care. For Medicare, Maryland will limit the growth to 0.5 percent less than the national growth rate per year. This is estimated to save Medicare $330 million in that five-year period. The base rate for individual hospitals is their total revenue from 2013, with a growth-rate ceiling of 3.58 percent. Hospitals can choose from two models of transition. The first is to transition to a global budget model from the beginning. The second involves a variable cost factor that reduces the incentive for hospitals to make money by increasing volume. If volume goes up, hospitals keep a fraction of the increase, but they also retain some of the lost revenue if volume goes down.

The goal of the change, besides the obvious cost savings, is to encourage hospitals to move to a population-based approach of providing care. Hospitals will move away from rewards for inpatient volume to a system that emphasizes prevention, quality, and more care coordination. Keeping patients out of the hospital and working with medical homes and community resources could lead to better outcomes and a healthier population. If successful, this could lead to control of the total cost of health care for Maryland.

Dr. Jaquis is system chief of emergency medicine at LifeBridge Health and chief of emergency medicine and attending physician at Sinai Hospital, both in Baltimore. He is a member of the ACEP Board of Directors.