In January 2023, the state of Maryland launched the first-ever government-based emergency medicine alternative payment model. An alternative payment model is a different way of paying for physician services from the usual model: see a patient, send a bill, and get paid, also known as fee-for-service. In the program, Medicare patients who visit a participating emergency department (ED) with specific diagnoses will have their 14-day total cost of care measured across all settings by the state regulatory agency, also known as the Health Services Cost Review Commission (HSCRC). The ED diagnoses chosen for the program include conditions like chest pain, syncope, pneumonia, and others where there are differences between physicians in which patients get admitted, i.e., admissions that seem at times subjective.¹ In total, the program includes 535 ED diagnoses. Broad categories of diagnoses in the 2023 model are listed on the related chart. If Medicare patients have any of those diagnosis when they enter a participating ED, they are included in the cost calculations.² More than 600 emergency department (ED) clinicians in the state are participating in the program.

Here’s How It Works

Average 14-day Medicare costs of care by diagnoses are measured at the hospital-level and calculated by the HSCRC. This includes the ED visit, hospital admission (should it occur), and any post-acute costs. These costs are compared to 2019 costs, adjusted for inflation, which is also calculated by the HSCRC. If costs are reduced more than 3 percent relative to the baseline, participating physician groups will receive a proportion of the savings. As an example, let’s say 14-day costs for chest pain–one of the included diagnoses—for a physician group were $3,000 on average in 2019. In 2023, that number falls to $2,500 based on ED protocols to increase outpatient management and safely avoid hospital admission. The physician group gets a certain proportion of the $500 savings for each chest pain patient—either 20, 50 percent, or 80 percent. That proportion is determined by the state regulatory agency based on how efficient the group was in 2019, compared to other groups in the state. So, let’s say the group sees 500 chest pain patients in 2023, saves $500 on each, gets 50 percent of the savings back. That means the group gets a payment of $125,000 from the state. Importantly, there are no penalties if costs rise in this model; that is, if the cost goes from $3,000 in 2019 to $3,500 in 2023.