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Maryland’s all payer hospital model’s extension is approved by Feds

Maryland’s unique “all payer” health care hospital model has been authorized by the Federal health officials through 2019 as the state tries to get approval on applying a similar plan for outpatient service providers for doctors and skilled nurses as well as rehabilitation centers.

The program regulates the amount a hospital can charge as an exchange for the federal government covering a larger share of the Medicare costs covered in othered states which is a strong step Maryland is able to take in fulfilling a federal requirement for lowering the annual Medicare costs by $330 million.

Monday the U.S Centers for Medicare and Medicaid Services (CMS) and Gov. Larry Hogan [R] had announced this extension of the program which will ensure the states health system won’t plummet into chaos when it’s current contract with the federal government will expire in the end of 2018.

Hogan said in an interview that his administration had been close to a deal which included an outpatient services program until the resignation of Tom Price (U.S. Health and Human Services Secretary) last fall.

The state was in need of an extension for it’s existing contract during the time leadership at the Department of Health and Human Services was in flux. Seeking help form Vice President Mike Pence, and the acting health and human services secretary Eric Hargan, Seema Verma CMS Administrator, and Alex Azar.

“Hogan said he personally had a lengthy discussion with all o them as they were about to blow up the entire Maryland health system if they didn’t go in and rescue it.”

The chief executive of the Maryland State Medical Society (Gene Ransom) said this continuation was a nice win for Maryland and questioned if the extension was ever in doubt.

The federal government allowed Maryland to regulate the amount hospitals were paid for services since the 1970’s. The “all payer” system has a goal in which it ensures private insurance, Medicare, and Medicaid will pay about the same prices.

For all other states reimbursements below, actual costs of services are provided by Medicare. Hospitals will then pass on the uncovered costs to the private insurers as well as the uninsured which then increases the cost for everyone except Medicare beneficiaries.

The arrangement Maryland has is largely beneficial to the state and provides about $1.7 billion more in funds for Medicare than it would had otherwise received.

The federal government reauthorized this deal through 2018 five years ago requiring Maryland to lower costs $330 million annually. Most of this by incentivizing a better outcome as well as penalizing hospitals for readmitting patients to quickly.