What Other States Could Learn from Maryland’s Model to Curb Healthcare Costs

Maryland transformed its hospital payment system in 2014 and has curbed cost growth and improved patient outcomes. With Washington encouraging state-level innovation, what can other states learn from Maryland’s success?

Since the 1970s, Maryland has had a sweet deal with healthcare regulators in Washington, DC: Keep the state’s inpatient cost growth below national trends, and the federal government will subsidize payments for Medicare and Medicaid services in the state, waiving a common payment rule.

But after the passage of the Affordable Care Act in 2010 and a push by Medicare to save more money, nothing was certain. And despite regulated rates for services, Maryland’s costs were accelerating faster than national averages.

That’s what Maryland healthcare officials were facing as the calendar turned to 2012. Maryland’s Health Services Cost Review Commission (HSCRC), which regulates the state’s all-payer healthcare system, ran the numbers on when costs would rise above the national average, putting the Medicare waiver in jeopardy. The answer: in about three months.