Maryland Hospitals’ Experimental New Payment System Is Saving Money

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In 2014, Maryland hospitals upended how they get paid, and so far it’s been saving money and improving services.

Up until last year, Medicare and Medicaid paid¬†hospitals in Maryland one service or procedure at a time. That’s probably how you would expect it to work. But this straightforward payment plan gave hospitals an incentive to perform unnecessary services and lengthen hospital stays.

That’s why, in an effort to reduce health care costs, hospitals across Maryland agreed to a fixed yearly payment from Medicare and Medicaid. The hospitals also agreed to lower the state’s high hospital readmission rates and reduce preventable health problems.

A recent reported suggests that it has been at least moderately successful. The experiment reduced Medicare’s per capita hospital costs by $116 million in 2014. Preventable health problems declined by 26 percent, NPR reports.

Now, if we can just get our patient-experience ratings out of the basement.


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  1. There is also no incentive for innovation and pushing the limits on treatment. No doubt there is fluff that needs to be cut out but this throws out the baby with the bath water IMO

  2. Doctors, or Physicians as they prefer to be called,are greed driven, end of debate. Anytime a reform is introduced, Pharma and the Doctors circumvent it. Greedy liars with doctors and hospitals more interested in volume and profits than results.

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