In 2014, Maryland started to regulate hospital spending after nearly four decades of setting hospital prices for all payers, public and private.
“The state started setting hospital rates for private payers in 1974 and three years later won permission from the federal government to also set rates under Medicare and Medicaid. Maryland policymakers say that move has erased the cost-shifting that most U.S. hospitals rely on to make up for low rates from public payers,” Modern Healthcare reported.
“Although the all-payer model allowed Maryland to significantly reduce its costs per admission, growth in the volume of admissions undermined its broader success in holding down spending.”
“So in 2014, Maryland agreed to set a budget for each hospital for all patients. The budget includes payment from every insurer. The state also promised that the budget would not grow faster than the state economy each year. A commission tracks hospital bills, hospital prices and patient volume. It also makes complex adjustments to account for very sick patients, transfers between hospitals, flu outbreaks and other factors that can increase or decrease demand for hospital services,” the publication reported.
But do other states have the political will to make such dramatic changes?