With an estimated 21% to 39% of health care costs associated with wasteful spending, states have begun looking for new ways to stabilize the finances of rural hospitals. CareFirst has taken a leadership role in helping Maryland address these financial and other challenges faced by rural communities and continues to innovate to ensure that all Marylanders have access to high-quality, affordable health care.
In 2010, Maryland chose to replace the traditional fee-for-service model in rural hospitals with a model using global budgets. The model was developed by the Maryland Health Services Cost Review Commission where each hospital participating in the program had a fixed revenue budget – a Total Patient Revenue (TPR) approach. This model creates financial incentives to manage resources efficiently and effectively. By reducing length of stay, ancillary testing, unnecessary admissions and readmissions, and unnecessary procedures and tests, the hospital retained its full fixed revenue budget.
Following the completion of the TPR demonstration period, Maryland moved all non-rural hospitals in the state to a Global Budget Revenue model. While not identical to the TPR, it follows a similar approach in using a global budget to increase efficiency and slow cost growth. The model has resulted in reduced readmissions and complications and improved quality of care.
In addition to its leadership role in Maryland’s rural global budget payment models, CareFirst remains a champion of rural health access in the state and creates programs to best serve those in need of care. The insurance provider was among the first plans to support reimbursement for services delivered via telehealth, which is especially relevant in rural areas. Today, it connects rural hospitals with Johns Hopkins Health System and other academic medical centers to ensure patients have access to the best practitioners across the state, regardless of geography.
CareFirst has also created programs to address behavioral health needs in rural areas around the state. Emergency departments are flooded with behavioral health issues that should be treated in appropriate behavioral health settings, not necessarily hospitals.
Similarly, emergency rooms are overcrowded throughout Maryland, and CareFirst has helped the state develop programs that prioritize primary care. In rural areas access to primary care is particularly important. To address primary care needs, CareFirst helps fund nursing education support programs, where nurses and nurse educators can connect to expand access to care in rural parts of the state.
By seeking to maximize access to care and encourage efficiency, Maryland, along with CareFirst and other insurance providers, has created a scalable, sustainable model that could be beneficial to other states facing similar challenges.