O'Malley's Audacious, Successful Health Plan
from Vox: http://www.vox.com/2015/11/24/9794622/martin-omalley-is-finally-talking-about-his-best-idea-health-care
____Martin O'Malley is finally getting national attention for his health care ideas. On Tuesday, he unveiled an extensive health care proposal that includes a grab bag of reforms. More price transparency. New protections on prescription drug costs. Funds to fight everything from lead poisoning to hepatitis C.
But make no mistake: Global budgets are the centerpiece.
How global budgets work, and why Maryland pursued them
As Sarah Kliff and Lena Sun detailed in the Washington Post last year, global budgets take typical health care economics and flip them on their head. Traditionally, hospitals get paid based on the number of procedures they perform, which is known as the fee-for-service model. But global budgets set a cap on spending: Hospitals are assigned a predetermined amount of revenue and are required to meet quality goals to get paid.
Essentially, hospitals are incented to deliver the best care — not the most care.
Different hospitals and insurers had experimented with global budget pilots, but until Maryland there had never been a statewide global-budget project before.
So why did Maryland pursue it? It's a complicated story, but it has to do with Maryland's decades of experience of innovating around health care.
In the 1970s, the state did something remarkable: It set a standard price for every hospital procedure. Typically, health insurers negotiate in secret with hospitals, each trying to get the best deal. But in Maryland, a state agency helps set the price for everything from an appendectomy to a hip replacement. And Medicare, Medicaid, and private insurers will all pay that set fee.
Health policy experts argue that Maryland's price-setting model was instrumental in controlling the state's health care costs. But it started running into some challenges in 2012, as costs were starting to rise quickly again.
Maryland has to get federal approval to run this type of program. And in 2014, officials announced a new cost-control program, one that committed the state to reducing Medicare hospital spending by $330 million over five years (alongside hitting certain quality metrics, too).
Within six months, every hospital in the state voluntarily signed on.
"This is without any question the boldest proposal in the United States in the last half century to grab the problem of cost growth by the horns," Princeton economist Uwe Reinhardt said at the time.
And what's even more audacious: It appears that Maryland is succeeding.
Results published in the New England Journal of Medicine earlier this month concluded that the demonstration already saved Medicare $116 million in 2014, more than one-third of the savings that Maryland had pledged by 2019. Per capita hospital costs actually shrank by more than 1 percent in the state.
A regularly updated dashboard shows off Maryland hospitals' progress against their goals.
In his new plan, O'Malley says he'll "create an option for states to adopt hospital global budgeting," although it's worth noting that some states already are moving forward.
For instance, Vermont is piloting an all-payer project...
read more: http://www.vox.com/2015/11/24/9794622/martin-omalley-is-finally-talking-about-his-best-idea-health-care
related:
O'Malley health care plan (text)
http://www.democraticunderground.com/1251845079
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