With some of the most costly Medicare patients in the nation, Maryland has decided to carry out an experiment in alternative medical payments. Instead of using the typical “fee-for-service” model, Maryland hospitals will now use “global budgeting.”
Global budgeting allows hospitals to focus on disease prevention and management, making it more flexible compared to fee-for-service, which limits reimbursement to the treatment of illnesses or disease.
Global budgets have already been implemented in Massachusetts, where its Blue Cross and Blue Shield health plan showed both significant savings and gains in quality. Early results from Maryland’s switch have been published in the New England Journal of Medicine and shown that Medicare has saved $116 million in the past year, with an improvement in general quality of care.
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