FORBES | This is the third in a four-part series on the Health Affairs Council on Health Care Spending and Value’s newly released report, “A Road Map for Action.” Each piece details one of the four priority areas within the report, which provides recommendations on how the U.S. can take a more deliberate approach to moderating health care spending growth while maximizing value. Part three focuses on our recommendations on setting spending growth targets. Read parts one and two here and here.

The Health Affairs Council on Health Care Spending and Value looked to states to be laboratories for policy experimentation and innovation. One area the Council members spent time investigating, with presentations from experts over several meetings, is state efforts to set spending growth targets. Two states in particular have led in this area: Maryland and Massachusetts.

The Maryland Example

Maryland has a long-standing history of setting growth targets dating back to the 1970s when they established all-payer rate-setting for hospital payments. Enabled by a Medicare waiver, Maryland was exempted from certain federal health care regulations in exchange for ensuring that Medicare inpatient payments per admission grew at a rate below the national growth rate. The state set rates for hospital inpatient services, and all third parties paid the same rate. This effort evolved in 2014 to a global hospital budget that encompassed inpatient and outpatient hospital services. Under what became known as the Maryland All-Payer Model, the state created a prospective annual budget for each hospital based on historical spending trends, whereby annual revenues were subject to a fixed cap. Hospitals continued to receive fee-for-service payments, but had the ability to adjust their rates nominal amounts throughout the year to stay within budget.  

Read more at Forbes: https://www.forbes.com/sites/billfrist/2023/02/28/a-road-map-for-action-on-health-care-spending-and-value-part-iii–spending-growth-targets/?sh=1911a1843e35