Changes in Health Care Use Associated with the Introduction of Hospital Global Budgets in Maryland

Background: In 2014, the State of Maryland placed the majority of its hospitals under all-payer global budgets for inpatient, hospital outpatient, and emergency department care. Maryland’s payment reform has garnered considerable attention from policymakers because of its unique approach to reorienting hospitals from a traditional fee-for-service payment model to a model that rewards hospitals for managing population health—including the provision of care outside of hospital settings. Despite reports from CMS and Maryland of the program’s early success in controlling hospital spending, the program's impacts on hospital and primary care use remain largely unknown. Under the structure of Maryland’s program, hospitals can lower spending by reducing hospital utilization and enhancing primary care—as policymakers had intended—or by reducing their prices to meet their budgets.

Design, Setting, and Participants: Using a quasi-experimental difference-in-differences design, we compared changes in hospital and primary care use among fee-for-service Medicare beneficiaries in Maryland vs. 27 matched out-of-state control counties from before (2009-13) to after (2014-15) Maryland's introduction of hospital global budgets. We conducted our analyses under two sets of assumptions. First, we assumed pre-intervention differences between Maryland and the control counties would have remained constant past 2014 had Maryland not implemented global budgets (the standard identifying assumption of difference-in-difference analyses). Second, we assumed differences in pre-intervention trends would have continued without the state’s payment change (differential trend assumption). In supplementary analyses, we compared our main difference-in-differences estimates to those generated from a series of placebo tests in which we iteratively re-assigned states outside of Maryland to the intervention group; using estimates generated in these tests, we assessed whether changes in Maryland consistently exceeded changes detected in unaffected (placebo) states.

Results: Assuming parallel trends, we estimated a differential change in Maryland of -0.47 annual hospital stays/100 beneficiaries (95% CI: -1.65,0.72; P=0.43) from the pre-intervention period (2009-13) to 2015, but assuming differential trends, we estimated a differential change in Maryland of -1.24 stays/100 beneficiaries (95% CI: -2.46,-0.02; P=0.047). Assuming parallel trends, we found a significant increase in primary care visits (+10.6 annual visits/100 beneficiaries; 4.6,16.6; P=0.001), but assuming differential trends, we found no change (-0.8 visits/100 beneficiaries; 95% CI: -10.6,9.0; P=0.87). Comparing estimates with both trend assumptions, we found no consistent changes in emergency department visits, return hospital stays, HOPD use, or post-hospitalization primary care visits associated with Maryland’s program. Differential changes in Maryland were within the distribution of changes detected in supplementary placebo analyses, suggesting that hospital and primary care utilization did not change differentially in Maryland from changes that we would have expected to see in the absence global budgets.

Conclusions and Relevance: We did not find consistent evidence that Maryland’s hospital global budget program was associated with anticipated reductions in hospital use or increases in primary care visits among fee-for-service Medicare beneficiaries after two years. Given the challenge of changing practice patterns over the short-term, evaluations over longer periods and in younger populations—for whom care outside the hospital may be more appropriate—should be pursued.