Changes In Hospital Utilization Three Years Into Maryland’s Global Budget Program For Rural Hospitals

Abstract

In a substantial shift in payment policy, the State of Maryland implemented a global budget program for acute care hospitals in 2010. Goals of the program include controlling hospital use and spending. Eight rural hospitals entered the program in 2010, while urban and suburban hospitals joined in 2014. Prior analyses, which focused on urban and suburban hospitals, did not find consistent evidence that Maryland's program had contributed to changes in hospital use after two years. However, these studies were limited by short follow-up periods, may have failed to isolate impacts of Maryland's payment change from other state trends, and had limited generalizability to rural settings. To understand the effects of Maryland's global budget program on rural hospitals, we compared changes in hospital use among Medicare beneficiaries served by affected rural hospitals versus an in-state control population from before to after 2010. By 2013-three years after the rural program began-there were no differential changes in acute hospital use or price-standardized hospital spending among beneficiaries served by the affected hospitals, versus the within-state control group. Our results suggest that among Medicare beneficiaries, global budgets in rural Maryland hospitals did not reduce hospital use or price-standardized spending as policy makers had anticipated.

The effects of global budget payments on hospital utilization in rural Maryland

“…That said, our results differ from those of Roberts et al in that we do find a significant decrease in outpatient visits. Their analyses use only Medicare fee‐for‐service data, while our analyses include all payers’ data.…”

Response to “The effects of global budget payments on hospital utilization in rural Maryland”

“…Using all‐payer hospital claims data and a difference‐in‐difference design, Done and Herring found no changes in admissions, readmissions, or emergency department (ED) visits associated with the program after 3 years, but did find a statistically significant 14.8% reduction in non‐ED outpatient utilization. By and large, these findings echo those of two prior evaluations of Maryland's program in rural hospitals, which found no change in readmissions among all payers after 18 months, and no changes in inpatient and ED use in a Medicare‐only population after 3 years . All three studies of the rural program utilized within‐state comparison groups—comprised of populations served by Maryland hospitals that had yet to receive global budgets—to isolate the effect of hospital budgets from other policy changes unique to Maryland's hospital payment system, providing a robust framework with which to examine the impact of this payment model in rural settings.…”

“…Done and Herring's analysis of rural hospitals and a CMS‐funded evaluation of the statewide program found reductions in outpatient hospital utilization and spending, which was concentrated among non‐ED services where hospitals likely had the greatest ability to reduce volume . However, studies by Roberts et al . concluded that, in both rural and urban contexts, reductions in outpatient utilization constituted a continuation of pre‐global budget trends rather than a post‐policy effect.…”

“…This provided a “loophole” by which hospitals could have met their budgets by shifting some outpatient services to off‐campus clinics . Done and Herring only assessed volume in on‐campus outpatient clinics, while Roberts et al . examined utilization in all outpatient facilities, including those not subject to a budget.…”

“…10 non-ED services where hospitals likely had the greatest ability to reduce volume. 10 However, studies by Roberts et al 5,8 concluded that, in both rural and urban contexts, reductions in outpatient utilization DEBATE-COMMENTARY constituted a continuation of pre-global budget trends rather than a post-policy effect. These different findings warrant further attention, because they highlight differences in how outpatient utilization is measured and elucidate one mechanism by which hospitals could have responded to the program's incentives.…”