Maryland's all-payer rate setting system

Do You Know About Maryland’s All-Payer Rate Setting System?

Maryland has a unique model where all insurers—Medicare, Medicaid, and private payers—pay the same hospital rates.

What does that mean?

1. No Payer Contract Negotiation.
By standardizing rates, Maryland eliminates contract negotiations. The Health Services Cost Review Commission (HSCRC) sets rates.

2. Global Budgeting Shifts Focus to Value
Since 2014, the state has adopted “global budgets” for hospitals, capping how much each hospital can charge in total. This encourages hospitals to reduce unnecessary admissions and invest in prevention rather than profit from high volumes of care.

3. Notable Results

• Slowed Cost Growth: Per-admission hospital spending in Maryland has grown at a slower pace than the national average, saving hundreds of millions of dollars.

• Better Care Coordination: With global budgets, many hospitals are putting resources toward preventive care to keep patients healthy and out of the hospital.

• Reduced Readmissions: Recent data shows a drop in readmissions rates, an important indicator of quality.

4. Challenges & Considerations
Critics say that the single rate-setting body holds too much power and that uniform rates don’t inherently reward high-quality care without additional incentives. Plus, while Maryland’s model has curbed hospital spending, it doesn’t address rising prescription drug costs or physician fees.

What’s your experience with Maryland’s model?