News & Analysis

Total Cost of Care: Lessons from the Maryland Model

Robert Jones

Dollars and healthcare items scattered on a light blue background. Photo by Anastasiia Gudantova.|Dr. Rachel Mandel, expert on Maryland's Total Cost of Care model

As we've written previously, CMS is currently accepting state applications for a new total cost of care model that represents a sweeping vision for healthcare transformation. This new AHEAD model is based largely on a 30-year experiment in Maryland, which we explained comprehensively in our "Guide to the Maryland Model and the Path AHEAD."

With hospitals and physicians wondering how their business might change under the AHEAD model, we turned to Dr. Rachel Mandel, the co-author of our Guide, to ask for her insights. Dr. Mandel is a senior clinical advisor with Ascendient and a longtime leader in Maryland healthcare.

RJ: What is your experience with the Maryland Medicare Waiver models, now called Total Cost of Care?

RM: After obtaining my master’s in health administration in 2013 and following 18 years of clinical practice in the community, I became a full-time physician executive as the Assistant VP of Medical Affairs in a local health system in Maryland. In 2018 I took on the role of VP of Medical Affairs for a year. During these years, the healthcare system functioned under Maryland’s All-Payer Model, which led to the Total Cost of Care model implementation in January 2019. The All-Payer Model, as a foundation for the Total Cost of Care Model, touched every aspect of the hospital/medical/patient relationship. Since 2018 I have worked as a consultant to community-based organizations on health literacy, healthcare disparities, and health equity issues as well as population health initiatives.

RJ: I think many hospital executives would be worried about adjusting to global budgets, as required under the AHEAD model. What was your experience with that as a health system leader? Any challenges of note?

RM: The  global budget concept will resonate differently for different organizations depending on their size, geography, medical staff, past experiences, and patient population. For some, a predictable budget will give them the flexibility to invest in innovative and more community-based interventions. For others, it will feel like a restriction that limits not only the care provided, but the capacity of the services provided.

In my opinion, the greatest challenge with the All-Payer model as implemented in Maryland between 2014 and 2018 was the lack of alignment with services outside of the hospital setting. Community based clinicians and service providers had little incentive to support the inpatient strategies. This created a division between the inpatient and outpatient world that contributed to exacerbation of fragmented care. The Total Cost of Care Model (AHEAD) as well as the current Maryland model, takes a step in the right direction by reinforcing continuity of care, navigation of patients and the focus on prevention as well as  improved outcomes in a patient-based, patient-centered model.

Another potential pain point in the all-payer model is that there can be a  very delicate balance  between adequate payments under this model and the cost of providing care. The formula used to determine budgets should endeavor to take the local cost of living into account in a very granular way. For example, some healthcare systems may be close enough to urban areas to have a higher cost of living but may be considered rural and therefore are reimbursed at lower “rural” rates by insurance companies and CMS. A thin operating margin makes these details very important.

RJ: You’ve been a physician executive for many years in a state where many – but not all – physicians chose to participate in a well-established model. As new states sign up for AHEAD, what advice would you give to physician practices deciding whether they want to participate?

Dr. Rachel Mandel, expert on Maryland's Total Cost of Care model

RM: It is coming. Each clinician needs to honestly review their patient population’s needs as it relates to prevention and community-based interventions. The primary care provider programs as well as other value-based incentive programs could not only give the clinicians an opportunity to be more financially stable, but the flexibility to implement new programs and strategies that will improve outcomes for their patients.

If AHEAD is clearly explained, and if the participation burden is not too heavy, then clinicians will pursue any strategy that will help them achieve better outcomes. Physician practices will need to have the technological capacity to participate, which means they will need to know their patient data, have the capability to navigate and communicate with the patients, and track outcomes. Practices need to be innovative and not be afraid to embrace technology as an adjunct to conventional practice. Having some of these systems in place will make participation with AHEAD a more valuable and productive endeavor.

RJ: You’ve also done a lot of work in population health, and that’s one area where Maryland didn’t see the kind of improvement it was hoping for, right? As new states implement their own total cost of care models, what can they do to achieve better results in population health?

RM: To achieve improvements in health on a population level, it is necessary to get out into the community. Not all populations have the same concerns and not all populations receive information and embrace interventions in the same way. Studies have shown that approximately 5% of the population accounts for nearly half of all health spending. If that is the case, then you need to identify that population in your community and practice and assess their needs and how to provide those services.

In certain communities the senior population may be growing and expanding. People 55 years old and over account for half of the total health care spend.  In this circumstance you might want to focus on programs that assist seniors with aging at home safely and preventing falls and disease progression. The Johns Hopkins School of Nursing founded their CAPABLE (Community Aging in Place-Advancing Better Living for Elders) program to address functionality and health in their senior population. This evidence-based program sends an RN, occupational therapist, and handy worker into the home over several months to address the senior's needs. The return on investment by this intervention is at least 6x, if not more. These interventions decrease both inpatient and outpatient costs, and increases patient independence, safety, mental health and health outcomes.

There may be a temptation to funnel the AHEAD money into previously established hospital-based programs. Avoid that temptation. A successful total cost of care model strategy could be to shift from the traditional acute medical problem response model to prevention and continuity of care. This requires the engagement of outpatient and community-based partners in novel ways.

For example, can you develop a program where hospital care managers coordinate a warm hand off to bilingual community health workers to support patients in a diabetes self-management program? Can you engage doulas, community health workers and midwives in partnership with managed care organizations to provide education and support for pregnant people with healthcare access challenges due to language barriers and other social drivers? Can you launch a transportation reimbursement program in your community that provides ride share opportunities to rural patients so that they can keep scheduled appointments? These types of initiatives can impact outcomes on a population level, given the right focus.

RJ: What about equity – the “E” at the center of the AHEAD acronym? Was that an important part of the Maryland model, and did the model help to close gaps in inequitable health outcomes?

RM: The Maryland model website states that equity is a facet of the model given that “in our hospital payment system, everyone pays the same, sparing Marylanders from cost-shifting and the two-tiered care” that burdens patients and worsens outcomes elsewhere. The Maryland Model promotes equitable access and outcomes through rate setting, management of funding and reimbursements. Although this is true, it doesn’t specifically address other social drivers of healthcare that impact disparities to include language barriers, geographic barriers, and bias.

Equitable outcomes can be achieved by understanding the needs of different populations. The AHEAD model may provide healthcare systems with more flexibility as to how to address disparities in their communities and thereby reduce disparate outcomes.

The approach can be specific to “at risk” populations, or universal in nature. A focused program may identify a population that has a higher rate of diabetes due to their diet. This population would require a tailored intervention designed to support them in a culturally competent manner. Family Connects would be a good example of a universal approach to population health. It is an evidence-based, RN home visiting program for newborns that has the ability to decrease morbidity and mortality in all populations, including those that may have historically worse outcomes.

RJ: Finally, only five states at most will be accepted for the AHEAD model, but even this tentative national rollout shows that CMS is serious about key elements like global budgets, all-payer participation, and total cost of care. For healthcare leaders in states that don’t immediately participate in AHEAD, what advice do you have in preparing for changes that look inevitable?

RM: Community relationships and partnerships will be key to the successful implementation of total cost of care strategies. Healthcare systems should assess their current connectivity to the community and look at other potential opportunities for collaboration. Demographic data collection and analytic capability will be critical, as well as a robust social need screening process.

Partnerships with nonprofits and other first line service organizations will create alliances that can tackle social drivers and advocate for policy change. There are entities in the community who are already working collaboratively or with collective impact initiatives that address transportation barriers, food insecurity, senior services, educational barriers, housing challenges, and many more. Healthcare systems must form relationships with these partners in the community. Forward-thinking and innovative healthcare systems should immediately start to embrace this evolution and encourage the engagement of critical community resources as they focus on data-driven outcomes for their patients.

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