Health care reform: Caring about costs, too

Expanding health coverage won't be sustainable unless Maryland can reduce expenses by emphasizing primary care

Change must also come to outpatient specialty care. As more patients face larger deductibles and co-payments, it is reasonable to expect that physician practices provide more understandable information about their cost and quality. To support better outcomes at lower costs, specialists should wherever possible be paid for a package of services (such as all care related to a knee replacement) and not individual services (such as each office visit, surgery, and re-operation on the path to a knee replacement). Working with physicians, patients, businesses and others, the Maryland Health Care Commission will explore setting standards for transparency and identify areas for creating packages of services. Maryland's Health Quality and Cost Council is planning to work with experts in the private sector to identify medical interventions that provide an especially high value to Marylanders — and suggest ways to design insurance plans that enhance access to these interventions.

Maryland's unique hospital rate-setting system has taken some important steps toward paying for value in health care. A number of rural hospitals have opted out of traditional payment-by-admission, instead accepting a set budget in advance. This novel payment structure, a "global budget," creates significant incentives to invest in community care and prevention. Many other hospitals in Maryland receive enhanced funding for certain admissions — but no reimbursement if the patient returns with 30 days. These hospitals are developing a much stronger relationship with primary care clinicians, long-term care facilities, community mental health and substance abuse treatment providers, home health agencies, and others to help patients manage their illnesses. An important next step is for these payment innovations to generate significant savings for those paying for care.

There are also opportunities to better align hospital efforts with those of community physicians and with medical homes. As spending on hospital care slows down, hospital systems will naturally expand their efforts in lower cost-settings — further supporting better outcomes at lower cost. Many of our state's hospital systems are well into this transformation. Through a modernization of the rate-setting system, Maryland can generate even more momentum and provide a model for others to follow.

Maryland's strategic initiatives will not just address costs; they will also improve health. With aligned incentives, health care organizations will be able to make the most of our nation-leading health information exchange, which allows critical medical records to be accessible at multiple points of care. We will see more partnerships with schools, local health departments, employers, and others to keep Marylanders active, tobacco-free, eating healthier, and well-immunized. We will see greater collaboration to support the care and independence of individuals with mental illness and substance use disorders. We will also see broad participation in creative approaches such as Health Enterprise Zones, which are expected to employ community health workers and others to address key causes of unacceptable health disparities.

Rebalancing health care is as important as expanding coverage. Both paths lead to the same destination of a healthier Maryland.

Dr. Joshua M. Sharfstein is secretary of the Maryland Department of Health and Mental Hygiene. His email is [e-mail]. Dr. Laura Herrera is the department's chief medical officer. Charles Milligan is the department's deputy secretary for health care financing at the Maryland Department of Health and Mental Hygiene.