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.

Keywords: Health Economics; Health Reform; Hospitals; payment.

Exhibit 2. Trends in acute hospital utilization among Medicare beneficiaries in the intervention and control populations, 2007-2013

These graphs show unadjusted annual rates of acute hospital utilization for the intervention and control populations. The error bars denote 95% confidence intervals and were calculated using standard errors clustered at the ZIP code level. Because Maryland’s global budget program for rural hospitals was implemented in July 2010, we omitted 2010 from our regression analyses. Separate trends for hospital stays and emergency department visits that did not lead to an admission and are plotted in Appendix Exhibit 8. ^a Hospital stays include inpatient admissions and observation stays. See Section 3 of the Appendix and the notes to Exhibit 4 for additional information about the measures’ construction. ^b Emergency department visits that did not lead to an inpatient admission. ^c Annual proportion of patients’ inpatient admissions, observation stays, and emergency department visits followed within 30 days by a second inpatient, emergency department, or observation visit. Assessed annually among patients with ≥1 inpatient admission, emergency department visit, or observation stay during the study year.

Exhibit 3. Trends in price-standardized acute and outpatient hospital spending among Medicare beneficiaries in the intervention and control populations, 2007-2013

These graphs show unadjusted annual price-standardized spending for acute and outpatient hospital services in the intervention and control populations. The error bars denote 95% confidence intervals and were calculated using standard errors clustered at the ZIP code level. Because Maryland’s global budget program for rural hospitals was implemented in July 2010, we omitted 2010 from our regression analyses. Separate trends for price-standardized spending associated with hospital stays and emergency department visits that did not lead to an admission are plotted in Appendix Exhibit 8. ^a Defined as the sum of price-standardized spending associated with hospital stays (inpatient admissions and observation-unit stays) and non-admitted emergency department visits. Because hospital prices were subject to change under Maryland’s global budget program, we price-standardized spending by applying mean national prices (measured annually at the level of Diagnosis-Related Groups for inpatient claims, revenue codes for observation-unit claims, and procedure codes for non-admitted emergency department claims) to claims for the corresponding categories of acute hospital use. Mean prices were calculated annually using Medicare claims from hospitals outside of Maryland. See Section 3 of the Appendix for additional information about the measures’ construction. ^b We price-standardized spending for hospital outpatient department services, excluding emergency department visits and observation stays, by applying national average procedure code-level prices to hospital outpatient department claims. Standardized prices were assessed annually from national Medicare claims, excluding hospitals in Maryland. Source: Authors’ analyses of fee-for-service Medicare claims for the periods 2007–2009 and 2011–2013.