Maryland Total Cost of Care Model

On March 12, 2025, CMS announced the intention to end the Maryland Total Cost of Care Model as of December 31, 2025. Subject to discussions with State authorities, the model transitioned to the AHEAD model and began its implementation period in January 2026.

Read more CMS Innovation Center Announces Model Portfolio Changes to Better Protect Taxpayers and Help Americans Live Healthier Lives

The Centers for Medicare & Medicaid Services (CMS) and the state of Maryland partnered to test the Maryland Total Cost of Care (TCOC) Model set a per capita limit on Medicare total cost of care in Maryland. The TCOC Model was the first Center for Medicare and Medicaid Innovation (Innovation Center) model to hold a state fully accountable for risk for the total cost of care for Medicare beneficiaries. The TCOC Model built upon the Innovation Center’s Maryland All-Payer Model, which had set a limit on per capita hospital expenditures in the State. The Maryland TCOC Model set the state of Maryland on course to save Medicare over $1 billion by the end of 2023, and the Model created new opportunities for a range of non-hospital health care providers to participate in the test to limit Medicare spending across an entire state.

Highlights

  • In most states, the cost of the same medical procedure can vary widely from hospital to hospital and by payer, and there is little to no coordination between hospital-based health care services and primary care services; these gaps in care can negatively impact both the patient experience and their health outcomes.
  • The Maryland Total Cost of Care Model (MD TCOC) built on lessons from the Maryland All-Payer Model to establish pricing of medical services provided by hospitals, primary care doctors and specialists across all payers. In the unique arrangement between Maryland and CMS, the state was fully accountable for the cost and quality of care for each patient with Medicare.
  • The model promoted greater coordination between health care providers and patient-centered care. Because hospitals and health care providers have a more stable, predictable source of revenue, they can focus more attention and funds on offering higher quality care through investment in health promotion and disease prevention interventions.
  • The model aimed to improve the overall health of Marylanders, reduce avoidable hospital readmissions and emergency department visits, and improve the patient experience in health care settings.

Background

The Maryland All-Payer Model, launched in 2014, established global budgets for certain Maryland hospitals to reduce Medicare hospital expenditures and improve quality of care for beneficiaries.

Global budgets provide hospitals with a fixed amount of revenue for the upcoming year, and encourage hospitals to eliminate unnecessary hospitalizations, among other benefits. Under the All-Payer Model, Maryland achieved significant savings for Medicare and improved quality. However, the Maryland All-Payer Model historically focused solely on the hospital setting, constraining the State’s ability to sustain its rate of Medicare savings and quality improvements. The Maryland TCOC Model built on the success of the Maryland All-Payer Model by creating greater incentives for health care providers to coordinate with each other and provide patient-centered care, and by committing the State to a sustainable growth rate in per capita total cost of care spending for Medicare beneficiaries.

Maryland Total Cost of Care Model Map

Model Details

The TCOC Model set Maryland on course to achieve fixed amounts of savings to Medicare per capita total cost of care during each model year between 2019 and 2023. The Model’s financial targets were structured to obtain a total of over $1 billion in Medicare total cost of care savings by the fifth performance year of the Model.

The TCOC Model included three programs:

  1. The Hospital Payment Program tested population-based payments for Maryland hospitals. In Maryland’s Hospital Payment Program, each hospital received a population-based payment amount to cover all hospital services provided during the year. The Hospital Payment Program created a financial incentive for hospitals to provide value-based care and to reduce the number of unnecessary hospitalizations, including readmissions.
  2. The Care Redesign Program (CRP) allowed hospitals to make incentive payments to nonhospital health care providers who partnered and collaborated with the hospital and performed care redesign activities aimed at improving quality of care. A participating hospital may have only made incentive payments if it had attained certain savings under its fixed global budget and the total amount of incentive payment made could not exceed such savings. Thus, the CRP and distribution of incentive payments under the program did not increase overall Medicare expenditures. To participate in the CRP, a hospital must have entered into a CRP participation agreement with CMS and the State.
  3. The Maryland Primary Care Program (MDPCP) was structured to incentivize primary care practices and FQHCs in Maryland to offer advanced primary care services to their patients. Participating practices and FQHCs received an additional per beneficiary per month payment directly from CMS intended to cover care management services. In Tracks 1 and 2 of the MDPCP, CMS also offered a performance-based incentive payment to health care providers intended to incentivize them to reduce the hospitalization rate and improve the quality of care for their attributed Medicare beneficiaries, among other quality and utilization-focused improvements. CMS retired Track 1 on December 31, 2023, and transitioned participants into either Track 2 or Track 3 by January 1, 2024.  A new track, Track 3, began on January 1, 2023, for primary care practices. Track 3 increased the total cost of care accountability of participating primary care practices by introducing upside and downside risk based on practice performance on cost and quality metrics. Track 3 was largely modeled after the Primary Care First (PCF) Model. For additional information regarding MDPCP Track 3 please reference the Request for Applications link below. Care Transformation Organizations (CTOs) partnering with participating practices and FQHCs also received payment from CMS to deploy interdisciplinary care management teams to assist practices and FQHCs in meeting care transformation requirements. CTOs could have partnered with practices and FQHCs participating in any MDPCP Track.

In Fall 2019, CMS solicited proposals from third-party payers operating in Maryland who were interested in aligning with the principles of advanced primary care in MDPCP. CMS selected CareFirst as an aligned payer and entered into an MOU  beginning in January 2020.

The State selected its own measures and targets within each of these population health areas for CMS approval. The Model included an Outcomes-Based Credits framework, which enabled CMS to grant the State credits for the State’s performance on the CMS-approved population health measures and targets, structured as a discount to the State’s actual TCOC used in calculating the State’s performance against the Model’s savings targets. The amount of these Outcomes-Based Credits was based on the return on investment (ROI) that Medicare would expect from the State’s improved performance on the CMS-approved population health measures and targets. In 2019, the state selected its first Outcomes-Based Credit which focused on the prevention of diabetes. Remaining Outcomes-Based Credits including proposed measures, targets, and methodologies were finalized in 2021.

The performance period of the TCOC Model began on January 1, 2019 and concluded on December 31, 2026. During the final three Model Years, CMS and the State negotiated either an expanded model test, a new model test, or a return to the national prospective payment systems.

Methodology

Evaluations

Latest Evaluation Reports

Prior Evaluation Reports

Additional Information


 

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