An American Sickness: How Healthcare Became Big Business and How You Can Take It Back

by Elisabeth Rosenthal

Most notably, Maryland has long been a creative outlier in the way it pays hospitals. For more than thirty-five years, its independent Health Services Cost Review Commission has set bundled rates for hospitalization; all insurers, including Medicare, pay the same rate for the same procedure on every patient. (To undertake such experiments, states need only to get a waiver from the Centers for Medicare and Medicaid Services.) In 2014 Maryland’s experimentation got still bolder: the state assigned hospitals a “global payment” based on the number of patients in their system—similar to the capitated payments Boeing negotiated for its employees. They will have to use the money wisely and well to benefit patient health rather than profit by doing more visits and procedures. Patients and insurers will still see bills on the basis of the services provided to them, which will be used to determine co-pays. If the volume of procedures decreases, leading to less calculated revenue than the global payment benchmark, the hospital will get to keep a portion of the savings.