Attention Maryland Providers: Are You Availing Yourselves of Regulatory Flexibilities under the TCOC Model?

An April 2024 independent[1] report (“Report”) analyzed the results of the first four years following implementation of the Maryland Total Cost of Care Model (the “TCOC Model”), finding that between 2019 and 2022 (the “TCOC Measuring Period”), the TCOC Model reduced Medicare spending, hospital admissions, and health disparities. CMS also distributed a summary of the Report’s findings.

What is the TCOC Model?

The TCOC Model is one of CMS’s Innovation Models, intended to reduce spending, improve patient care, and achieve healthier communities. Specifically, it builds upon the Maryland all-payer model, which limits hospital Medicare spending per person. The TCOC Model expands upon the all-payer model, imposing a Medicare per capita limit on a broader range of providers, including primary care practices. The TCOC Model invites non-hospital providers to participate in the program and collaborate with hospital providers to offer value-based care. There are three components to the TCOC Model:

1. Hospital Payment Program: Under the Hospital Payment Program, each year, hospitals receive a population-based payment, set at an amount intended to cover all hospital services they provide to patients. Hospitals are incentivized to provide value-based care under this program to reduce their costs, including unnecessary hospitalizations.
2. Care Redesign Program (CRP): The CRP enables hospitals to make incentive payments to its non-hospital provider partners. These incentive payments are limited to savings under the Hospital Payment Program and therefore do not increase Medicare costs globally. Participation in the CRP requires that a hospital enter into a participation agreement with CMS and the State of Maryland.
3. Maryland Primary Care Program (MDPCP): Under the MDPCP, primary care practices and federally qualified health centers (FQHCs) receive a per beneficiary per month payment directly from CMS to cover patient care services. Additional performance-based cost and quality incentives are offered under the MDPCP as well. Additionally, Care Transformation Organizations (CTOs) partnering with MDPCP-participating practices and FQHCs are eligible for payments from CMS to assist their practice and FQHC partners in meeting their objectives under the MDPCP. CTOs can involve a broad array of entities with an interdisciplinary care management team providing care coordination services to Medicare beneficiaries, including Accountable Care Organizations, managed service organizations, Clinically Integrated Networks, hospitals, and other practice support organizations. Care coordination services include nutrition counseling, pharmacy services, behavioral health, health education, and other services.

The TCOC Model took effect as of January 1, 2019, and will be renewed, modified, or terminated on December 31, 2026.

What were the results of the TCOC Measuring Period?

The Report determined that the TCOC Model reduced Medicare spending, concluding that there were $689 million in Medicare net savings in the TCOC’s first three years.[2] The Report found that disparities in unplanned readmissions, preventable admissions, and timely follow-up were reduced between (i) Black and White beneficiaries by a range of 26% to 40%, and (ii) those living in high versus low Social Vulnerability Index areas by a range of 19% to 31%. Over two-thirds of these reductions occurred by the end of the hospital-only all-payer model period, suggesting that the reductions in disparities are in large part due to hospitals’ quality-adjusted global budgets under the programs. The Report also found an increased use of observation stays rather than admissions, especially in higher vulnerability populations and Black beneficiaries, which helped reduce disparities in admissions.

Under the MDPCP, the Report found a 2.5% decrease in admissions, which may have resulted from providers’ efforts to call patients after hospitalizations and emergency department visits and a significant (13%) increase in patients receiving care management services from 1% of beneficiaries to 14% of beneficiaries. Also, high-risk patients sought care from MDPCP entities at a greater rate and practices themselves reported a greater ability to deliver long-term comprehensive care to their patients. The MDPCP cost CMS $96 million annually but did not generate statistically significant cost savings.

Benefits of the TCOC Model

The TCOC Model offers Maryland providers an opportunity to participate in a novel value-based care model that results in healthier populations, reduced health disparities, and financial incentives to reduce Medicare spending. Providers participating in the TCOC Model may avail themselves of flexibilities offered under CMS’s fraud and abuse waivers, resulting in greater flexibility to Maryland providers in structuring their contractual, ownership, and financial relationships. While these relationships would need to satisfy the waiver requirements outlined by CMS, they may offer providers with relief that their value-based arrangements do not implicate the Anti-Kickback Statute or the Stark Law.

Stay tuned – other states may start positioning themselves to replicate the TCOC Model. CMS is encouraging other states to adopt similar global budgets to minimize avoidable health costs by investing in primary care and reducing unnecessary and prolonged stays in hospitals or rehabilitation facilities.

If you have any questions about the TCOC Model or its impact on your organization, please contact a member of the Sheppard Mullin Healthcare Team.

FOOTNOTES

[1] While characterized as “independent,” the consulting firm that developed the Report was contracted by CMS.

[2] In order to benefit from the fraud and abuse waivers, providers must demonstrate savings under the TCOC Model.