Assessment of Costs and Care Quality Associated With Major Surgical Procedures After Implementation of Maryland’s Capitated Budget Model

IMPORTANCE: In 2014, Maryland implemented the all-payer model, a distinct hospital funding policy that applied caps on annual hospital expenditures and mandated reductions in avoidable complications. Expansion of this model to other states is currently being considered; therefore, it is important to evaluate whether Maryland’s all-payer model is achieving the desired goals among surgical patients, who are an at-risk population for most potentially preventable complications. OBJECTIVE: To examine the association between the implementation of Maryland’s all-payer model and the incidence of avoidable complications and resource use among adult surgical patients. DESIGN, SETTING, AND PARTICIPANTS: This comparative effectiveness study used hospital discharge records from the Healthcare Cost and Utilization Project state inpatient databases to conduct a difference-in-differences analysis comparing the incidence of avoidable complications and the intensity of health resource use before and after implementation of the all-payer model in Maryland. The analytical sample included 2 983 411 adult patients who received coronary artery bypass grafting (CABG), carotid endarterectomy (CEA), spinal fusion, hip or knee arthroplasty, hysterectomy, or cesarean delivery between January 1, 2008, and December 31, 2016, at acute care hospitals in Maryland (intervention state) and New York, New Jersey, and Rhode Island (control states). Data analysis was conducted from July 2019 to July 2021. EXPOSURES: All-payer model. MAIN OUTCOMES AND MEASURES: Complications (infectious, cardiovascular, respiratory, kidney, coagulation, and wound) and health resource use (ie, hospital charges). RESULTS: Of 2 983 411 total patients in the analytical sample, 525 262 patients were from Maryland and 2 458 149 were from control states. Across Maryland and the control states, there were statistically significant but not clinically relevant differences in the preintervention period with regard to patient age (mean [SD], 49.7 [19.0] years vs 48.9 [19.3] years, respectively; P < .001), sex (22.7% male vs 21.4% male; P < .001), and race (0.3% vs 0.4% American Indian, 2.8% vs 4.5% Asian or Pacific Islander, 25.9% vs 12.7% Black, 4.7% vs 11.9% Hispanic, and 63.5% vs 63.4% White; P < .001). After implementation of the all-payer model in Maryland, significantly lower rates of avoidable complications were found among patients who underwent CABG (−11.3%; 95% CI, −13.8% to −8.7%; P < .001), CEA (−1.6%; 95% CI, −2.9% to −0.3%; P = .02), hip arthroplasty (−0.8%; 95% CI, −1.0% to −0.5%; P < .001), knee arthroplasty (−0.4%; 95% CI, −0.7% to −0.1%; P = .01), and cesarean delivery (−1.0%; 95% CI, −1.3% to −0.7%; P < .001). In addition, there were significantly lower increases in index hospital costs in Maryland among patients who underwent CABG (−$6236; 95% CI, −$7320 to −$5151; P < .001), CEA (−$730; 95% CI, −$1367 to −$94; P = .03), spinal fusion (−$3253; 95% CI, −$3879 to −$2627; P < .001), hip arthroplasty (−$328; 95% CI, −$634 to −$21; P = .04), knee arthroplasty (−$415; 95% CI, −$643 to −$187; P < .001), cesarean delivery (−$300; 95% CI, −$380 to −$220; P < .001), and hysterectomy (−$745; 95% CI, −$974 to −$517; P < .001). Significant changes in patient mix consistent with a younger population (eg, a shift toward private/commercial insurance for orthopedic procedures, such as spinal fusion [4.3%; 95% CI, 3.4%-5.2%; P < .001] and knee arthroplasty [1.6%; 95% CI, 1.0%-2.3%; P < .001]) and a lower comorbidity burden across surgical procedures (eg, CABG: −0.7% [95% CI, −0.1% to −0.5%; P < .001]; hip arthroplasty: −3.0% [95% CI, −3.6% to −2.3%; P < .001]) were also observed. CONCLUSIONS AND RELEVANCE: In this study, patients who underwent common surgical procedures had significantly fewer avoidable complications and lower hospital costs, as measured against the rate of increase throughout the study, after implementation of the all-payer model in Maryland. These findings may be associated with changes in the patient mix.