The Impact of Maryland's Global Budget Payment Reform on Emergency Department Admission Rates in a Single Health System

Background In 2014, the state of Maryland (MD) moved away from fee-for-service payments and into a global budget revenue (GBR) structure where hospitals have a fixed revenue target, independent of patient volume or services provided. We assess the effects of GBR adoption on emergency department (ED) admission decisions among adult encounters. Methods We used hospital medical record and billing data from adult ED encounters from January 1, 2011, through December 31, 2015, with four MD hospitals and two District of Columbia (DC) hospitals within the same health system. We performed difference-in-differences analysis and calculated the effects of the GBR model on ED admission rates (inpatient and observation) using hospital fixed-effect regression adjusted for patient, hospital, and community factors. We also examined changes in the distribution of acuity among ED admissions with GBR adoption. Results The study sample included 1,492,953 ED encounters with a mean ED admission rate of 20.5%. The ED admission rate difference pre- and post-GBR was -1.14% (95% confidence interval [CI] = -0.89 to -1.40) for MD hospitals and -0.04% (95% CI = -0.24 to 0.32) for DC hospitals with a difference-in-differences result of -1.10% (95% CI = -1.34 to -0.86). This change was attributable to a -3.3% (95% CI = -3.54 to -3.08) decline in inpatient admissions and 2.7% (95% CI = 2.53 to 2.79) increase in observation admissions. Declines in admissions were observed primarily among mild-to-moderate severity of illness encounters with a low risk of mortality. Conclusions Within the same health system, implementation of global budgeting in MD hospitals was associated with a decline in ED admissions-particularly lower-acuity admissions-compared to DC hospitals that remained under fee-for-service payments.