The impact of global budget payment reform on systemic overuse in Maryland

Background: Medical overuse is a leading contributor to the high cost of the US health care system and is a definitive misuse of resources. Elimination of overuse could improve health care efficiency. In 2014, the State of Maryland placed the majority of its hospitals under an all-payer, annual, global budget for inpatient and outpatient hospital services. This program aims to control hospital use and spending. Objective: To assess whether the Maryland global budget program was associated with a reduction in the broad overuse of health care services. Methods: We conducted a retrospective analysis of deidentified claims for 18-64 year old adults from the IBM MarketScan (R) Commercial Claims and Encounters Database. We matched 2 Maryland Metropolitan Statistical Areas (MSAs) to 6 out-of-state comparison MSAs. In a difference-in-differences analysis, we compared changes in systemic overuse in Maryland vs the comparison MSAs before (2011-2013) and after implementation (2014-2015) of the global budget program. Systemic overuse was measured using a semiannual Johns Hopkins Overuse Index. Results: Global budgets were not associated with a reduction in systemic overuse. Over the first 1.5 years of the program, we estimated a nonsignificant differential change of 0.002 points (95%CI, 0.372 to 0.369; p = 0.993) relative to the comparison group. This result was robust to multiple model assumptions and sensitivity analyses. Conclusions: We did not find evidence that Maryland hospitals met their revenue targets by reducing systemic overuse. Global budgets alone may be too blunt of an instrument to selectively reduce low-value care.