SB 42
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 42 (Chair, Finance Committee)(By Request - Departmental -
Health)
Finance Health and Government Operations
Health Services Cost Review Commission - Duties and Reports - Revisions
This departmental bill modifies the timing and required contents of the annual report of the
Health Services Cost Review Commission (HSCRC) to include specified information on
Maryland’s current “All-Payer Model Contract.” The bill (1) repeals provisions relating to
a separate report on the status of the All-Payer Model Contract; (2) repeals a requirement
that HSCRC publish specified information about acute care hospital charges; and
(3) makes conforming changes. HSCRC is authorized to assist, on the request of the
Secretary of Health, in the implementation of federally approved model programs
consistent with the All-Payer Model Contract. The bill takes effect July 1, 2020.
Fiscal Summary
State Effect: The bill is not anticipated to affect State operations or finances.
Local Effect: None.
Small Business Effect: The Maryland Department of Health has determined that this bill
has minimal or no impact on small business (attached). The Department of Legislative
Services concurs with this assessment. (The attached assessment does not reflect
amendments to the bill.)
Analysis
Bill Summary/Current Law: Under the bill, “All-Payer Model Contract” means the
payment model demonstration agreement authorized under § 1115A of the Social Security
Act, including any amendments to the agreement between the State and the federal
Center for Medicare and Medicaid Innovation (CMMI).
The bill requires that HSCRC submit its annual report by May 1 of each year (rather than
by October 1) and expands the required contents of the report so that the update on the
status of the State’s compliance with the provisions of the current All-Payer Model
Contract, includes:
 performance in limiting inpatient and outpatient hospital per capita cost growth for
all payers;
 annual progress toward achieving the State’s financial targets established by the
contract;
 a summary of the work conducted, recommendations made (including by
workgroups), and HSCRC action on activities related to the contract;
 actions approved by HSCRC to promote alternative methods of rate determination
and payment of an experimental nature;
 reports submitted to CMMI relating to the contract;
 any known adverse consequences in implementing the contract, as reported to
CMMI, that may negatively impact quality of or access to care, and the actions
HSCRC has taken to mitigate the consequences; and
 annual progress made in the development of public and private partnerships between
hospitals and other entities, including community-based physicians and
organizations and other post-acute care providers, to achieve the population health
goals established with CMMI.
Two other reporting provisions are repealed. First, the bill repeals the requirement that
HSCRC, in consultation with the Maryland Health Care Commission, annually publish
each acute care hospital’s severity-adjusted average charge per case for the 15 most
common inpatient diagnosis-related groups. Second, the bill repeals the requirement that
HSCRC, on or before May 1 each year, submit to the Governor, the Secretary of Health,
and the General Assembly, specified information on the status of the State’s compliance
with provisions of the All-Payer Model Contract as this information is now incorporated
into HSCRC’s annual report.
Under current law, if the federal Centers for Medicare and Medicaid Services (CMS) issues
a warning notice related to a “triggering event” as described in the All-Payer Model
Contract, HSCRC must provide written notification to the Governor, Secretary of Health,
SB 42/ Page 2
and the General Assembly within 15 days after the issuance of the notice and submit
specified updated information every three months thereafter. The bill repeals the
requirement to submit updated information.
Under current law, HSCRC must (1) permit a nonprofit facility to charge reasonable rates
that will permit the facility to provide, on a solvent basis, effective and efficient service
that is in the public interest and (2) permit a proprietary profit-making facility to charge
reasonable rates that permit the facility to provide effective and efficient services and
include enough allowance for and provide a fair return to the owner of the facility. The bill
requires HSCRC to carry out these requirements consistent with the All-Payer Model
Contract.
Background:
Maryland All-Payer Model Contract and Total Cost of Care Model
Effective January 1, 2014, Maryland entered into a contract with the federal government
to replace the State’s 36-year-old Medicare waiver with the Maryland All-Payer Model
Contract. Under the waiver, Maryland’s success was based solely on the cumulative rate
of growth in Medicare inpatient per admission costs. Under the model contract, however,
the State was not only required to limit inpatient, outpatient, and Medicare per beneficiary
hospital growth but also to shift hospital revenues to a population-based system and to
reduce both hospital readmissions and potentially preventable complications.
The All-Payer Model Contract also called for Maryland to submit a proposal for a new
model, no later than January 2017 that would limit, at a minimum, the Medicare beneficiary
total cost of care growth rate. In July 2018, Maryland and CMS agreed to the terms of the
new Total Cost of Care Model (TCOC). TCOC, which went into effect January 1, 2019, is
designed to (1) improve population health; (2) improve outcomes for individuals; and
(3) control growth of the total cost of care. To accomplish these goals, the model is
designed to move beyond hospitals to address Medicare patients’ care in the community.
Under the new model, the State will be required to address care delivery across the health
care system with the objective of improving health and quality of care, while limiting State
growth in Medicare spending to a level lower than the national rate.
HSCRC advises that statute currently reflects Maryland’s 2014 All-Payer Model Contract,
which expired in calendar 2018. The bill is intended to align statute with the new 10-year
TCOC Model State Agreement with the federal government and update HSCRC’s related
activities.
SB 42/ Page 3
 Additional Information
Prior Introductions: HB 1426 of 2019, a substantially similar bill, passed the House and
passed second reading in the Senate.
Designated Cross File: None.
Information Source(s): Maryland Department of Health; Maryland Insurance
Administration; Department of Legislative Services
Fiscal Note History: First Reader - January 13, 2020
rh/jc Third Reader - March 15, 2020
Revised - Amendment(s) - March 15, 2020
Analysis by: Amberly Holcomb Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 42/ Page 4
 ANALYSIS OF ECONOMIC IMPACT ON SMALL BUSINESSES
TITLE OF BILL: Health Services Cost Review
Commission – Statute -- Update
BILL NUMBER: SB 42
PREPARED BY: Webster Ye
PART A. ECONOMIC IMPACT RATING
This agency estimates that the proposed bill:
_X_ WILL HAVE MINIMAL OR NO ECONOMIC IMPACT ON MARYLAND SMALL
BUSINESS
OR
WILL HAVE MEANINGFUL ECONOMIC IMPACT ON MARYLAND SMALL
BUSINESSES
PART B. ECONOMIC IMPACT ANALYSIS
None
SB 42/ Page 5


Statutes affected:
Text - First - Health Services Cost Review Commission - Duties and Reports - Revisions: 19-225 Health General, 19-201 Insurance, 19-120 Insurance, 19-207 Insurance, 19-214 Insurance, 19-219 Insurance, 19-225 Insurance, 19-226 Insurance, 15-604 Insurance
Text - Third - Health Services Cost Review Commission - Duties and Reports - Revisions: 19-220 Health General, 19-201 Health General, 19-120 Health General, 19-207 Health General, 19-214 Health General, 19-219 Health General, 19-220 Health General, 19-225 Health General, 19-226 Health General, 15-604 Health General