Changes in Hospital Utilization Three Years into Maryland’s Global Budget Program for Rural Hospitals

In a substantial shift in payment policy, the State of Maryland implemented a global budget program for acute care hospitals in 2010. Goals of the program include controlling hospital use and spending. Eight rural hospitals entered the program in 2010, while urban and suburban hospitals joined in 2014. Prior analyses, which focused on urban and suburban hospitals, did not find consistent evidence that Maryland’s program had contributed to changes in hospital use after two years. However, these studies were limited by short follow-up periods, may have failed to isolate impacts of Maryland’s payment change from other state trends, and had limited generalizability to rural settings. To understand the effects of Maryland’s global budget program on rural hospitals, we compared changes in hospital use among Medicare beneficiaries served by affected rural hospitals versus an in-state control population from before to after 2010. By 2013—three years after the rural program began—there were no differential changes in acute hospital use or price-standardized hospital spending among beneficiaries served by the affected hospitals, versus the within-state control group. Our results suggest that among Medicare beneficiaries, global budgets in rural Maryland hospitals did not reduce hospital use or price-standardized spending as policy makers had anticipated.