Maryland changes unique hospital rate system

ANNAPOLIS, Md. - The state of Maryland is announcing a new initiative with the federal government to modernize the state's unique rate-setting system for hospital services.

The agreement will be announced Friday by state and federal officials.

Under the agreement, Maryland will move away from reimbursing hospitals on a fee-for-service basis to an emphasis on prevention and quality of care.

The changes were made after Maryland nearly missed requirements to keep a valuable and one-of-a-kind Medicare waiver.

Maryland operates the nation's only all-payer hospital rate regulation system under which all third parties pay the same for hospital services. Over the years, Maryland has kept the rate of hospital cost increases lower than other states, and the federal government has made larger Medicare payments to the state to offset the costs of uncompensated care.

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