Improving Value

Global Budgets

Global budgets are spending targets for a large swath of healthcare spending. In the United States, these are relatively uncommon but both Maryland and Massachusetts have incorporated the idea into their state approaches to health spending.  

Global budgets are rarely used in isolation- instead they complement other policies like ACO payment policy or all-payer hospital rate setting.

The success of a global budget is likely to very tied into how achievable the target is and the supports in place to help providers meet the target.

In theory, global budgets provide clarity as to goals and the help a state work through an exercise of where they want state spending on healthcare to be in the near future.

Providers around the country will be watching how Maryland and Massachusetts hospitals respond to the global budgets, particularly how they address care coordination for patients with complex medical needs, where a lot of the potential for quality improvement and cost savings lies.