State officials and hospitals outline AHEAD implementation, warn of near-term trade-offs

State and health system officials told a joint Senate Finance and House Health committee that Maryland has secured a state agreement to participate in the federal AHEAD model and is moving immediately to implementation, while hospital leaders warned that the new terms raise near-term financial and capacity trade-offs.

The governor’s office, the Maryland Department of Health and the Health Services Cost Review Commission described the AHEAD agreement as a 10‑year performance period signed Nov. 12, 2025, that preserves hospital global budgets while adding new all‑payer total cost‑of‑care targets and Medicare fee‑for‑service accountability. Michael Huber, deputy chief of staff to Gov. Moore, said the administration negotiated full hospital participation and expects the model to be used to expand primary care, improve population health and stabilize access for vulnerable patients.

Why it matters: State negotiators said the model sets measurable statewide targets and creates a multi‑agency regulatory working group to translate those targets into policy. John Crom, executive director of the HSCRC, explained that Medicare global budget rules will be set by the federal Innovation Center (CMMI) starting in the model’s later years and that Maryland must now set an all‑payer total cost growth target and primary care investment goals.

Hospital leaders told legislators the new AHEAD terms raise the scale of savings Maryland hospitals must generate while reducing the revenue hospitals receive from public payers. The HSCRC and Department of Health described projected Medicare savings of roughly $460 million and an estimated total public‑payer effect of about $870 million across Medicare and Medicaid over the performance period. Tequila Terry of the Maryland Hospital Association said those totals are materially higher than previous negotiations and warned that safety‑net hospitals will have limited ability to offset public‑payer declines.

Cost‑shifting and Medicare Advantage: A central point of contention was a working‑group proposal to recover part of the shortfall by adjusting hospital rates in ways that will increase commercial insurers’ costs. The state described an initial policy path that would shift roughly $87 million a year onto commercial payers in early years, stepping up toward larger amounts over time; the regulatory group also proposed targeted support to stabilize Medicare Advantage plans (an estimated $435 million in later years) for plans that serve primarily Maryland residents and meet quality thresholds. Multiple legislators pressed executives and agency officials for exact, license‑to‑trade numbers: how many plans exited the market in 2026, how many beneficiaries were displaced, and how premium impacts would be measured. Panelists said enrollment tallies were still being finalized and pledged to provide detailed projections to the committees.

Implementation steps and open questions: Officials described an 18‑month HSCRC policy calendar to ready state rules, a hospital throughput and ED‑length‑of‑stay dashboard, and a multi‑agency regulatory working group that will recommend which policy interventions from a federal menu Maryland will adopt in a follow‑on legislative session. Lawmakers repeatedly asked for concrete financial modeling showing the rate and premium impacts of different cost‑shift mechanisms and for clarity about how hospital‑level physician coverage costs would be treated.

What’s next: Agency officials committed to continuing technical briefings and to providing the requested numerical analyses. They also flagged two near‑term priorities for legislative and stakeholder review: how to protect Medicare Advantage enrollees now rather than wait until 2028, and how to address the physician reimbursement and uncompensated‑care gaps that hospitals say drive financial strain.

The committee left the briefing with requests for written projections and an agreement from state agencies to return with more detailed models and the working‑group’s recommendations ahead of next year’s session.