Maryland is losing its longstanding rate-setting power for Medicare fee-for-service under CMS’ “achieving healthcare efficiency through accountable design” payment model. Commercial insurers are going to bear the brunt, needing to tackle about half of the state’s necessary savings and covering relief for Medicare Advantage plans.
On Jan. 14, the Maryland Health Services Cost Review Commission finalized cost-shifting and Medicare Advantage stabilization strategies for the model. Announced in 2023, the AHEAD model planned to award no more than eight states up to $12 million each as they work toward quality and population health outcomes, all while reducing avoidable spending. Maryland is one participant.
The Center for Medicare and Medicaid Innovation will take over Medicare fee-for-service global budget-setting in 2028, but the state will maintain rate-setting for the remaining payers. Under the model, Maryland must lower fee-for-service spending growth, as compared to national trends, by 2.66% by 2032. These savings would equate to $460 million, but the overall system impact could approach $870 million. Savings could translate to shared savings with primary care providers and federal reductions.
The Maryland Health Services Cost Review Commission confirmed a $435-million cost shift onto commercial payers via hospital rate increases. Cost-shifting is allowed under AHEAD, and the commission will increase commercial hospital rates by $87 million every calendar year from 2028 through 2032 before maintaining the shift in rates.
There will also be 11.55% in rate relief for eligible Medicare Advantage plans. To cover this, commercial rates will increase 0.75%, contributing to a 2.55% rate increase by 2032 for these payers as a result of both efforts. Medicaid rates will help offset the relief in 2027 only.
