Bumps AHEAD: Trump administration evaluating Maryland's authority to set Medicare rates

Yahoo

08-05-2025

A look at Western Maryland Hospital Center in Washington County. (File photo by Hannah Gaskill/Maryland Matters)
The Trump administration has signaled an interest in reining in Maryland's ability to set rates for Medicare services – an authority the state has held for about 40 years.
Maryland's system, unusual among states, gives the state significant say over the costs of health care services across different coverage plans to keep costs low and consistent, in what's known as the States Advancing All-Payer Health Equity Approaches and Development, or AHEAD, model.
But advocates worry that the feds' apparent interest in changing who sets Medicare rates could disrupt health care payments for consumers, governments and providers.
Senate President Bill Ferguson (D-Baltimore City) told reporters this week that he was 'cautiously concerned' about the future of Maryland's health care system while those negotiations continue between federal and state health officials.
'I don't want to over-index anything … There's reason to be concerned that there are going to be substantial changes,' he said.
The state's ability to set Medicare rates has been in place for about 40 years under a waiver granted by the Centers for Medicare and Medicaid Innovation (CMMI).
In the time since, the state's health care system has evolved and the Maryland Health Services Cost Review Commission now determines the rates for care across all hospitals in the state, so that health care service costs are similar whether someone has private insurance, Medicare or Medicaid.
But the current iteration of that payment system, called Total Cost of Care, is set to end in December 2025. Last November, Maryland entered into an agreement with the Biden administration to continue under the similar AHEAD system. The AHEAD model was actually based on Maryland's Total Cost of Care model and similar systems in other states, due to its success in reducing health care costs.
But the Trump administration is now talking about taking another look at that arrangement and possibly making some changes. Specifically, federal officials are interested in removing Maryland's ability to set rates for Medicare services
While current talks focus on Medicare rates, there could be ripple effects on rates for Medicaid and private insurance due to the state's all-payer model that aims to keep costs for health care consistent across the board, according to health care advocates.
Centers for Medicare and Medicaid Services, which oversees CMMI, did not confirm whether the Trump administration plans to end Maryland's rate-setting authority for Medicare, but reiterated that 'subject to discussions with State authorities,' the AHEAD model is currently set to begin in January 2026.
Maryland Health Secretary Dr. Meena Seshamani, a former CMS official in the Biden administration, said that those discussions are ongoing.
'Since the change in federal administration, the Maryland Department of Health has been in direct discussions about the future of the model, working with CMMI and in-state stakeholders to align the Maryland model with federal priorities to deliver high-quality outcomes for all Marylanders,' Seshamani said Wednesday. 'The administration will not comment further, given that discussions are ongoing and confidential.'
There may be opportunities where CMMI and the state can find common ground over shared goals like preventing and reducing chronic disease, experts say, though it is unclear where negotiations will land at this moment.
Gene Ransom, CEO for MedChi, the Maryland State Medical Society, believes it is not time to panic, and that there is still opportunity for the state and the Trump administration to 'meet in the middle' — even if CMMI officials signal interest in changing the rate-setting process for Medicare.
And despite his 'cautious concern,' Ferguson said he hopes that any changes that come down on the state's current health care plan will still help lower health care costs for Marylanders while pushing for greater quality of care.
'There could be changes that don't have a dramatic impact on the financial stability of our marketplace for health care,' he said.
'I am hopeful that those in charge of CMS and CMMI will see the benefit that the Maryland model has provided for lowering costs over time,' he said, noting that there may be 'important updates' in the next few weeks.