Maryland in a Minute – June

HSCRC

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The Health Services Cost Review Commission (HSCRC) held its June meeting on June 10, 2026. The following statewide recommendations were reviewed by the commission:

Update Factor – FY2027 – Final Recommendations

For Global Revenues:

• Provide all hospitals with a gross inflationary increase of 3.37 percent, including an additional 0.20 percent to support revenue needs based on historical underfunding of inflation, and 0.06 percent allocated based on each hospital’s proportion of drug costs.
• Provide an overall increase of 4.07 percent for revenue (including a net increase to uncompensated care) and 3.95 percent per capita for hospitals under Global Budgets. In addition, the staff is proposing to split the approved revenue into two targets: a mid-year target and a year-end target. Staff will apply 49.73 percent of the Total Approved Revenue to determine the mid-year target, and the remainder of the revenue will be applied to the year-end target. Staff are aware that there are a few hospitals that do not follow this pattern of seasonality and will adjust the split accordingly.
• An additional $50 million per year will be provided to hospitals in FY2027 and FY2028 to be earmarked for AHEAD model preparation. This will be reassessed after FY2027 and removed from the FY2029 base. Providers can work together as part of the application and should try to prevent duplication of efforts where possible. HSCRC staff will approve proposals by the providers and come up with a methodology by September 2026.

For Non-Global Revenues, including psychiatric hospitals and Mt. Washington Pediatric Hospital:

• Provide an overall update of 3.17 percent for inflation and additional inflation of 0.20 percent, for a total update of 3.37 percent. Suspend the productivity adjustment for RY 2027.

The above items were approved as part of the FY2027 Update Factor.

In addition, the following draft recommendation was reviewed. Comments on the below are due by June 24, 2026, and will be voted on at the July HSCRC meeting.

Provide additional funding related to uncompensated care to the Maryland Health Benefit Exchange Fund of 0.40 percent to support reinsurance and subsidies for marketplace enrollees and 0.10 percent to increase the reserve held in the HSCRC’s Uncompensated Care Fund to be released as additional uncompensated care emerges.

Health Outcome Payment Effort (HOPE) – Final Recommendations

The original draft recommendations from the March 2026 HSCRC meeting included:

• Care Transformation Initiatives (CTIs) are ending on June 30, 2026.
• HOPE is the replacement, with alignment to the AHEAD model.
• There are two paths to participation in the model: 1. Care Transformation Framework (CTF) – which is designed for a hospital or a group of hospitals. 2. Regional and Statewide Initiatives (RSI) that are coordinated by a non-hospital organization (but must partner with one or more hospitals) and have a regional scope.
• Paths have slightly different qualifications, but both have 50% share of savings and plan to be all-payer inclusive of Medicare Fee-For-Service (FFS) if possible.
• Funding levels for the first three years (FY2027 – FY2029) of $50 million per year.
• One-time payment to continue existing CTIs in FY2027, but hospitals must designate a population health leader and submit a HOPE proposal by a specified date.

After feedback from stakeholders, the HSCRC staff proposed the following changes to the draft recommendations:

• Shift the implementation and measurement start date from FY2027 to FY2028.
• Provide reasonable flexibility in baseline and measurement periods to account for variation in initiatives and differing stages of program maturity across organizations.
• In FY2027, provide one-time infrastructure funding totaling $25 million, distributed proportionately based on hospitals’ Global Budget Revenue (GBR), as well as an additional $25 million in seed funding for proposals that are qualified under HOPE.
• Allow flexibility regarding eligible applicants for Regional and Statewide Initiatives (RSIs), including permitting hospitals to serve as applicants when appropriate.
• Sunset High-Value Care Plans (HVCPs) at the conclusion of FY2026 following completion of final reporting requirements.

Final recommendations were approved by the Commission.

Chesapeake Regional Information System for our Patients (CRISP) funding for FY2027 – Final Recommendations

• Direct funding and matching funds under Medicaid Enterprise System (MES) Federal Programs for Health Information Exchange (HIE) operations and infrastructure ($3,504,000)
• Direct funding and Medicaid Enterprise System (MES) matching funds for reporting and program administration related to population health, the Achieving Healthcare Efficiency through Accountable Design (AHEAD) Model, and hospital regulatory initiatives ($7,396,000).

This would provide $10.9 million in funding for CRISP for FY2027. This is approximately 19.0% of CRISP’s Maryland funding, as compared to a budgeted 26.0% in FY2026. The HSCRC funding increase in FY2026 was to address anticipated reductions in Federal matching grants, which have not occurred.

Final recommendations were approved by the Commission.

Inpatient Length of Stay (IP LOS) – Final Recommendations

• Implement a monitoring program for all-payer IP LOS for acute-care hospitals.
• Assess the risk-adjusted mean IP LOS for acute admissions, with clinical exclusions and winsorization (a statistical method) to minimize the effect of extreme outlier cases.
• Provide summary-level reports and patient-level files that allow hospitals to track IP LOS and stratify by patient characteristics (i.e., primary diagnosis, patient disposition) or other factors to identify areas of opportunity.
• Publicly report trends in IP LOS statewide and by hospital at HSCRC Commission meetings.
• Propose inclusion of IP LOS for payment in RY2029 or RY2030 as part of the portfolio of hospital quality and population health incentives for Maryland Global Budgets (i.e., non-Medicare hospital global budgets).
• Monitor to ensure the measurement approach is valid and the policy is achieving its intended result (lower IP LOS and ED LOS) and for unintended consequences, including readmission rates and ED revisits.

Final recommendations were approved by the Commission.

Global Budget Carve Out – Draft Recommendations

• Staff propose the adoption of the following items effective July 1, 2026, which carves out approximately 9.4 percent of statewide revenue associated with highly specialized care from population-based methodologies. Proposed carve-out list prioritizes highly specialized tertiary and quaternary care performed at Academic Medical Centers (AMCs) (58 percent), with expansions to include certain tertiary services also performed at non-AMCs (41 percent). The list could be updated effective January 1, 2028, based on desired alignment with a final CMMI list.
• Staff propose the use of CY2025 charges, inflated to FY2027, as the baseline for carve-out eligible volume, which would be removed from global budgets. The baseline for lower-volume hospitals should be based on a three-year average.
• Staff propose that all volumes eligible for carve-outs under this policy are funded at 100 percent of variable costs, and hospitals are held 100 percent liable for volatility.
• All prospective adjustments in FY2027 rates relevant to the current Complexity and Innovation Policy will be reversed upon a Carve-out Policy approval; retrospective adjustments for FY2025 and FY2026 will be made.
• Staff propose the removal of all carve-out cases from all other volume methodologies, including the Market Shift, Demographic Adjustment, Surge Funding, Deregulation, and Repatriation/Expatriation. Continue including carve-out eligible cases in the quality pay-for-performance and Potentially Avoidable Utilization (PAU) Redistribution assessments.
• Staff propose to review the list annually (1) for potential additions and subtractions and (2) to understand the impact of the policy. Material changes will be brought to the Commission for approval.
• Volumes eligible under the existing Outpatient Cosmetic Surgery program will also be carved out effective July 1, 2027.

Past and upcoming HSCRC meeting information can be found here. Next meeting of the HSCRC will be held on July 22, 2026. Note that this meeting was originally scheduled for July 8, 2026.

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