Ripple effects of AHEAD model could ‘topple’ MD healthcare system, CareFirst official warns

State officials, hospitals and insurance companies need to tread carefully as Maryland transitions into a new hospital rate-setting system — or else it could topple over like a Jenga tower.

That’s according to Kim Robinson, vice president of state government affairs for CareFirst BlueCross BlueShield, in an informational panel about the AHEAD model at the Maryland Association of Counties summer conference Thursday.

Insurance companies like CareFirst are watching Maryland officials navigate a multiyear transition into a new structure that will ultimately remove the state’s authority to set hospital rates for services covered by Medicare, an authority it’s had for decades.

It’s a precarious and delicate situation.

“We’re pulling little blocks out of this particular structure, and what we want to make sure is we don’t pull that one block that’s going to make it all fall down,” Robinson said.

It’s the existential challenge facing Maryland’s healthcare system, as the state transitions to a new framework to set hospital rates, called Achieving Healthcare Efficiency through Accountable Design – the AHEAD model.

The previous model, called the Total Cost of Care, expired at the end of 2025. That system gave Maryland officials authority to regulate hospital costs across all payers in the system, which include private insurance, Medicaid and Medicare. The Health Service Cost Review Commission determines those rates.

State officials had signed an agreement with the Biden administration in 2024 that would have largely kept the state’s authority to regulate all payers intact. But the Trump administration decided early last year to renegotiate the terms of that agreement.

After lengthy negotiations with the Trump administration, the AHEAD model will remove the state’s authority to set Medicare rates in 2028.

But due to the complexities and interconnectedness of Maryland’s unique healthcare system, insurers and others are unsure how the state’s new hospital rate-setting system under the AHEAD model will work exactly.

“I think we’re all watching with bated breath to see how this is going to function,” Robinson said. She expects that under the new model the federal government will contribute less than what they do now under the Total Cost of Care model, which will likely shift costs to the private market.

“We don’t yet know what the federal rate is going to be,” Robinson said. “We will still see all commercial payers paying the same rate. So regardless of which insurer you may be working with, that does not necessarily change.

“Counties, individuals, businesses, large businesses, small businesses – we anticipate that the … rates for all of those payers is going to go up,” she said.

If private insurance companies have to pay more, those costs will likely shift to consumers.

Meanwhile, rising healthcare costs could lead people to go without coverage, which increases the frequency of “uncompensated care” in emergency rooms, where uninsured patients end up because they delayed preventive care until they have to receive emergency medical services.

“Their costs are more expensive because they need more services. When they need more services, they put more burden on the healthcare system,” Robinson said. “The rest of us end up picking up that cost, and that gets baked into the rate-setting system.

“It all comes back around and what we don’t want is to see a spiral that just makes costs go higher and higher and higher,” Robinson said.

Private insurance companies or hospitals may decide to pull out of the state’s system altogether due to the uncertainty of the AHEAD model, which would strain the system further or completely disrupt it.

Robinson described that dynamic as a game of “chicken.”

“If I’m being candid, I think what everybody is waiting and watching on all sides is what is the other side going to do,” she said. “If hospital anxiety gets too high and they decide that they’re fearful of what the new system looks like – the system only works because hospitals affirmatively agree to participate in the model.

“So we’re watching them – like that game of chicken – to see, ‘Are the hospitals comfortable? Are the hospitals staying in?’ ” she said. “And I think they’re watching on the other side. Where are the payers? And where is the state? Is the state still committed?”

Robinson said that the balancing act for all participants in the healthcare system – state government, insurance companies, hospitals and consumers – is similar to Jenga.

“It only works when all of the players remain in the game,” she said. “As soon as one of those entities pulls out, the model collapses … the whole thing would topple.”

Danielle J. Brown is a new Maryland resident covering health care and equity for Maryland Matters.