The HSCRC Bridge Adjustment Explained: How Maryland Will Smooth the Move to CMS Medicare Global Budgets

By Two Pillars & Co Advisory Group · Sources checked October 2026

What is the Bridge Adjustment, in plain English?

Imagine two people running a relay. One runs the first leg with a baton, the other must take it and keep going. If the hand-off is sudden, the baton drops. The Bridge Adjustment is the part of Maryland’s plan meant to make that hand-off smooth. Until 2028, the HSCRC sets the Medicare fee-for-service portion of each hospital’s global budget using Maryland’s methods. From January 1, 2028, CMS, through its Innovation Center (CMMI), sets those budgets using its own methodology.^[3] The two methods will not give the same answer for every hospital, and the Bridge Adjustment is how the State proposes to phase from one answer to the other over three years.

The HSCRC’s draft recommendation describes the adjustment precisely. It quotes Section 12(b)(ii) of the Amended and Restated AHEAD Model Maryland State Agreement, which lets the State modify each participant hospital’s CMS-calculated Medicare global budget for performance years 3, 4 and 5, and states that this adjustment “will heretofore be called the ‘Bridge Adjustment.’” Its purpose, the document says, is to ease the transition for hospitals as they move from State-designed to CMMI-designed global budgets. In practice, it means adjusting global budgets to reflect a blend of the trended historical State and CMMI-set global budget amounts during those three years.^[1]

Why is a bridge needed? Two budgets built two different ways

The draft explains that the HSCRC will compare two numbers for each hospital. The first is the CMS-defined hospital global budget, or HGB. CMS builds it from total Medicare payments the hospital received in calendar year 2026, increased or decreased by a series of adjustments that trend funding from the 2026 base year to the performance year and implement other parts of the CMS specification.^[1] The second is the State-defined Medicare HGB: an estimate of what the hospital’s Global Budget Revenue for Medicare fee-for-service patients would be under Maryland’s methodologies.^[1]

Most CMS adjustments are likely to be similar across hospitals, but one, called the Repricing Adjustment, varies significantly. Under it, hospitals in the top quartile of a ratio comparing the payments they received with the payments they would have received under the national Medicare fee-for-service rate structure receive a downward adjustment, while hospitals in the bottom quartile receive increases. The draft notes that this is similar to the State’s Integrated Efficiency policy, but does not consider total cost of care and is implemented on an accelerated basis.^[1] That single adjustment can move one hospital’s CMS budget well above or below its State budget.

Without a bridge, those differences would arrive all at once on January 1, 2028. A hospital whose CMS-calculated budget fell short of its State budget could lose revenue overnight for reasons unrelated to its care or performance, while another would gain. The bridge is meant to give hospitals a ramp instead of a cliff; the slides say the goal is to support hospitals during the transition and avoid steep cliffs, providing time to adapt.^[2]

The rules: caps, revenue neutrality and the State weight

The agreement sets the outer limits. For performance year 3 (2028), the State can redistribute no more than 30 percent of the total Medicare hospital global budget revenue for participant hospitals to other participant hospitals; for performance year 4 (2029), no more than 20 percent; and for performance year 5 (2030), no more than 10 percent.^[3] The HSCRC draft stresses two requirements: the redistributed amount is capped at a decreasing percentage each year, and it must be net neutral, meaning total spending cannot exceed CMMI’s established total Medicare hospital global budget revenue.^[1] In plain terms, the Bridge Adjustment moves money among hospitals; it does not add Medicare dollars.

The control knob is the State weight, also called the glide path factor. It places a relative weight on the State-defined Medicare HGB and a corresponding weight on the CMS-defined HGB. For example, if the State weight is 65 percent, the CMS weight is 35 percent. Because the State can vary the weight from year to year, the adjustment can create a gradual path toward the CMS-defined budgets.^[1] The agreement gives the State the legal authority to decide how heavily the blend weighs the State’s or CMMI’s budget.^[1]

Staff recommend setting the weight as a range now, and fixing the exact figure when final CMS budgets are available. The recommended ranges are shown below.^[1]

The ranges fall each year, which is the glide path in action: the State’s share of the blend shrinks as CMS’s grows, ending near zero by 2030.

Where would it apply? Whole budgets, the Repricing Adjustment or specific pieces

The draft identifies a key design choice. The Bridge Adjustment could technically be applied to any combination of CMS adjustments, including the Repricing Adjustment. Applying it to individual adjustments would require calculating each adjustment’s impact and judging whether each should be bridged. Staff are inclined toward a simpler approach: apply the bridge either to the entire global budget or only to the Repricing Adjustment. They believe evaluating individual adjustments would add complexity and subjectivity.^[1] Applying it to only the Repricing Adjustment is the simplest approach other than whole budgets, but leaves hospitals exposed to gains and losses from other differences between State and CMS policies.^[1]

Stakeholders in the Payment Models Workgroup, which discussed the adjustment on September 10, September 23 and October 7, commented that some adjustments should not be bridged and asked to understand which elements of the CMS budget are being phased in. They also stated that the bridge should phase in the CMS-defined budgets, not negate or undo changes, a view staff say they share.^[1]

Option 1: spread the aggregate difference across all hospitals

Option 1 applies the adjustment to spread the aggregate, state-level difference between the CMMI and State global budgets across all hospitals, weighted by the State weight. The effect is to redistribute the state-level difference proportionally to hospital-level State budgets.^[1] In the draft’s worked example, the mechanics are: scale each hospital’s State budget so the State total matches the CMMI total, compare that State-equivalent budget with the hospital’s CMMI budget, and apply the State weight to the gap. The final budget is, in effect, a blend of the CMMI budget and the scaled State budget.^[1] A hospital whose CMS budget equals its State budget can still receive a small change, because the statewide difference is spread to everyone.

Here is the HSCRC’s hypothetical Scenario A, in which the total CMMI budget is 3.0 percent higher than the State total, using a State weight of 50 percent and the 30 percent cap. The hospitals and figures are hypothetical.^[1]

Read the table this way. Hospitals Y and Z, whose CMMI budgets fall below their State budgets, face cuts of 3.3 and 6.7 percent without a bridge. Under Option 1 those shrink to 0.2 and 1.8 percent. Hospitals U, V and W, whose CMMI budgets are higher, receive smaller increases. Hospital X, unaffected on its own numbers, gets a 1.5 percent increase because the statewide difference is spread across all hospitals. In dollars, Hospital Z would lose $10 million without a bridge; Option 1 reduces the loss to $2.75 million.^[1]

Option 2: a pool funded by hospitals that gain from CMS’s method

Option 2 targets the adjustment more narrowly. It creates a pool of bridge funding from hospitals whose CMMI global budget is higher than their State global budget, sized using the State weight, and distributes the pool, in proportion to changes in their budgets, to hospitals whose CMMI budget is lower than their State budget, up to a maximum tied to the State weight. The effect is to move funding directly from hospitals that gain under the CMS calculation to hospitals that lose.^[1]

In the same Scenario A, Option 2 smooths less than Option 1. Hospitals Y and Z fall by 1.7 and 3.3 percent instead of 0.2 and 1.8 percent, and Hospital Z’s $10 million reduction becomes a $5 million reduction. Hospital X, whose two budgets are equal, is unchanged under Option 2.^[1] In the draft’s Scenario B, where the total CMMI budget is only 0.5 percent above the State total, Hospital Z’s $10 million reduction becomes $4.61 million under Option 1 and $5 million under Option 2.^[1]

The trade-off is clear. Option 1 treats every hospital by one formula and gives more smoothing, but it changes budgets even for hospitals that are unaffected. Option 2 leaves unaffected hospitals alone and targets the gap, but smooths less and creates clearer winners and losers.

Materiality thresholds

The draft also mentions a materiality threshold. If the Bridge Adjustment is applied only to the Repricing Adjustment, staff discussed potentially applying a materiality threshold to Option 1 to exclude the middle-quartile hospitals, giving them no adjustment; otherwise Option 2 may be preferred because it would not change the budget of hospitals unaffected by the Repricing Adjustment.^[1] The point is to avoid needless volatility for stable hospitals and to concentrate the adjustment where the differences are largest.

Timeline: when will this be decided and applied?

The draft lays out a tight schedule. CMMI has released version 3.2 of the financial specifications for its Medicare global budget method and will release finalized specifications in mid-January 2027, according to the agreement. CMMI has released preliminary global budget estimates for Maryland hospitals based on fiscal year 2024 data, plans updated estimates based on calendar year 2025 data, and will eventually provide final budgets based on finalized specifications and calendar year 2026 data; the timing is unclear, but final budgets are likely in 2027.^[1]

The State will apply the Bridge Adjustment and give CMMI updated hospital budget values in late 2027, after which CMMI must give Maryland hospitals their final calendar year 2028 budgets by December 2027.^[1] Because that window is so short, staff ask the Commission to approve a policy that staff can implement without returning to the Commission for another approval in late 2027.^[1][2] Stakeholder comment letters on the draft are due to hscrc.payment@maryland.gov by November 11, 2026, and staff will update the recommendation after receiving them.^[1]

What the Bridge Adjustment is not

It is not new money; it is revenue neutral.^[1] It is not the commercial cost shift, a separate State policy to raise commercial hospital rates by $87 million a year from 2028.^[4] And it is not the same as the HSCRC’s “bridge period” for quality programs, the interim years before CMS quality programs formally apply.^[5] The terms sound alike, so it helps to ask which one is meant.

What should hospital executives do now?

This is practical guidance from Two Pillars, not a statement of any agency. First, request your hospital’s CMMI preliminary global budget estimate and compare it with your State-defined Medicare budget; the gap determines which side of the bridge you are on. Second, find out where your hospital falls in the Repricing Adjustment, since the top and bottom quartiles are the ones most affected. Third, model both options and the recommended State weight ranges to see your 2028, 2029 and 2030 budgets; the HSCRC’s own hypothetical shows how different the outcomes can be. Fourth, consider commenting by November 11, 2026, especially on whether the adjustment should apply to whole budgets or only the Repricing Adjustment, on the weight ranges and on materiality thresholds. Fifth, plan for the end of the bridge: on the agreement’s terms it ends after 2030.^[3]

Frequently asked questions

What to do next

1. Obtain your CMMI preliminary budget estimate and compare it with your State-defined Medicare budget.
2. Find your hospital’s position in the Repricing Adjustment quartiles.
3. Model Options 1 and 2 across the State weight ranges.
4. Decide whether to submit comments by November 11, 2026.

Sources

1. Maryland Health Services Cost Review Commission, October 2026 Public Pre-Meeting Materials (646th meeting, October 21, 2026), including the Draft Recommendation: Bridge Adjustment. Accessed October 2026.
2. Maryland Health Services Cost Review Commission, October 2026 Public Post-Meeting Materials (646th meeting, October 21, 2026), including presentation slides. Accessed October 2026.
3. Maryland Health Services Cost Review Commission (hosting the executed agreement), Amended and Restated Achieving Healthcare Efficiency through Accountable Design (AHEAD) Model Maryland State Agreement. Accessed October 2026.
4. Maryland Regulatory Working Group (published by the HSCRC), Proposal of the Regulatory Working Group: Cost-Shifting and Medicare Advantage (November 2025). Accessed October 2026.
5. Maryland Health Services Cost Review Commission, Performance Measurement Workgroup meeting slides (August 19, 2026). Accessed October 2026.

Sources checked October 2026. This guide is general information for hospital leaders and is not legal, financial or regulatory advice. HSCRC and CMS policies change, and rate-year figures here are examples from the documents named in the sources. Confirm current figures with the HSCRC and CMS before relying on them. Two Pillars & Co is independent of the organizations cited. See our editorial policy.