HSCRC Glossary: The Maryland Hospital Finance Terms Every Executive Should Know

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

The system

HSCRC (Health Services Cost Review Commission). An independent agency of the State of Maryland that regulates hospital rates, advances health system transformation and supports the AHEAD Model.^[1]

All-payer model. Maryland’s approach in which all payers pay the same rate for hospital care with certain small policy-driven adjustments.^[18] The first model began in 2014 and gave Maryland authority to set facility-based global budgets for Medicare, Medicaid and commercial payers.^[15]

Public payer differential. A built-in difference in payments for public payers, established at the inception of the first Medicare waiver in 1977; it is 5.7 percent for all public payers. Payers may also be eligible for an additional 2 percent prompt-pay discount.^[18]

Total Cost of Care (TCOC) Model. The ten-year model that began in 2019, adding state accountability for all Medicare beneficiary spending and the Care Redesign Program and Maryland Primary Care Program to global budgets.^[15]

AHEAD Model. The Achieving Healthcare Efficiency through Accountable Design Model, a voluntary state total cost of care model running through December 31, 2035; Maryland is Cohort 1.^[16]

Rates and the budget

Global Budget Revenue (GBR). A fixed annual revenue target for each hospital, known at the start of the fiscal year and determined from an historical base period adjusted for inflation, volume, quality, payer mix and uncompensated care.^[2][3]

Total Patient Revenue (TPR). The earlier revenue-constraint system that GBR extends, available to sole community providers and hospitals in regions without densely overlapping service areas.^[3]

Rate year (RY). July 1 through June 30.^[5]

Update factor. The annual recommendation that updates hospital rates and approved revenue each July 1 for inflation, policy adjustments, performance and prior-year settlements.^[5]

Rate order. The HSCRC document that carries a hospital’s permanent and one-time adjustments for the rate year.^[5]

Permanent and one-time adjustments. Permanent adjustments change the revenue base going forward; one-time adjustments apply to a single year.^[5]

Rate report, center code and unit of measure. An annual report of rates for each hospital cost center; three-letter center codes identify daily, ancillary and ambulatory cost centers, each with a standard unit of measure.^[4]

Mid-year and year-end target. The division of a year’s approved revenue into two targets, since financial tests use calendar-year results; for RY 2026, 49.73 percent of approved revenue was applied to the mid-year target.^[5]

Approved revenue. The revenue the HSCRC approves for a hospital for the rate year under its global budget.^[5]

Volume and efficiency adjustments

Demographic adjustment. Funding for projected age-adjusted population change at the ZIP code level, excluding increases due to potentially avoidable utilization.^[6]

Virtual patient service area (VPSA). A hospital’s service area built from its service volume in each ZIP code for eight age groups, used to attribute population to the hospital.^[7]

Market shift adjustment (MSA). A mechanism that reallocates revenue between hospitals when patients shift between them, capped at the lesser of the gain or the loss.^[6][8]

Variable cost factor (VCF). The share of cost assumed to vary with volume in market shift calculations; historically 50 percent.^[8]

ECMAD. Equivalent case-mix adjusted discharge, the HSCRC’s case-mix adjusted measure of inpatient volume.^[5]

CDS-A. The schedule for certain high-cost, physician-administered outpatient drugs, adjusting budgets so funding equals 100 percent of Average Sales Price.^[6]

Complexity and Innovation policy. A policy funding highly specialized, innovative cases, such as transplants and CAR-T, with a 100 percent variable cost factor for drugs and supplies.^[6]

National demand modifier. A 0.1 percent addition to the demographic adjustment for the non-Medicare population, approved January 14, 2026 and implemented July 1, 2026 with the RY 2027 update factor.^[19]

Surge policy. Funding for infectious disease surges; from RY 2027 weighted 66 percent on ECMADs and 33 percent on patient days, per the policy approved in January 2026.^[19]

GBR carve-out. A policy in development to remove certain highly specialized, high-acuity, highly variable cases from hospital global budgets and pay them separately.^[20]

Deregulation, repatriation and out-of-state volume. Policies for services leaving regulated space, Maryland residents returning from out-of-state care, and non-resident patients.^[6]

Integrated efficiency and Interhospital Cost Comparison (ICC). Efficiency policy comparing hospitals’ costs; the RY 2026 recommendation proposed that hospitals in the third quartile or better, or within one historical standard deviation of average, not be penalized.^[5]

Capital methodology. The policy providing predictable rate updates for large capital projects.^[3]

Quality and utilization

MHAC (Maryland Hospital Acquired Conditions). A program putting 2 percent of inpatient revenue at risk based on 14 potentially preventable complications.^[10]

QBR (Quality Based Reimbursement). A program putting 2 percent of inpatient revenue at risk across person and community engagement, clinical care and patient safety.^[11]

RRIP (Readmission Reduction Incentive Program). A program rewarding and penalizing all-payer 30-day readmission performance, up to 2 percent of inpatient revenue.^[12]

PAU (potentially avoidable utilization). Hospital care that is unplanned and could be prevented through better care, coordination or community-based care.^[13]

PAU savings policy. A prospective statewide reduction limiting inflation on PAU-related revenue; currently penalty-only.^[13]

GBR-PAU Efficiency Adjustment. A reduction to the demographic adjustment based on a hospital’s historical PAU performance.^[14]

PQI and PDI. The Agency for Healthcare Research and Quality’s Prevention Quality Indicators and Pediatric Quality Indicators, used to measure avoidable admissions.^[13]

High-value care plan. The plan in which hospitals report improvement targets and outcomes for reducing PAU; in RY 2026, failing to report triggered a 0.27 percent take-back of inflation.^[5]

Uncompensated care

Uncompensated care (UCC). Hospital care for which no compensation is received, typically charity care and bad debt; funded in Maryland by a statewide markup and a pool.^[9]

Predicted UCC. A model-based estimate using the Area Deprivation Index, payer type and site of care, blended 50/50 with actual UCC.^[9]

AHEAD terms

Performance year (PY). A 12-month calendar-year period of the AHEAD implementation period; PY1 is 2026 and PY10 is 2035.^[17]

Eligible Hospital and Participant Hospital. An Eligible Hospital is a Maryland acute care, critical access or rural emergency hospital meeting model criteria; a Participant Hospital has signed a Hospital Participation Agreement with CMS and the State and a global budget revenue agreement with the State.^[17]

Medicare FFS TCOC Target. The limit on Medicare fee-for-service per-beneficiary spending the State must meet each performance year, built from a savings component.^[17]

All-Payer TCOC Growth Target. The State-set limit on all-payer total cost of care growth.^[17]

CMS-designed Medicare FFS Hospital Global Budget Methodology. The method CMS uses to calculate Medicare hospital global budgets from performance year 3 (2028).^[17]

Bridge Adjustment (draft). The HSCRC’s name for the State’s authority under Section 12(b)(ii) of the AHEAD agreement to blend State-defined and CMS-defined Medicare global budgets in performance years 3 to 5 (2028 to 2030), redistributing no more than 30, 20 and 10 percent of total Medicare hospital global budget revenue on a revenue-neutral basis; under a draft recommendation presented October 21, 2026; the Commission has not yet voted on it.^[17][22]

State weight (glide path factor). The share of the blend placed on the State-defined Medicare budget in the Bridge Adjustment, with the remainder on the CMS-defined budget; staff propose ranges of 50 to 85 percent in 2028, 25 to 65 percent in 2029 and 0 to 35 percent in 2030.^[22]

HGB (hospital global budget) and Repricing Adjustment. An HGB is a hospital’s global budget. In CMS’s method, the Repricing Adjustment lowers budgets for hospitals in the top quartile of payments relative to the national Medicare fee-for-service rate structure and raises them for the bottom quartile.^[22]

AHEAD transition funding. One-time funding of $100 million over rate years 2027 and 2028, distributed as a $500,000 base to each acute care hospital plus an amount proportional to gross patient revenue, with a chief financial officer attestation due each July 31.^[23]

Multi-payer global budget (GBR). The HSCRC’s name for the system in which one hospital budget covers all payers; the October 2026 workplan lists a rate model for multi-payer GBR as work in progress as Medicare’s portion moves to CMS’s method.^[23]

Minimum viable product. The HSCRC’s stated approach to the 2028 transition: practical, incremental updates rather than disruptive overhauls, so that a fully operational system exists by January 1, 2028.^[23]

Bridge period. The HSCRC’s term, in its quality workplan, for the transition years before the CMS quality programs formally apply.^[21]

Primary Care AHEAD and Enhanced Primary Care Payment. A CMS primary care program offering prospective, risk-adjusted payments through four pathways.^[16]

MDPCP-AHEAD. The continuation of the Maryland Primary Care Program under AHEAD, for performance years 1 through 3 unless extended.^[17]

Geo AHEAD. A program in which CMS selects geographic entities by competitive bidding to be accountable for total cost of care; it begins in Maryland in 2028.^[16][17]

All-payer affordability test. The contract limit on all-payer in-state hospital charge growth of 3.58 percent per year, approximating gross state product growth.^[5]

Medicare Financial Test. The requirement under the Total Cost of Care Model to generate $372 million in annual Medicare savings by the end of calendar year 2025.^[5]

USPCC. United States Per Capita Cost, the national cost trend used in AHEAD calculations.^[5]

Frequently asked questions

What to do next

1. Share this glossary with your finance and quality teams.
2. Map each term to the document in which it is defined.
3. Add your hospital’s own figures next to each term.
4. Read the guides on global budgets and AHEAD.

Sources

1. Maryland Health Services Cost Review Commission, HSCRC home page. Accessed October 2026.
2. Maryland Health Services Cost Review Commission, Global Budget Revenue (GBR) overview. Accessed October 2026.
3. Maryland Health Services Cost Review Commission, Global Budget Revenue Adjustments. Accessed October 2026.
4. Maryland Health Services Cost Review Commission, Hospital rate reports. Accessed October 2026.
5. Maryland Health Services Cost Review Commission, Final Recommendation for the Update Factors for Rate Year 2026 (June 11, 2025). Accessed October 2026.
6. Maryland Health Services Cost Review Commission, GBR Volume. Accessed October 2026.
7. Maryland Health Services Cost Review Commission, Overview of Demographic Adjustment (June 4, 2014). Accessed October 2026.
8. Maryland Health Services Cost Review Commission, Volume Policy Workgroup Meeting 1: Market Shift Policy Overview and Industry Concerns (July 31, 2025). Accessed October 2026.
9. Maryland Health Services Cost Review Commission, Rate Year 2024 Uncompensated Care Report (July 12, 2023). Accessed October 2026.
10. Maryland Health Services Cost Review Commission, Maryland Hospital Acquired Conditions (MHAC) Program. Accessed October 2026.
11. Maryland Health Services Cost Review Commission, Quality Based Reimbursement (QBR) Program. Accessed October 2026.
12. Maryland Health Services Cost Review Commission, Readmission Reduction Incentive Program (RRIP) Policy for Rate Year 2027 (memo, May 23, 2025). Accessed October 2026.
13. Maryland Health Services Cost Review Commission, Potentially Avoidable Utilization (PAU) Savings Policy. Accessed October 2026.
14. Maryland Health Services Cost Review Commission, Global Budget Revenue (GBR) Potentially Avoidable Utilization (PAU) Efficiency Adjustment. Accessed October 2026.
15. Health Care Transformation Task Force, Maryland All-Payer & Total Cost of Care Models (September 2020). Accessed October 2026.
16. Centers for Medicare & Medicaid Services, AHEAD (Achieving Healthcare Efficiency through Accountable Design) Model. Accessed October 2026.
17. 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.
18. Maryland Regulatory Working Group (published by the HSCRC), Proposal of the Regulatory Working Group: Cost-Shifting and Medicare Advantage (November 2025). Accessed October 2026.
19. Maryland Health Services Cost Review Commission, February 2026 Post-Meeting Materials, including approved minutes of the January 14, 2026 public meeting. Accessed October 2026.
20. Maryland Health Services Cost Review Commission, Volume Workgroup Meeting #4: GBR Carve-outs (July 2026). Accessed October 2026.
21. Maryland Health Services Cost Review Commission, Performance Measurement Workgroup meeting slides (August 19, 2026). Accessed October 2026.
22. 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.
23. Maryland Health Services Cost Review Commission, October 2026 Public Post-Meeting Materials (646th meeting, October 21, 2026), including presentation slides. 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.