HSCRC Quality Programs Explained: MHAC, QBR and RRIP

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

Why does Maryland run its own hospital quality programs?

Elsewhere in the country, Medicare’s national programs reward and penalize hospitals on quality. Maryland’s all-payer system runs parallel programs that apply to all payers. The HSCRC explains that its quality initiatives are important policy tools to give hospitals strong incentives to improve quality over time, and that they hold a portion of hospital revenue at risk directly tied to performance benchmarks.^[1] The Commission’s Quality team designs, implements and manages statewide all-payer hospital reimbursement adjustments based on hospital performance on a comprehensive set of metrics, working with stakeholders through the Performance Measurement Work Group.^[1]

The programs are also tied to the State’s federal agreement. The PAU savings policy page notes that it is important for maintaining Maryland’s exemption from CMS quality-based payment programs, which allows the State to operate its own programs on an all-payer basis.^[6] The QBR program’s guiding principles likewise include that measures be generally consistent with CMS Value-Based Purchasing measures to support Maryland’s annual waiver from that program.^[3]

MHAC: preventing hospital-acquired complications

The Maryland Hospital Acquired Conditions program aims to improve patient care and hospital decision-making by putting two percent of inpatient hospital revenue at risk, as a maximum penalty or reward, based on performance on 14 identified potentially preventable complications. The HSCRC describes these complications as harmful events that develop after the patient is admitted and may result from processes of care and treatment rather than the natural progression of illness. Examples include an accidental laceration during a procedure, improper administration of medication and hospital-acquired pneumonia.^[2]

The program resembles the federal Hospital-Acquired Condition Reduction Program but is all-payer, uses a Maryland-specific list of complications and does not relatively rank hospitals in assigning financial rewards and penalties. It is based on a system developed by 3M Health Information Systems that identifies complications using present-on-admission codes in claims data.^[2] For rate year 2028, the Commission’s final MHAC recommendation is dated February 11, 2026.^[2]

QBR: patient experience, safety and clinical care

The Quality Based Reimbursement program incentivizes quality improvement across three domains: Person and Community Engagement, Clinical Care and Patient Safety. It works by putting two percent of inpatient hospital revenue at risk. It uses measures similar to the federal Medicare Value-Based Purchasing program but has an all-payer focus and can adjust domain weights to focus on Maryland-specific improvement.^[3] The HSCRC’s guiding principles, set through the Performance Measurement Work Group, require that measures include all patients regardless of payer, be fair to hospitals, be generally consistent with CMS measures and be able to track progress.^[3]

The final recommendation for rate year 2027 kept domain weights at Person and Community Engagement 60 percent, Safety 30 percent and Clinical Care 10 percent. Within the engagement domain, HCAHPS patient survey measures carry most of the weight (HCAHPS top box 33.33 percent, HCAHPS consistency 16.67 percent, HCAHPS linear 16.67 percent), alongside timely follow-up measures. The document also records a pre-set revenue adjustment scale of 0 to 80 percent with a cut-point at 41 percent.^[4] The final recommendation for rate year 2028 is dated January 14, 2026.^[3]

The rate year 2028 policy changes the weights. The HSCRC memo of March 2, 2026 records that on January 14, 2026 the Commission approved staff recommendations to update domain weights to Person and Community Engagement 38 percent, Safety 31 percent and Clinical Care 31 percent, to keep 2 percent of inpatient revenue at risk with a pre-set revenue adjustment scale of 0 to 80 percent and a cut-point of 32 percent, and to add a $150,000 bonus in rates for hospitals that fully meet the State’s expedited electronic quality measure reporting timeline. The memo explains that the changes align the program more closely with the CMS Hospital Value-Based Purchasing program, and that the HSCRC will continue a State QBR program for payers other than Medicare fee-for-service.^[9]

RRIP: reducing preventable readmissions

The Readmission Reduction Incentive Program was implemented to reduce preventable 30-day hospital readmissions and is closely aligned with federal readmissions programs. Hospitals can receive rewards or penalties based on readmission rates.^[1] The rate year 2027 memo sets out the policy: an all-payer, 30-day, all-cause readmission measure, case-mix adjusted for severity with planned readmissions excluded; a statewide four-year improvement target of -5.0 percent through 2026 using a blended base period of calendar years 2022 and 2023; an attainment target under which hospitals at or better than the 65th percentile of statewide performance receive scaled rewards; and maximum rewards and penalties of 2 percent of inpatient revenue.^[5]

Hospitals are measured on the better of attainment or improvement. The rate year 2027 policy also provided an additional incentive of up to 0.50 percent of inpatient revenue for reducing readmission disparities within a hospital. The rate year 2028 final recommendation keeps the measure, the improvement and attainment targets and the 2 percent maximum, adds an adjustment for out-of-state readmissions and transfers, and replaces the financial disparity incentive with monitoring of within-hospital disparities, while assessing alignment of the measure and targets with AHEAD.^[5][10]

PAU savings and the guardrail

A fourth program, the PAU savings policy, operates differently. The HSCRC sets a prospective statewide PAU savings adjustment that limits inflation on revenue related to potentially avoidable utilization, based on the previous year’s performance. Unlike the other programs, it is currently penalty-only.^[6] A separate guide in this series explains it. To limit the effect on any single hospital, the HSCRC also applies a maximum revenue guardrail that caps the amount one hospital can be penalized in a single year under the quality policies.^[1]

How much revenue actually moves? In the rate year 2026 update recommendation, the net revenue adjustment across MHAC, RRIP (including its disparity gap incentive) and QBR was -0.06 percent statewide using preliminary QBR figures, with preliminary QBR adjustments implemented in the July rate orders and final adjustments made in the January rate orders.^[7] The statewide average is small, but individual hospitals’ results can be much larger in either direction, which is why quality performance is a budgeting issue as well as a clinical one.

What is coming: rate year 2029 and the move to CMS programs

The HSCRC is already drafting the next round. Its draft recommendation for rate year 2029 QBR, presented October 21, 2026, is a draft that the Commission has not yet voted on; it is minimally changed from the rate year 2028 policy: it keeps domain weights of 38, 31 and 31 percent, keeps 2 percent of inpatient revenue at risk with a 0 to 80 percent scale and a preset cut-point of 32 percent, and applies the state QBR program to patients of all payers other than Medicare fee-for-service. Comments are due by October 29, 2026 to hscrc.quality@maryland.gov.^[12]

The larger strategy was discussed at the Commission’s September 9, 2026 meeting. Staff described four state programs, MHAC, QBR, RRIP and PAU, that together held 6 percent of all-payer global budget revenue at risk. They noted that Maryland asked CMMI to delay the official transition to CMS’s national quality programs until calendar year 2030, that CMMI will apply Maryland’s state-level quality adjustments to Medicare global budgets in 2028 and 2029, and that staff recommend preserving the 6 percent revenue-at-risk level across both the Medicare and non-Medicare budget streams. Staff are considering removing potentially preventable complications from the MHAC payment methodology for rate year 2029 to align with CMS Patient Safety Indicators, proposed keeping QBR incentives for emergency department length of stay and health equity, refining readmission measures to mirror national standards, and sunsetting the pay-for-reporting requirement on emergency department best practices in favor of a state-led learning collaborative.^[13] HSCRC slides place the transition to CMS quality programs for Medicare fee-for-service global budgets starting in fiscal year 2030, with the HSCRC maintaining quality incentives for multi-payer budgets.^[13] These are staff proposals and discussion items, and final recommendations are expected in the first half of 2027.

What changes in 2028?

The amended AHEAD agreement changes the picture for Medicare patients. Beginning in performance year 3 (calendar 2028), participating hospitals transition from the State-administered hospital quality and value-based programs to the CMS programs for their Medicare beneficiaries: Hospital Value-Based Purchasing, the Hospital-Acquired Condition Reduction Program, the Hospital Readmissions Reduction Program, the Hospital Inpatient Quality Reporting Program and the Hospital Outpatient Quality Reporting Program. The State may maintain its CMS-approved quality and value-based programs for Medicaid and commercial payers, and those programs should aim to align with the CMS programs.^[8]

The HSCRC has described the timing more gradually. Its March 2026 QBR memo says hospitals will be moving to the CMS programs for rate year 2029 or 2030,^[9] and an August 2026 workgroup presentation says CMS will formally transition to its hospital quality programs in calendar year 2030 using CMS fiscal year 2030 results, with calendar year 2028 and 2029 adjustments to Medicare fee-for-service global budgets based on the State all-payer quality programs for rate years 2028 and 2029.^[11] The same presentation describes the HSCRC’s plan for this “bridge period” as a minimum viable product rather than a perfect end state, aligning with CMS policies where they suit hospitals under global budgets.^[11]

For executives, that means a hospital will face two quality scorecards as the transition proceeds: CMS programs for Medicare and Maryland programs for other payers. Building one quality improvement effort that performs well under both is more practical than managing them separately. The HSCRC’s own RRIP memo already commits to alignment with AHEAD readmission goals.^[5]

Frequently asked questions

What to do next

1. Pull your latest MHAC, QBR and RRIP results.
2. Rank where revenue is most at risk.
3. Map your measures to the CMS programs that will apply from 2028.
4. Build one quality plan that serves both scorecards.