What Is Global Budget Revenue (GBR)? How Maryland Hospitals Are Paid

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

What is a global budget in plain English?

Think of the way most households run: income arrives each month, and spending is managed to fit. Most hospitals are paid the opposite way: revenue rises with every admission, test and procedure, so the business model rewards volume. A global budget reverses the logic. The HSCRC’s Global Budget Revenue overview states that GBR sets an annual revenue target for each hospital, rather than letting volume drive revenue, and that each hospital’s total annual revenue is known at the beginning of each fiscal year.^[1] The hospital’s task becomes delivering the right care to its community within an agreed operating envelope.

The HSCRC explains the purpose this way: GBR methodology is central to achieving the three-part aim of the All-Payer Model, better care, better health and lower cost for all Maryland patients. In contrast to the previous Medicare waiver, which focused on controlling increases in Medicare inpatient payments per case, the All-Payer Model focuses on controlling increases in total hospital revenue per capita.^[2]

How is a hospital’s global budget set?

The starting point is history. According to the HSCRC, annual revenue is determined from an historical base period that is adjusted for inflation updates, infrastructure requirements, population-driven volume increases, performance in quality-based or efficiency-based programs, changes in payer mix and changes in levels of uncompensated care. Annual revenue may also be modified for changes in service levels, market share shifts or shifts of services to unregulated settings.^[2]

The Health Care Transformation Task Force, summarizing the Maryland model, describes the budget process similarly: a prospective facility-based global budget for each hospital based on gross hospital revenue from the previous year, with adjustments for inflation, infrastructure requirements, demographic changes, payer mix and performance on quality measures. The budget covers all hospital inpatient and outpatient services unless specifically excluded by the HSCRC.^[3] Each of those adjustments has its own policy, and the next articles in this series explain them one by one.

If revenue is fixed, how do hospitals still get paid?

A common misunderstanding is that a global budget means the hospital is paid a lump sum in a check. It is not. The Task Force explains that hospitals continue to bill under the existing fee-for-service system at rates set by the HSCRC. They are required to monitor their total year-to-date charges and revenue, compare them to their annual global budget, and adjust unit charges for services on an ongoing basis to remain within the approved budget.^[3] In effect, the rates are a mechanism for collecting the approved revenue, and the hospital manages volume, pricing and timing so that actual revenue lands on the target.

The HSCRC also divides each year’s approved revenue into targets. For rate year 2026, staff proposed a mid-year target and a year-end target, applying 49.73 percent of total approved revenue to the mid-year target, because certain financial tests are performed on calendar-year results.^[6] Hospitals with different seasonality may have the split adjusted.

Where did global budgets come from, and what have they achieved?

Global budgets extended an earlier approach. The HSCRC describes GBR methodology as an extension of Total Patient Revenue (TPR), which established a fixed annual revenue cap for hospitals that were sole community providers or in regions without densely overlapping service areas.^[2] The statewide model launched in 2014 under the Maryland All-Payer Model. As conditions of that model, Maryland had to shift 80 percent of hospital revenue into facility-based global budgets, limit annual per-capita cost growth to 3.58 percent, generate at least $330 million in Medicare savings and achieve a 30 percent reduction in hospital-acquired conditions over five years.^[3]

Results reported for the early years were favorable. A Task Force summary of an HSCRC report covering 2014 to 2017 cites annual per-capita cost growth of 2.03 percent against the 3.58 percent target, $916 million in cumulative Medicare savings, and a 53 percent reduction in hospital-acquired conditions across all payers. It also cites a CMS Innovation Center evaluation finding that from 2014 to 2018 the model reduced all-cause and potentially avoidable admissions by almost seven percent.^[3] These are reported results from public evaluations, and they relate to the early years of the model.

What are the risks and trade-offs for a hospital?

A fixed budget changes where the financial pressure sits. If costs rise faster than the budget’s inflation allowance, the hospital absorbs the difference. If volume falls because patients are healthier or are served elsewhere, revenue does not fall in step, which can create room for investment, but the HSCRC’s adjustments mean that revenue also does not rise simply because volume does. The HSCRC’s volume policy states its aim: money follows the patient, but statewide volume does not grow on net for anything other than population growth and certain forms of innovation.^[5]

Executives therefore manage a different set of levers: cost per unit of care, avoidable utilization, quality scores, market position and the timing of revenue within the year. A later article in this series describes practical approaches to managing under a global budget.

How does the AHEAD Model change global budgets?

Under the amended AHEAD agreement, the State-designed all-payer global budget method applies only in the first two performance years, 2026 and 2027. From performance year 3, which begins January 1, 2028, the State must use the CMS-designed Medicare fee-for-service hospital global budget method for Medicare, alongside Maryland payer global budgets set by the State.^[4] The State must also ensure that at least 85 percent of in-state, all-payer acute care hospital revenue for Maryland residents is paid to participating hospitals under those combined global budgets.^[4] The details are covered in the article on the 2028 and 2029 changes.

Frequently asked questions

What to do next

1. Pull your approved revenue and rate year targets.
2. List which adjustments applied to your budget last year.
3. Track year-to-date charges against your budget monthly.
4. Read the guides on adjustments and quality programs next.