Internal Medicine Updates in Maryland: What Physicians Should Know in 2026

Maryland has never billed healthcare quite like the rest of the country, and 2026 marks the most significant shift in that arrangement in years. On January 1, 2026, Maryland officially transitioned from its long-running Total Cost of Care Model to a new federal initiative called the AHEAD Model, a change that affects how hospitals get paid and, downstream, how internal medicine practices experience referral patterns, care coordination incentives, and value-based care opportunities across the state.

This isn't a routine annual update. It's a structural transition to Maryland's decades-old approach to healthcare payment, layered on top of the usual annual Medicare and Medicaid changes every practice already has to track. This guide walks through what's actually changing, what Maryland internists specifically should watch, and what to do about it in the year ahead.

Why 2026 Updates Matter for Maryland Internal Medicine Practices

Maryland is the only state in the country where a state agency, not the federal government, sets hospital payment rates, an arrangement that's existed in some form since the 1970s. That uniqueness means Maryland internists operate inside a payment ecosystem that looks meaningfully different from internal medicine practices in nearly every other state. When that underlying system changes, as it just did with the AHEAD transition, the ripple effects touch referral relationships, hospital partnerships, and value-based contracting opportunities in ways that don't necessarily show up in a national Medicare Physician Fee Schedule summary.

Maryland's Healthcare Payment Environment

Maryland's All-Payer Model

Maryland's payment system traces back to the original Maryland All-Payer Model, which ran from 2014 through 2018 and required Medicare, Medicaid, and commercial insurers to pay the same rate for the same hospital service at the same hospital. This all-payer rate setting, overseen by the Health Services Cost Review Commission, is the foundation everything since has built on.

Total Cost of Care

The Total Cost of Care Model, which ran from 2019 through the end of 2025, extended that all-payer framework and made Maryland the first state fully accountable for total Medicare spending under a Center for Medicare and Medicaid Innovation model. An independent evaluation found the model reduced hospital admissions by 16.2 percent and cut total Medicare spending, including non-claims payments, by $689 million between 2019 and 2021, while also reducing disparities in several quality measures. On March 12, 2025, CMS announced its intention to end the Maryland TCOC Model effective December 31, 2025, with the state transitioning into the AHEAD Model beginning January 2026.

Impact on physician practices

Under AHEAD, Maryland must increase its Medicare total cost of care savings by 0.128 percent annually compared to a 2023 baseline, starting in calendar year 2026, with the Health Services Cost Review Commission estimating the 2026 savings target at approximately $525 million. That's a different calculation than the prior Total Cost of Care Model used. Maryland's 2025 TCOC savings requirement was $372 million, measured relative to a 2013 base year, while the new AHEAD target uses a 2023 base year instead. The two figures reflect different methodologies rather than a direct year-over-year comparison, but both point to the same underlying reality: Maryland's savings obligation remains substantial under the new model. For internal medicine practices, this matters because meeting that target depends heavily on care coordination, chronic disease management, and reducing avoidable hospital utilization, exactly the kind of work internists already do, and exactly the kind of work value-based contracts and hospital partnerships are likely to keep rewarding going forward.

2026 Medicare Payment Updates Internal Medicine Physicians Should Watch

Beyond Maryland's own payment structure, internists statewide still operate under the national Medicare Physician Fee Schedule for professional services. The CY 2026 fee schedule introduced a first-of-its-kind efficiency adjustment reducing work relative value units on most non-time-based services, alongside a new conversion factor structure that treats qualifying Advanced Alternative Payment Model participants differently from other practices. Given how central ACO and value-based participation is likely to become in Maryland specifically under AHEAD, understanding whether your practice qualifies as an APM participant for conversion factor purposes is worth confirming directly rather than assuming.

Maryland Medicaid Updates for Internal Medicine Practices

Maryland Medicaid, administered through the Maryland Department of Health and delivered primarily through the HealthChoice managed care program, continues to operate alongside the state's broader payment transition. Because Maryland's all-payer rate setting applies to hospital services across Medicare, Medicaid, and commercial insurance alike, changes to hospital global budgets under AHEAD can indirectly affect how Medicaid managed care organizations structure their own provider relationships and care coordination expectations. Internal medicine practices with a substantial Medicaid panel should confirm current HealthChoice managed care organization requirements directly, since specifics can shift as the broader AHEAD transition continues to unfold through 2026 and 2027.

Payer and Insurance Changes Maryland Internists Should Monitor

The renegotiation of Maryland's authority under AHEAD is still an open, developing story worth watching closely. As of late 2025, Maryland and CMS were still negotiating specific terms, and reporting indicates the federal government may take over setting Medicare rates in Maryland beginning in 2028, with full CMS authority anticipated by 2031.

That's a multi-year runway, but it signals that Maryland's uniquely state-controlled rate-setting authority, the very feature that's defined the state's healthcare payment system for decades, may not be permanent. Commercial payers operating in Maryland will likely continue adjusting their own contracting approaches as this federal-state relationship continues to evolve.

Value-Based Care and ACO Opportunities

Given AHEAD's structure and its explicit savings targets, Maryland internal medicine practices are well positioned to benefit from deeper engagement with value-based care arrangements, whether through hospital-affiliated care transformation programs, Accountable Care Organizations, or direct participation incentives tied to reducing avoidable utilization. The original Total Cost of Care Model specifically included significant new investment in primary care as part of its design, a priority that reasonably carries forward into how AHEAD structures its own primary care engagement strategy. Internists who haven't yet explored ACO participation or hospital care transformation partnerships have a genuine opportunity to reassess that decision as Maryland's new model matures through 2026.

Prior Authorization and Administrative Challenges

Prior authorization remains a persistent administrative burden for internal medicine practices nationally, and Maryland is no exception. As payers continue adjusting utilization management approaches in response to Maryland's broader payment transition, practices should expect at least some near-term inconsistency in prior authorization requirements as hospital systems and managed care organizations recalibrate their own internal policies around the new AHEAD framework.

Credentialing and Payer Enrollment Considerations

Practices adding new internists, opening additional Maryland locations, or expanding into new payer networks should build extra lead time into credentialing timelines during this transition period. When a state's underlying payment model changes this significantly, payer enrollment processes and provider network requirements can experience temporary delays or procedural adjustments as organizations update their own internal systems to reflect the new framework.

Billing and Reimbursement Issues Maryland Internists Should Review

1. Confirm whether your practice's hospital and health system partners have communicated any changes to care coordination expectations tied to the AHEAD transition.
2. Review your current value-based contracts or ACO participation agreements for any updated terms reflecting Maryland's new savings targets.
3. Track whether Medicaid managed care organization requirements shift as HealthChoice adapts to the broader payment transition.
4. Confirm your billing team understands the distinction between Maryland's hospital-level all-payer rate setting and the standard national Medicare Physician Fee Schedule that still governs most physician professional billing.
5. Watch for evolving prior authorization and utilization management policies from payers recalibrating around the new model.

What Internal Medicine Practices Should Do in 2026

Stay directly engaged with updates from the Health Services Cost Review Commission and the Maryland Department of Health rather than relying solely on national healthcare policy coverage, since Maryland's specific transition details won't always make it into general Medicare or Medicaid news. Reassess value-based care and ACO participation opportunities given AHEAD's explicit savings targets and continued emphasis on primary care engagement. Build in extra lead time for credentialing and payer enrollment during this transition period, and maintain close communication with hospital and health system partners about how their own participation in AHEAD is affecting shared care coordination expectations.

Frequently Asked Questions

What is the Maryland AHEAD Model?

AHEAD, which stands for States Advancing All-Payer Health Equity Approaches and Development, is the federal model Maryland transitioned into on January 1, 2026, replacing the state's previous Total Cost of Care Model as the framework governing Maryland's unique all-payer hospital rate-setting system.

Why did Maryland transition from the Total Cost of Care Model to AHEAD?

CMS announced on March 12, 2025 its intention to end the Maryland Total Cost of Care Model effective December 31, 2025, with Maryland and CMS having already entered an agreement in November 2024 for the state to participate in the successor AHEAD Model.

How did the Total Cost of Care Model perform before ending?

An independent evaluation found the model reduced hospital admissions by 16.2 percent and reduced total Medicare spending, including non-claims payments, by $689 million between 2019 and 2021, while also reducing disparities across several quality measures.

What savings target does Maryland need to meet under AHEAD?

Maryland must increase Medicare total cost of care savings by 0.128 percent annually compared to a 2023 baseline starting in calendar year 2026, with the Health Services Cost Review Commission estimating the 2026 target at approximately $525 million.

Will Maryland continue setting its own Medicare hospital rates?

This is still being negotiated. Reporting as of late 2025 indicated CMS may take over setting Medicare rates in Maryland beginning in 2028, with full federal authority anticipated by 2031, though the state retains its distinctive all-payer rate-setting role in the interim.

How does Maryland's payment system differ from other states?

Maryland is the only state where a state agency, the Health Services Cost Review Commission, sets hospital payment rates rather than following the standard federal Inpatient and Outpatient Prospective Payment Systems used elsewhere, requiring Medicare, Medicaid, and commercial insurers to pay the same rate for the same hospital service.

Does the AHEAD transition affect physician professional billing directly?

AHEAD primarily governs hospital-level global budgets and total cost of care accountability. Physician professional services continue to be billed under the standard national Medicare Physician Fee Schedule, though care coordination incentives tied to AHEAD can influence referral patterns and value-based contracting opportunities for internists.

What should Maryland internal medicine practices watch for regarding Medicaid?

Practices with a significant Medicaid panel should monitor HealthChoice managed care organization requirements directly, since changes to hospital global budgets under AHEAD can indirectly influence how Medicaid managed care organizations structure provider expectations.

Is value-based care participation more relevant for Maryland internists now?

Given AHEAD's explicit savings targets and the Total Cost of Care Model's established emphasis on primary care investment, Maryland internists have a genuine opportunity to reassess ACO participation and hospital care transformation partnerships as the new model matures.

Where can Maryland practices get authoritative updates on the AHEAD transition?

The Health Services Cost Review Commission and the CMS Innovation Center both publish direct updates on the AHEAD Model's implementation, and are more reliable sources for Maryland-specific detail than general national healthcare policy coverage.

Conclusion

Maryland's shift from the Total Cost of Care Model to the AHEAD Model is the most significant change to the state's healthcare payment environment in years, and it's still actively unfolding, with key questions about long-term rate-setting authority unresolved as of this writing. Internal medicine practices that stay engaged with Maryland-specific updates, reassess their value-based care positioning, and build flexibility into credentialing and billing workflows during this transition will be better positioned than those treating 2026 as just another routine update year.

Edge RCM CTA

Navigating a payment system transition this significant takes more than watching national Medicare headlines, it takes understanding how Maryland's specific AHEAD transition affects your practice's billing, credentialing, and value-based care participation. Edge RCM works with Maryland internal medicine practices on billing accuracy, payer enrollment, and revenue cycle support built around the state's uniquely structured healthcare payment environment. If your practice wants a clearer picture of how the AHEAD transition affects your specific billing and contracting position, Edge RCM can help you review it.