Maryland Hospital Rate Setting Changes: Compliance Considerations for Employers

Maryland is preparing to transition its hospital payment oversight framework beginning January 1, 2026, replacing the current Total Cost of Care (TCOC) model with the federal AHEAD (Achieving Healthcare Efficiency through Accountable Design) model. While the state will retain its all‑payer hospital rate setting authority, AHEAD expands regulatory accountability to total health care spending, primary care investment, and population health outcomes across Medicare, Medicaid, and commercial payers. This shift is expected to increase oversight not only of hospitals, but of broader health care cost and delivery models.

From a compliance standpoint, employers sponsoring insured or self‑funded health plans should anticipate potential changes in carrier pricing strategies, provider reimbursement, and network design as hospitals respond to new cost and performance benchmarks. These changes may indirectly affect plan affordability, network adequacy, and access requirements under federal and state rules. Employers should closely review renewal terms, carrier communications, and plan disclosures to ensure employee materials remain accurate as Maryland’s regulatory model evolves.

Compliance Risks to Watch

• Network adequacy concerns if hospitals limit services, consolidate, or exit networks due to reimbursement pressure
• Mid-year network or benefit changes requiring updated participant notices
• Affordability impacts tied to premium increases as carriers adjust to new cost targets
• Access to care issues, particularly for inpatient or specialty services
• Disclosure and fiduciary risks if plan materials do not reflect changes driven by the AHEAD model

Employers are encouraged to maintain ongoing communication with carriers and advisors, document compliance review efforts, and prepare employee communications in advance of any material plan changes.

PCORI Fee Amount Adjusted for 2026 Plan Years

The IRS has released updated guidance increasing the Patient‑Centered Outcomes Research Institute (PCORI) fee for certain health plans. For plan or policy years ending on or after October 1, 2025, and before October 1, 2026, the PCORI fee is $3.84 per covered life, up from $3.47 for the prior period. The fee generally applies to insurers of fully insured health plans and to employers sponsoring self‑insured group health plans.

PCORI fees are reported and paid annually using IRS Form 720 and are due by July 31 of the year following the end of the plan year. For plans ending in 2025, payment is due by July 31, 2026. Employers with self‑insured plans should confirm covered‑life counts and filing responsibilities to ensure timely payment.

Excluded plans generally include excepted benefits such as standalone dental and vision plans, health FSAs meeting exemption requirements, and certain employee assistance programs.

A member of your Bolton team will reach out in the coming weeks to confirm this year’s PCORI fee calculation and payment process.

IRS Releases ACA Pay‑or‑Play Penalty Amounts for 2027

The IRS has announced the updated employer shared responsibility (“pay‑or‑play”) penalty amounts under the Affordable Care Act (ACA) for calendar year 2027. Applicable large employers (ALEs) — generally those with 50 or more full‑time employees, including full‑time equivalents — must offer affordable, minimum‑value health coverage to full‑time employees and their dependents or potentially face penalties. For 2027, the adjusted penalty for failing to offer coverage to substantially all full‑time employees is $3,780 per employee (minus 30), while the penalty for offering coverage that is unaffordable or does not provide minimum value is $5,670 per affected employee. Both amounts reflect increases from 2026.

Employers should factor these higher penalty amounts into their annual health plan reviews and ACA compliance strategies. An ALE may trigger penalties if even one full‑time employee receives a premium tax credit through the Health Insurance Marketplace due to insufficient coverage. Reviewing eligibility determinations, affordability calculations, and minimum‑value standards ahead of each plan year can help reduce compliance risk and unexpected liability under the ACA. For those clients engaged in Bolton BAS services, our team will assist in this activity.