Top officials leave hospital rate-setting commission amid AHEAD model transition

As Maryland begins the transition into a new hospital rate-setting system, the state commission authorized to establish those rates is heading into its own transition – a change in leadership.

Health Services Cost Review Commission Chair Joshua Sharfstein and Executive Director Jon Kromm said the the July 22 meeting of the HSCRC would be their last with the commission.

Their departure marks a significant leadership change at the powerful state body that determines how much hospitals can charge for care. Both have been with the commission since 2023.

During those years, Sharfstein, Kromm and HSCRC staff negotiated with federal officials under the Biden and Trump administrations about the future of Maryland’s hospital rate-setting model. The previous model, called the Total Cost of Care, expired at the end of 2025, leading into the Achieving Healthcare Efficiency through Accountable Design system, also called the AHEAD model.

“I feel that this model provides an opportunity to better health and lower costs for Maryland,” Sharfstein said in a recent interview.

Sharfstein, a former Maryland Health secretary, is currently a vice dean at Johns Hopkins Bloomberg School of Public Health. He was initially expected to step away in June but stayed on for one more month, which coincided with Kromm’s last meeting as well.

Kromm will be returning to Health Management Associates, a research and consulting firm focusing on the healthcare industry, where he was a managing principal prior to joining the commission in 2023. William Henderson, principal deputy director with the commission, will take over as interim executive director. A new chair has not been announced.

But Kromm’s and Sharfstein’s departures mean the HSCRC will be under new leadership during the multiyear shift into the AHEAD model after years of negotiations with two presidential administration to nail down the new framework.

The state’s previous hospital rate-setting system technically came to an end Dec. 31 — though major changes in state operation have not yet occurred. The Total Cost of Care system gave Maryland officials authority to regulate hospital costs across all payers in the system, which include private insurance, Medicaid and Medicare. The Health Service Cost Review Commission determines those rates.

State and federal officials had signed an agreement in 2024 that would have largely kept the state’s authority to regulate all payers intact. But the Trump administration decided early last year to renegotiate the terms of that agreement.

State and federal officials went back and forth over how much authority Maryland should have to dictate hospital rates, and federal officials looked to remove Maryland’s ability to set the rates for care provided under Medicare, an authority the state had held for more than 40 years.

Ultimately, the state was allowed to keep much of its hospital payment system for two years, allowing time to implement larger policy changes before revoking the state’s authority to set Medicare rates in 2028.

The challenge for HSCRC’s future leadership will be in how to implement AHEAD model goals, such as keeping the costs of healthcare low and strengthening Maryland’s primary care system.

But if there’s going to be a leadership change at the HSCRC, now is the time, said Gene Ransom, CEO for MedChi, the Maryland State Medical Society.

“It kind of makes sense,” he said. “Now, it’s time to move into implementation. It’s logical that you would have a turnover at this time.

“You have high-level staff who are staying on and are really talented. I think everything should be fine,” he said. “It’s a natural course of things.”

Sharfstein’s departure also closes the chapter on his controversial appointment to the commission.

In June 2023, Gov. Wes Moore announced the appointment of three commissioners to the HSCRC, which included Sharfstein and Nicki McCann, vice president of provider/payer transformation for the Johns Hopkins Health System.

Sharfstein’s appointment was in question due to a Maryland law that says there cannot be more than three commissioners with connections to “the management or policy of any facility” on the HSCRC to avoid potential conflicts of interest. Additionally, a 1995 ethics decision concluded that a commission employee’s affiliation with Johns Hopkins University violated a state employment conflict law, given the close relationship between the university and Johns Hopkins Health System.

With two other hospital representatives already on the commission, the question was whether Sharfstein and McCann’s appointments violated that three-person limit.

The Moore administration stood by the appointments, saying that Sharfstein and McCann met “all the statutory requirements to serve on the Commission.” Months later, Moore appointed Sharfstein to serve as chair.

Moore appointees to Md. hospital cost review commission in doubt due to legal questions

Sharfstein’s appointment also coincided with criticisms over the commission’s gender parity, with only one woman filling a seat on the seven-member board at the time. Today, there are two women serving on the commission.

Meanwhile, members of the insurance industry voiced concern that there were transparency issues in some of the decision-making at the HSCRC with Sharfstein as chair, during AHEAD negotiations and other policy decisions.

This past session, the governor’s office did not ask the Maryland Senate to reappoint Sharfstein to the commission, leaving his tenure with the HSCRC to expire this summer.

At the July meeting, Kromm applauded the work of the HSCRC under Sharfstein’s leadership.

“He and I have worked together in a number of contexts, on a number of really tricky policy issues. I am really fortunate to call him a friend,” Kromm said at the July meeting. “I’ve learned an incredible amount from Josh over the years. I will forever be indebted to you for all that you’ve provided both to me personally, to the staff here through your leadership and all the great work you’ve done.”

In his final remarks, Kromm thanked the work of the commission staff, a small group that he said “doesn’t get a lot of flowers” for working on the challenging policy that comes out of the HSCRC.

He also thanked the remaining commissioners who “have a tremendously hard voluntary job,” and noted that the commission have “challenges ahead” as the state transitions to the model.