This blog dives into what an all-payer model agreement is and if we should expect to see more states incorporate this model in the future.
An all-payer model agreement is a system where healthcare costs are the same for every patient under the same provider, no matter what insurance coverage the patient might hold. This means that, for this type of model, “all payers” pertains to private health insurance plans, large employer self-insured health plans, uninsured patients, and Medicare and Medicaid plans (under an approved waiver).
According to the National Conference of State Legislatures (NCSL), payment rates "may be set per service or per case (e.g., hospital care for a heart attack). Rate setting has mainly been used for hospital inpatient and outpatient services."
While the concept sounds simple, implementing an all-payer healthcare model requires significant coordination between state governments, healthcare providers, insurance companies, and the CMS. States typically work with the CMS through waiver programs that allow them to test alternative payment structures in hopes of lowering per capita costs.
Under many all-payer healthcare agreements, participating payers agree to follow a common framework for determining reimbursement rates and healthcare spending targets. The goal is to eliminate disparities in fee schedules. While states don’t necessarily push for identical payment rates, they are pursuing a more predictable and transparent reimbursement environment.
Many modern all-payer programs also incorporate broader healthcare delivery reforms. Participating states have made heavy investments in areas such as primary care, preventive services, and population health programs designed to improve outcomes while controlling long-term healthcare spending.
An all-payer model has advantages for both healthcare providers and patients. An upfront payment system provides cost control incentives and price transparency, and encourages equal access to physical and mental health treatments. It can also reduce administrative burden and simplify contract creation for health care providers.
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Maryland, the poster child for the all-payer model since 2014, has rates for services or treatments that can be set by a state authority or by providers. Maryland’s all-payer model is primarily for hospital services, and is the only state with a hospital finance all-payer system.
A key component of Maryland’s success with the all-payer model has been the state’s Health Services Cost Review Commission. The regulatory body is responsible for establishing hospital payment rates. Unlike most states, Maryland’s commission sets rates that apply across participating payers to standardize the payment environment.
The state has also implemented hospital global budgets that provide participating hospitals with a fixed annual revenue target. These changes are meant to reward hospitals for efficiency, rather than incentivizing them to hit a specific volume. When health systems are incentivized to provide higher-quality care, the entire system improves.
According to the Centers for Medicare & Medicaid Services (CMS), Maryland’s aim is to reduce the all-site hospital readmissions rate; reduce 65 preventable hospital-acquired conditions, also known as Potentially Preventable Complications (PPCs); and measure population health through various population health measures.
From 2014–2018, CMS conducted research into the efficacy of the all-payer model in Maryland, known as the performance period.
The findings, taken directly from CMS, give a look at what happened during the performance period and include the following:
Since the original performance period ended, Maryland has continued refining its approach through the Total Cost of Care Model. Maryland’s experience has influenced many of the newer, state-federal healthcare reform initiatives now being tested across the country. While early all-payer models focused primarily on reimbursement, newer programs place greater emphasis on health equity, primary care investment, and accountability for total healthcare spending.
Overall, the performance period saw some positive findings, but not many significant changes. This project has been going on for years, so it’s safe to assume that this model will continue, but likely to shift and change to provide more substantial results (e.g., Vermont's all-payer ACO model). We do not currently know how Maryland's model versus any other model will fare, considering the growing transparency legislation (e.g., the federal No Surprises Act).
Both Vermont and Colorado have also adopted all-payer models.
CMS is using Vermont's All-Payer Accountable Care Organization (ACO) Model as a new test of an alternative payment model. In this model, the most significant payers throughout the state (i.e., Medicare, Medicaid, and commercial payers) focus on health outcomes by incentivizing value and quality of care.
Participation is voluntary for providers and other payers. Vermont’s model was designed to encourage greater coordination of care among providers while improving patient outcomes. Healthcare providers assumed greater responsibility for managing patient outcomes by participating in accountable care organizations. The model emphasized preventive care, chronic disease management, and community-based healthcare initiatives.
Vermont’s All-Payer ACO model concluded on December 31, 2025. State leaders are now preparing to participate in CMS’s newer AHEAD initiative. The newer model places a greater emphasis on statewide accountability for healthcare spending and coordinated care participation.
Colorado is moving away from the fee-for-service model and aims for a value-based care model. The state aims to have 50% of Medicaid payments tied to a value-based arrangement by 2025.
As value-based care is continually tested as a strong alternative to the typical fee-for-service model, we can expect to see growing changes made in states throughout the American healthcare system. For more information about value-based care, see our blog "Defining Value-based Care."
Colorado’s approach differs somewhat from Maryland’s hospital-focused model and Vermont’s AC-centered strategy. Instead, the state has emphasized a gradual transition toward value-based reimbursement through a combination of alternative payment arrangements and investments in primary care.
These efforts include per-capita payment models and performance-based incentives. Colorado has also focused on expanding access to care in rural and underserved communities while integrating behavioral health services into their care delivery strategies.
In July 2024, the Centers for Medicare & Medicaid Services announced that Connecticut and Hawaii will be joining Maryland and Vermont in a new all-payer initiative.
The AHEAD model (All-Payer Health Equity Approaches and Development) will provide federal funding and other tools to participating states with a goal of addressing healthcare cost growth and supporting health equity.
The AHEAD model is designed as a comprehensive framework that supports several goals, including healthcare affordability, equity, and care delivery transformation. Participating states receive federal support and technical assistance while committing to implement statewide strategies for managing spending.
The initiative places emphasis on strengthening primary care infrastructure and addressing disparities in health outcomes. Participating states must also develop and submit long-term implementation plans.
The all-payer healthcare reform has continued to gain momentum. Additional states have joined the AHEAD initiative. CMS selected New York and Rhode Island as part of the next AHEAD cohort. More states are expected to be considered in future application cycles.
The AHEAD model represents one of the federal government’s most ambitious healthcare payment reform efforts to date. CMS has extended the model’s operational timeline through 2035. Participating states have a longer runway to implement reforms, measure outcomes, and refine their strategies.
New York’s participation is notable given the state’s population and complex healthcare system. Proponents and detractors of the AHEAD program will closely observe how it performs when pressure tested in New York.
AHEAD expands accountability across the entire healthcare system. States are expected to coordinate participation among Medicaid programs and commercial insurers. Each state is also expected to advocate for participation with health systems and primary care providers.
One of the defining features of the AHEAD model is its emphasis on hospital global budgets and prospective payment arrangements. Participating states are required to implement Medicaid hospital global budgets early in the program. Additional participation requirements will be phased in over time.
The model also encourages a move away from fee-for-service reimbursement. Participating organizations receive payments that support greater flexibility in care delivery while maintaining accountability for quality and spending outcomes. States are also required to develop advanced primary care programs to promote prevention efforts.
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The all-payer healthcare model has the potential to be a net benefit for everyone, especially patients. However, it also makes reimbursement more complex. Rivet helps organizations simplify these challenges through tools that support payment variance monitoring, payer rate analysis, and patient pricing transparency. Improved visibility into reimbursement performance can help support your operational efficiency and financial sustainability.
Rivet offers patient payment estimator software solutions that integrate with your EHR for up-front patient cost estimates (that comply with the 2021 No Surprises Act), as well as denied and payment variance solutions.
To dive further into Rivet's Estimates and discuss billing pain points, request a demo.
An all-payer healthcare model is a payment system where multiple payers participate in a coordinated reimbursement schedule. Participants may include Medicare, Medicaid, commercial insurers, and sometimes self-funded employer health plans. The goal is to create more predictable healthcare spending and improve transparency.
State and federal governments play a central role in developing and overseeing all-payer models. The CMS sets various standards and authorizes variances through waivers. State governments are responsible for doing much of the heavy lifting. State regulatory agencies must coordinate with payers and providers while also overseeing hospital rates, spending targets, and quality measures.
Many modern all-payer healthcare initiatives place a strong emphasis on primary care investment and care delivery transformation. Participating providers may also receive additional resources to support preventive care and chronic disease management.
Maryland, Pennsylvania, and Vermont currently use all-payer models. New York and Rhode Island are joining AHEAD.
