In September 2023, the Centers for Medicare & Medicaid Services (CMS) released a new state total cost of care (TCOC) model called the States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model. This model follows in the footsteps of other successful state total cost of care (TCOC) models to improve health care spending, improve population health, and advance health equity by reducing disparities in health outcomes. Continue reading to learn more about the AHEAD model.

AHEAD Model Overview

As mentioned above, AHEAD is a TCOC model which makes participating states responsible for managing health care quality and costs across all payers and ensuring health care providers deliver high-quality care, improve population health, advance health equity by supporting underserved patients, and offer greater care coordination. Through the AHEAD model, CMS aims to strengthen primary care, improve care coordination, and increase screening and referrals to community resources like housing and transportation to address social drivers of health. Previous state-based models implemented in Maryland (Maryland Total Cost of Care Model), Pennsylvania (Pennsylvania Rural Health), and Vermont (Vermont All-Payer Accountable Care Organization Model) have all been successful. Maryland’s TCOC model was launched in 2014 which established global budgets for certain hospitals. The state found that they had reduced spending on hospital care per person, improved quality of care, lower rates of readmissions, and fewer hospital-acquired conditions. An evaluation for the model for 2019 to 2021 also showed that this model reduced acute care hospital admissions and spending, increased Medicare non-hospital spending, reduced total Medicare fee-for-service (FFS) spending, and lower rates of preventable hospital admissions and readmissions. Maryland is considering participating in the AHEAD model and reviewing whether it would support its current programming. Vermont implemented its All-Payer Accountable Care Organization (ACOs) model in 2017 which gave health care providers the opportunity to participate in Medicare ACOs. A 2023 evaluation showed that under this model, health care spending was within the target range, and there was an improvement in many quality measures, but the COVID-19 pandemic may have affected these results. Pennsylvania started their rural health model in 2019 to increase access to high-quality care in rural areas and to improve the financial viability of rural hospitals by using global budgets for select hospitals. Since this is the most recent TCOC model, there is not as much performance data available, but preliminary results show that the model met the performance target for people with Medicare or private insurance, potentially reduced Medicare FFS spending and hospitalizations, and improved the financial viability of participating hospitals.

Performance period and funding of model

The AHEAD model is scheduled to run for 11 years from 2024 through 2034. CMS will provide funding to selected states for up to six years with a maximum of $12 million dollars per state. Funding will be given to states in an initial award and then in subsequent annual non-competing awards over the course of up to 6 years. The model concludes in December 2034 for all cohorts regardless of implementation date. There are specific parameters around how states can use the funds for planning and implementation activities including:

  • Recruiting primary care providers and hospitals to participate in the model 
  • Setting statewide total cost of care (TCOC) cost growth targets and primary care investment targets
  • Building behavioral health infrastructure and capacity
  • Supporting Medicaid and commercial payer alignment
  • Hiring new staff to support the model
  • Investing in new technology
  • Supporting demographic data collection
  • Developing Medicaid hospital global budget methodology

Who can participate in the model?

States that are interested in applying must apply through CMS’ Notice of Funding Opportunity (NOFO). CMS is expecting to award agreements to up to eight states across both application periods. Eligible applicants are state agencies (e.g., state Medicaid agency, state public health agency, state insurance agency, or other entity with rate-setting or budget authority) with the authority to enter into an agreement with CMS on behalf of their state. States selected for the model will select one of three cohorts based on implementation period. Cohort 1 is an 18-month pre-implementation period starting in July 2024 until December 2025 with the first performance year in beginning in January 2026. Cohort 1 is for states who are ready to apply and implement the model as soon as possible. Cohort 2 is a 30-month implementation period from July 2024 to December 2026 wile the first performance year starts in January 2027. Cohort 2 is for states who are ready to apply but need additional time to prepare for implementation such as developing a data infrastructure or recruiting providers. Lastly, Cohort 3 is a 24-month pre-implementation period from January 2025 to December 2026. This cohort’s performance year begins in January 2027. States should have submitted their applications through NOFO by March 18, 2024 for Cohorts 1 and 2 and should submit their applications by August 12, 2024 for Cohort 3.

For more information or to learn more about CMS initiatives and updates, please contact the professionals listed below, or your regular Crowell contact.