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CMS Quality Conference 2026: CMS Signals a Faster Path from Policy to Practice in Quality

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The Centers for Medicare & Medicaid Services (CMS) convened the  at a moment when healthcare quality policy is increasingly being shaped through formal rulemaking as well as informal policy signals and implementation vehicles. The discussions reflected CMS鈥檚 core priorities鈥攚ellness and prevention, digital infrastructure, patient safety, and program integrity鈥攁nd reinforced a broader theme that CMS intends to continue to move faster to advance these priorities than traditional regulatory timelines allow. 

黑料不打烊 (黑料不打烊) experts attended QualCon and are working with healthcare organizations as they interpret these signals and prepare to implement the policy priorities highlighted during the conference. This article describes these cross-cutting issues and highlights strategies and actions healthcare entities can take now. 

Moving Faster Requires Different Approaches to Policy and Implementation 

CMS Administrator Dr. Mehmet Oz emphasized CMS鈥檚 increasing use of voluntary commitments, public-private collaboration, Requests for Information (RFIs), and other informal policy tools as alternatives or precursors to formal requirements, creating an imperative for early stakeholder engagement. 

  • CMS leaders highlighted stakeholder convenings as a key vehicle to drive change outside of regulatory processes, including the pledge by health plans to streamline and improve聽聽requirements.聽These commitments聽may聽signal聽future regulatory聽mandates聽and shifts in the marketplace.聽
  • 罢丑别听聽provides聽the foundation for quality initiatives.聽罢丑别听CMS聽Administrator聽highlighted聽the 600-plus organizations that have committed to the goals of聽the聽CMS Health Tech Ecosystem,聽including companies聽that聽support conversational聽artificial intelligence (AI)听assistants聽that聽would make聽ingestion聽and sharing of data with healthcare providers easier through the 鈥淜ill the Clipboard鈥� efforts, and聽have pledged聽to support interoperability.聽
  • CMS聽is using聽listening sessions听补苍诲听RFIs聽to聽shape聽the direction聽and drive quality聽policy.聽The agency聽leaders invited聽new ideas聽and reinforced the value of feedback received聽through聽RFIs, citing examples such as the聽, Medicare Advantage improvements, and the RFI聽on聽. CMS leaders also convened sessions pertaining to patient safety, dialysis care, and best practices for medication for treatment of opioid use disorder, signaling these are areas under consideration for policy development.聽

Health and Wellness Positioned as a Core Component of Quality Efforts 

QualCon prominently featured CMS鈥檚 commitment to promoting health and wellness. Dr. Oz discussed underutilization of existing benefits, such as annual wellness visits, and CMS Deputy Administrator and Director of the Center for Medicare, Chris Klomp, focused on community-based approaches to prevention. Mr. Klomp also spoke of ongoing interest in moving physician payment toward primary care and away from specialty procedures. 

CMS officials highlighted new Center for Medicare and Medicaid Innovation (Innovation Center) models, such as  and , which are aligned with the Administrator鈥檚 policy priority of empowering patients. CMS officials also acknowledged challenges to behavioral change and the levers CMS is employing in new models, including technology and incentives for beneficiaries, partnerships, and community health workers. 

Digital Infrastructure Framed as Necessary for Quality Reforms 

QualCon also emphasized making quality measurement fully digital, specifically using FHIR庐 (Fast Healthcare Interoperability Resources) specifications. Agency officials reported having FHIR specifications for 70+ measures and characterized FHIR as the standard for new measures. Use of FHIR aligns with broader interoperability rules, including  requiring state Medicaid programs and payers participating in public programs to use FHIR for electronic prior authorization by January 2027. 

Quality measurement leaders spoke about the value of integrating quality data in real time and the move from 鈥渓agged scorecards鈥� to 鈥渃ontinuous intelligence.鈥� Notably, attendees expressed enthusiasm about the potential for AI to support measurement and personalization of quality, measures addressing trajectories of care over time, and new approaches to risk adjustment. 

Application of AI to Patient Safety Is on the Horizon 

Patient safety discussions focused on the potential for AI鈥慹nabled tools to identify risk earlier and prevent harm, particularly with regard to medication safety and error prevention. CMS speakers emphasized that realizing these gains depends on intentional governance, standardized workflows, and patient involvement in AI development and deployment. Rather than positioning AI as a substitute for clinical judgment, sessions framed it as an augmentation tool requiring clear safeguards and accountability. 

Avoiding Fraud, Waste, and Abuse 

CMS leaders noted the potential to avoid fraud, waste, and abuse through a cross-functional fraud detection center that can analyze claims in real time. CMS also discussed collaboration with states and private insurers and encouraged external input. 

Medicaid Discussions 

Medicaid received more limited attention at this conference. CMS Medicaid officials reiterated interest in having fewer quality measures and engaged in discussion with state leaders on how to focus quality efforts. They highlighted learnings about the Medicaid early, periodic, screening, diagnosis, and treatment (EPSDT) program and from CMS Innovation Center models centered on maternal health and substance use disorder care. 

What We鈥檙e Watching Next 

Following QualCon 黑料不打烊 experts are continuing to follow several federal quality-related initiatives that affect plans, health systems, states, and other healthcare delivery organizations include: 

  • How CMS translates voluntary commitments and聽Health Tech Ecosystem initiatives into聽lasting聽policy expectations聽for transforming quality聽
  • The pace at which digital quality measurement shifts from pilot to standard practice聽
  • How AI governance frameworks evolve alongside聽additional聽real-world聽use cases in quality and safety聽

Connect with Us 

黑料不打烊, including Leavitt Partners and Wakely, work with healthcare organizations to navigate the transition to digital quality measurement and act upon digital quality data to improve healthcare delivery. 

Wakely uses analytics-driven operating design and return on investment (ROI) analysis, clinical data acquisition models and tools, and pilot-based validation of measure rates and processing performance to support scalable digital quality measurement (dQM) adoption, as outlined in the . 

Leavitt Partners is working with federal agencies on a number of activities related to the CMS Health Tech Ecosystem and interoperability, including the Kill the Clipboard initiative, which was informed by a seminal . In addition, Leavitt Partners convenes the , which is working to solve both technical and policy issues in digital quality measurement. 

For聽details, contact聽our experts below.

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Outlook 2026: Regulatory Uncertainty, Evidence Evolution, and the Future of Healthcare Innovation

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As healthcare innovation accelerates, regulatory and policy frameworks are evolving just as rapidly. Across drug development, medical devices, diagnostics, and emerging therapies, innovators are navigating a landscape shaped by shifting federal signals, changing evidentiary expectations, and growing pressure to align regulatory success with real鈥憌orld access and affordability. 

This article draws on insights from experts at 黑料不打烊, Inc. (黑料不打烊), and Leavitt Partners, an 黑料不打烊 company, who bring decades of experience working within the US Food and Drug Administration (FDA) and in collaboration with industry leaders to address complex regulatory, commercialization, and access challenges. Their perspectives reflect firsthand experience with translating policy intent into operational reality across the healthcare ecosystem. 

These insights underscore a central theme in early 2026: Innovation is advancing faster than the policy frameworks designed to support it. For developers, investors, payers, and policymakers alike, the challenge is no longer whether innovation is possible, but whether regulatory and coverage pathways can evolve quickly and coherently enough to support it. 

A More Fragmented Policy Signal Environment 

Historically, federal health policy followed relatively formal and predictable channels鈥攔ulemaking, guidance documents, and established notice and comment processes. Today, innovators increasingly receive policy signals through nontraditional and informal mechanisms, including agency websites, journal articles, speeches, podcasts, and pilot initiatives. 

This evolution in communication and how we ingest information has two implications. 

First, it creates greater uncertainty for market planning, as policy direction often emerges incrementally or indirectly. In addition, the higher stakes are higher for understanding the federal regulatory environment. Organizations that closely track agency behavior, precedent, and internal norms are better positioned to distinguish meaningful change from repackaged status quo. 

For innovators operating on 10鈥憈o-15-year development timelines, even modest policy volatility can materially affect research and development (R&D) investment decisions, pipeline prioritization, and commercialization strategies. 

Innovation Is Outpacing Traditional Evidence Models 

Scientific progress, especially in rare disease therapies, advanced biologics, and precision medicine, can both strain and challenge traditional clinical trial paradigms. Small patient populations, heterogeneous disease pathways, and novel mechanisms of action are making large, randomized trials increasingly difficult or impractical. 

In response, federal regulators are signaling a broader openness to: 

  • Real鈥憌orld evidence (RWE)听
  • Natural history studies聽
  • Registries and longitudinal data聽
  • Biomarkers and intermediate endpoints聽

These approaches are not new, but their expanding role reflects a recognition that traditional evidence hierarchies alone are no longer sufficient for evaluating next鈥慻eneration therapies. At the same time, regulators continue to emphasize that alternative evidence must meet rigorous scientific standards, particularly when used to support initial approval or expanded indications. 

The implication for innovators is that evidence strategy can no longer be an afterthought. Developers must design programs that support regulatory approval and downstream coverage, pricing, and post鈥憁arket evaluation. It is possible for evidence frameworks to overlap, but they must remain distinct. 

Regulatory Approval Is a Midpoint for the Innovator Product Journey 

A recurring challenge across healthcare sectors is the disconnect between regulatory approval and payer coverage decisions. While regulators focus on safety and efficacy, payers assess value, durability of response, and budget impact because they often struggle to justify large upfront payments within their annual budgeting structure. 

This misalignment is particularly acute for high-cost therapies with long-term benefits and products approved through accelerated or flexible pathways, where long-term value may misalign with short-term payer budgeting cycles. 

As policymakers explore ways to modernize regulatory frameworks, questions remain about whether coverage and payment systems will adapt in parallel. Without greater alignment, innovators may continue to face scenarios where regulatory success does not translate into timely or consistent patient access. 

Predictability and Durability Are Emerging Policy Priorities 

Looking further ahead in 2026 and beyond, predictability and durability鈥攏ot just flexibility鈥攁re emerging as core priorities for industry and policymakers alike. Flexibility is essential to support innovation, but durable policy frameworks, particularly those derived from statute, offer greater confidence in long鈥憈erm investments. 

Several themes will likely shape the next phase for how federal health policy handles innovation: 

  • Streamlining early clinical development, including first鈥慽n鈥慼uman studies聽
  • Codifying successful regulatory pathways to ensure durability across聽presidential聽administrations聽
  • Clarifying expectations for post鈥憁arket evidence generation聽
  • Improving transparency and consistency in agency advice聽

These efforts reflect a broader recognition that innovation ecosystems depend not just on scientific breakthroughs, but also on stable rules of the road. 

Why It Matters 

For healthcare innovators, the policy environment in 2026 presents both opportunity and risk. They can leverage new evidence frameworks, engage earlier with regulators, and shape emerging policy conversations; however, they also face risks linked with unpredictability, misaligned incentives, and uncertainty around long鈥憈erm access and reimbursement. 

Successful innovation will increasingly depend on industry partners with integrated strategies that connect regulatory planning, evidence development, policy engagement, and market access from the earliest stages of innovation. 

For policymakers, the challenge is to modernize regulatory and coverage frameworks in ways that support innovation without sacrificing rigor, affordability, or public trust. 

Connect with Us 

As healthcare continues to evolve, one thing is clear: Innovation policy is no longer a niche concern. Rather, it is central to the future of access, outcomes, and system sustainability. 

For further exploration of these issues, listen to 黑料不打烊鈥檚 recent podcast on how evolving regulatory frameworks are shaping innovation, commercialization, and access across healthcare. The discussion features insights from Ben Shand of 黑料不打烊 and Julie Tierney of Leavitt Partners, whose combined experience spans senior roles within FDA and extensive collaboration with industry on complex regulatory and policy challenges. The conversation expands on the themes highlighted here, including regulatory predictability, evidence evolution, and strategies for navigating uncertainty across the product life cycle. 

The takeaway is clear: Waiting until late in development to collaborate with regulators and policymakers is no longer a viable strategy. Organizations that engage earlier and more actively are better positioned to anticipate shifts, shape the conversation, and avoid costly misalignment between approval and coverage. 

黑料不打烊 can help you identify where the policy landscape is creating new opportunities and where risks may emerge. We work with organizations to develop proactive engagement strategies that align with today鈥檚 changing environment, especially when traditional approaches are no longer delivering results.

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HIMSS26: Building the Foundation for Interoperable, AI-Ready Healthcare聽

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Key Insights from the 2026 HIMSS Global Health Conference and What They Mean for Your Organization  

American healthcare is confronting two urgent realities. First, the administrative burden on clinicians and patients remains very high. Prior authorization delays, manual intake forms, fragmented records, and identity challenges continue to drive cost and erode the trust that is the foundation of the provider-patient relationship. At the same time, artificial intelligence (AI) capabilities are advancing rapidly, outpacing governance frameworks, regulatory structures, and data infrastructure. Together, these dynamics are the defining operational challenge of 2026. 

Federal policy is responding less through sweeping new regulation than through coordinated execution levers. The Centers for Medicare & Medicaid Services (CMS) initiatives, including the , information blocking enforcement,  (HTI-5) Proposed Rule , and the prior authorization (PA) final rule, reflect a shift toward making interoperability operational in production environments. What distinguishes this moment from prior efforts is the explicit linkage between interoperability and AI. Federal leaders are saying openly that reliable, trustworthy, and deflationary AI depends on disciplined data exchange, identify, and governance. 

罢丑别鈥� (HIMSS26),鈥疢arch 9鈥�12, in Las Vegas, NV, marked a marked a turning point in which the industry began translating that message into tangible organizational decisions. Two 黑料不打烊 (黑料不打烊), companies actively engaged in the program: the  moderated sessions in the preconference forums and Interop Experience Pavilion, and , lent their expertise in Medicare Advantage (MA), Medicaid managed care, risk adjustment, and quality measurement鈥攖he areas in which FHIR-based infrastructure will directly reshape performance and risk management. 

This article reflects what these teams learned and what it means for the industry. 

What We Learned at HIMSS 

Several themes surfaced throughout the conference, not as isolated ideas but as shared assumptions of the field shaping near-term strategy: 

Successful AI deployments rely on interoperability and quality data.  Across sessions and conversations, speakers emphasized that success will require not just access, but data that are standardized, governed, and semantically consistent. The promise of AI is advancing quickly, but many organizations are still working to build the data foundation needed to support it. 

CMS-aligned networks are paving the way for federal transformation. Concrete pledge deadlines, and a Centers for Medicare & Medicaid Services (CMS) Administrator willing to say publicly that healthcare is the only sector where technology has failed to be deflationary, sent a signal that the industry took seriously. Voluntary frameworks are being seen as previews of future requirements. 

Information blocking enforcement is no longer theoretical. Officials from ASTP/ONC confirmed that notices of potential nonconformity have already gone out to health IT firms under the certification program, and more are on the way. With Department of Health and Human Services Office of the Inspector General penalties of up to $1 million per active violation and more than 1,500 complaints filed since the federal portal launched, the compliance calculus has shifted. Dr. Thomas Keane, National Coordinator for Health Information Technology, was direct: Developers that block information risk losing their certification, and their clients risk losing access to CMS payment incentives. The long implementation runway is over, enforcement is now active, and the consequences are real. 

The federal vision for AI is patient-first. CMS Administrator Dr. Mehmet Oz said to slow the inflationary effects of the growth in healthcare technology, he wants to put agentic AI tools in the hands of every Medicare beneficiary before the end of this administration鈥攁n ambitious goal. He cautioned, however, that none of it works without building the necessary data infrastructure now. AI is the destination; interoperability is the road. 

CMS is ready to pivot to digital quality measures and put investment behind it. CMS and ASTP/ONC leadership announced that all quality measures will now be modeled on HL7 FHIR. MultiCare Connected Care showed it working in production. Early adopters will shape the pathway and gain strategic advantage as the transition accelerates. Successful transformation will require simplified workflows, established lines of accountability, and a product-oriented mindset geared toward data and interoperability. 

Identity is a known gap, but the solution is taking shape. Patient matching, provider directories, and consumer-facing credentialing came up in nearly every policy and technical session. The $6 billion CMS cited for annual provider directory validation waste alone captured attendees鈥� attention. But HIMSS26 brought concrete, live progress on the credential side and a Leavitt Partners-moderated preconference session focused on moving the industry from alignment in principle to alignment in production. 

Governance is now an operational discipline. Health system chief information officers and chief medical information officers described governance structures already in place and under active revision. The shift from “we need governance” to “our governance needs to evolve” was palpable. 

Consumer technology has entered the clinical conversation. Emory Hillandale Hospital鈥檚 announcement of the first all-Apple facility signaled that the boundary between consumer devices and clinical infrastructure is evolving. 

Autonomous AI systems were everywhere. Vendors demonstrated how AI agents are handling administrative workflows, such call centers, revenue cycle, scheduling, and PA. Health system leaders acknowledged real deployments alongside real uncertainty about governance, security, and identity management for non-human actors in clinical environments. The technology is moving faster than the frameworks designed to oversee it. 

What It Means: Five Insights 

The CMS Health Technology Ecosystem is redefining what “interoperable” means for federal programs; TEFCA will scale what it proves 

For years, interoperability has been a certification checkbox rather than a functional description. The CMS ecosystem is changing that by tying the definition to observable behaviors: HL7 FHIR APIs that respond, encounter notifications that fire, identity verification that works at the front door. More than 700 organizations have pledged; CMS has set hard deadlines (March 31 for initial results, July 4 for advanced capabilities), and the agency is tracking outcomes, not just attestations. 

In the fireside chat moderated by ,  was direct: The regulatory cycle is slow, and what the ecosystem can produce in nine months is what the regulations will eventually codify. Organizations that shape this work now will have less catching up to do when it becomes mandatory. 

The Trusted Exchange Framework and Common Agreement (), which now exchanges 600 million health records across 75,000+ organizations (up from 10 million in January 2025), is the rising tide that scales what the speedboat networks prove. And state-level health information exchanges (HIEs) remain strategically important given their governance structures, trust relationships, and operational capabilities. 

Provider directory is the sleeper issue 

Patient matching and digital identity got considerable attention, but a provider directory may be the highest-yield near-term opportunity. CMS estimates $6 billion is wasted annually simply validating where providers practice, what licenses they hold, and what insurance they accept鈥攁 problem that compounds every time a payer, health system, or patient tries to connect with the right clinician through the right channel. 

A real-time, standardized provider directory is foundational to PA, network adequacy, and care navigation. It is also one of the three heavy lifts that the CMS Health Technology Ecosystem is actively working to address. Organizations that invest now in clean, FHIR-based provider data will be ahead of an upcoming requirement. 

Semantic Consistency Determines AI Outcomes 

The distinction between syntactic interoperability (data move between systems) and semantic interoperability (data means the same thing in every system) was a running thread through the Interoperability and HIE Forum. Dan Liljenquist, chief strategy officer at Intermountain Healthcare, put the operational reality plainly during his keynote address: Intermountain is building a unified semantic data layer in the cloud鈥攊ngesting EHR data daily, normalizing it against common models, making it computable across 34 hospitals鈥攂ecause without that layer, AI produces unreliable outputs at scale. 

Graphite Foundry, the mechanism Graphite Health is developing as a nonprofit collaborative, represents a model where health systems build shared semantic infrastructure rather than solving the same problem independently behind proprietary walls. The broader implication: AI strategy and data infrastructure strategy are the same, and organizations that treat them separately will find that their AI investments underperform. 

Digital Identity and Privacy Architecture are Converging 

Policy and industry discussions reflected growing alignment around higher鈥慳ssurance digital identity, privacy鈥憄reserving design, and consistent credentialing. Progress in this area reduces friction for patient鈥慸irected access while supporting trust and security across ecosystems.  

Mr. Howells moderated the preconference session, Bridging Digital Worlds: Identity Federation Strategies Across B2B and B2C Ecosystems, which brought together CMS Chief Health Technology Officer Alberto Colon Viera, David Bardan (CLEAR), Wes Turbeville (ID.me), and Renee Edwards, Applied AI at UnitedHealth Group. The session produced three concrete outcomes:  

  • CMS confirmed Medicare.gov is now live with CLEAR, ID.me, and Login.gov, meaning consumers can choose which credential they use and relying parties can leverage that same credential to authenticate consumers into their own systems.  
  • Participants agreed on a common IAL2 token payload.  
  • UnitedHealth Group announced United Health Group鈥檚 pursuit of Kantara certification and unification of all their portals to a single identity based on IAL2. 

Identity has long been a blocker to scalable patient access. Aligning on a common IAL2 model removes another friction point and moves the industry closer to a future in which patients can securely access their medical records through the apps they choose. 

Interoperability is Expanding Beyond Traditional Boundaries  

For years, FHIR-based infrastructure has been built primarily around clinical and claims data. But two sessions in signaled meaningful progress on two long-neglected fronts: pharmacy and oral health. Pharmacy data 鈥� critical to medication management, managed care, and complete longitudinal records鈥攁re increasingly being drawn into the standards-based exchange ecosystem, including the recognition of pharmacists as clinicians whose data and clinical contributions belong in the longitudinal record. 

Patients are also gaining real-time visibility into their own pharmacy benefits: the Consumer Real-Time Pharmacy Benefit Check, an open FHIR-based standard, puts cost and coverage information directly in patients’ hands at the point of prescribing 鈥� a meaningful step toward the same patient empowerment that the “kill the clipboard” and digital identity work is driving elsewhere in the ecosystem.  

Oral health data, long absent from the medical record despite its correlation with diabetes, cardiovascular disease, and maternal health, is now the subject of active federal interoperability investment across CMS, the Veterans Health Administration, and the Indian Health Service. Leavitt Partners’ alliances in both domains鈥攖he Oral Health Interoperability Alliance and the Pharmacy Interoperability and Clinical Services Alliance (PICSA)鈥攁re helping shape the technical and policy frameworks that will bring these data streams into the broader ecosystem. Whole-person care requires whole-person data, and the field is finally building the infrastructure to support it. 

What Remains Unresolved 

Despite momentum, several issues remain unresolved:  

The Role of Payers in TEFCA and National Exchange is Still Evolving 

There is growing interest in extending TEFCA beyond provider-to-provider exchange to support payer use cases such as quality measurement, care management, and prior authorization. However, questions remain around participation models, data rights, governance, and value alignment. Until these are resolved, payer engagement will likely remain uneven, limiting the full potential of nationwide exchange. 

The Business Case for Interoperability is Not Yet Consistently Realized 

While the policy direction is clear, the economic incentives are still misaligned. Providers often bear the operational burden of data exchange, while financial benefits may accrue elsewhere. Similarly, investments in interoperability infrastructure do not always translate into immediate or measurable returns. Advancing adoption will require clearer ROI pathways, shared incentives, and models that distribute value more equitably across stakeholders. 

Governance and Operating Models are Still Catching Up to the Technology. 

There is increasing recognition that interoperability at scale is not just a technical challenge 鈥� it is a governance challenge. Questions around enforcement, delegation of authority, participant accountability, and operational oversight remain active areas of development. As exchange expands, these governance structures will need to mature rapidly to sustain trust and ensure consistent implementation. 

Near-term signals, such as CMS responses to pledged-network deadlines, finalization of HTI5 and related rules, continued prior authorization modernization, and digital quality measure implementation, will shape the next phase of execution. 

What We’re Watching 

Extending Open Standards to Rural and Underserved Providers 

The Rural Health Transformation Program offers a unique opportunity to expand the open standards ecosystem being built. Leavitt Partners and Wakely are engaged in both the policy conversations and implementations that will determine how to ensure this opportunity can transform healthcare. 

March 31 and July 4 deadlines 

CMS set these dates publicly and specifically. How the agency responds to organizations that miss them will signal how serious the voluntary framework really is and how quickly it becomes a program condition. 

HTI-5 Finalization and HTI-6 Proposed Rule 

ONC’s proposed rule to focus certification on HL7 FHIR APIs, algorithm transparency, and interoperability is still in proposed form. Finalization, as proposed, would transform the vendor landscape and remove the safe harbor that legacy proprietary interfaces have relied on. 

Prior Authorization is Moving 

The federal regulations and last summer’s voluntary commitment by more than 60 health insurers covering 257 million Americans across commercial, Medicare Advantage, and Medicaid markets has created a moment of regulatory and industry alignment. Payers committed to reducing the volume of services requiring PA, standardizing electronic PA using HL7庐 FHIR庐 APIs, and answering at least 80 percent of electronic requests in real time by 2027. The direction is clear, the commitments are specific, and the infrastructure to support them 鈥� HL7庐 FHIR庐 APIs being built for patient access and the ecosystem is the same infrastructure PA modernization requires. Leavitt Partners and Wakely are watching closely as implementation moves from pledge to production.  

The Digital Quality Measure (dQM) Enters the Implantation Phase 

CMS has made clear where the market is headed: digital quality measurement built on HL7 FHIR. The challenge now is execution. FHIR infrastructure developed for prior authorization or patient access can be leveraged for quality reporting as well, creating the potential for reusable investment across use cases. But the transition to dQM is not simply a technology upgrade; it is a broader business transformation that will require changes in workflows, governance, and organizational readiness. 

Digital Identity Momentum 

The IAL2 token payload agreement, Medicare rollout of digital identity, and United Health Group鈥檚 Kantara pursuit signal that the industry is aligning on a shared credential infrastructure. Leavitt Partners will continue to support the development and adoption of the open identity standards that make patient-directed access real across payers, providers, and health technology platforms. 

The infrastructure for an interoperable, AI-ready healthcare system is being built under real policy pressure in real-world environments. 黑料不打烊 companies bring health IT policy and open standards expertise to help organizations shape and navigate that landscape as well as actuarial and implementation depth to translate it into financial and operational decisions. Organizations that invest in the foundation鈥攄ata, identity, standards, governance鈥攚ill be positioned to move faster and more responsibly as AI capabilities continue to advance. 

We Can Help 

黑料不打烊 companies are uniquely positioned to help organizations move from interoperability strategy to real-world execution. We provide end-to-end support across digital quality measurement transformation, policy-to-operations execution, pharmacy interoperability, oral health interoperability, digital insurance cards, and the actuarial and financial modeling needed to assess performance impact, revenue implications, and reporting risk. Leavitt Partners and Wakely professionals were active participants in HIMSS26 conversations and bring the policy, operational, measurement, and financial expertise needed to help clients prepare for what comes next. 

This blog reflects policy signals and public session content from the 2026 HIMSS Global Health Conference. It represents the perspective of Leavitt Partners and Wakely Consulting Group, both 黑料不打烊 Companies, and does not constitute legal or regulatory advice

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Fiscal 2027 State Budget Proposals: Provider Taxes, Medicaid Financing, and OBBBA Effects

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As of March 15, 2026, most governors had released proposed budgets for state fiscal year (FY) 2027. In addition, several governors in states that enacted biennial budgets in 2025 have released supplemental proposals. These FY 2027 state budget proposals signal how governors are responding to Medicaid financing changes, provider tax phase downs, and new implementation costs created in the  (P.L. 119-21, OBBBA). 

Given the requirement enacted in OBBBA, this year鈥檚 state budgets are more than spending plans. They are critical policy tools governors will use to navigate changes in federal funding, new program requirements, and increasing pressures across Medicaid and broader healthcare markets. 

The FY 2027 budgets indicate how governors are attempting to balance competing imperatives: maintaining healthcare coverage and access, stabilizing provider networks, financing Medicaid obligations, and aligning state healthcare and health-related programs with new federal rules. Healthcare provider taxes, revised funding priorities, and targeted funding proposals are key levers in the process of balancing budgets. 

黑料不打烊 Information Services (黑料不打烊IS) has published its final iteration of the  (subscriber access required), which examines proposed FY 2027 state budgets (January 22, 2026, A Look at Proposed State Fiscal Budgets). Our March 2026 issuance covers all proposed FY 2027 budgets for non-biennial budget states and some supplemental budget proposals for states that enacted biennial budgets in 2026. Following is a look at key trends in Medicaid proposals and some of the substantial budget proposals that are discussed within the report. 

Provider Taxes and Medicaid Financing Under OBBBA 

One notable fiscal federal policy change under OBBBA is the phase down of the Medicaid provider tax programs, a financing mechanism many states rely on to draw down federal matching funds and support provider payments. The federal law freezes existing provider tax programs, prohibits new ones, and requires Medicaid expansion states to phase down the minimum allowable tax rate from 6 to 3.5 percent by 2032. 

In addition, OBBBA places new limits on state-directed payments, capping them at 100 percent of Medicare rates for expansion states and 110 percent for non-expansion states. Grandfathered payment arrangements will be phased down by 10 percent annually beginning in 2028. 

FY 2027 state budget proposals highlight how these changes will have substantial and long-term fiscal impacts, even if some effects are delayed. Examples include: 

  • Arizona estimates it will receive $5.3 billion less in federal support between FY 2029 and 2033 as a result of policy changes. 
  • 颁补濒颈蹿辞谤苍颈补听projects聽that聽state聽expenditures聽for Medi-Cal聽will聽grow $2.4 billion in聽FY聽2027, largely聽because聽the Medical Provider Interim Payment聽expires聽in聽FY聽2026 and聽a decrease in聽managed care organization (MCO)听tax revenue available聽to support the聽Medi-Cal聽program.聽Gov.聽Gavin Newsom鈥檚 proposed聽FY聽2027 budget assumes a transition period for the decreased MCO tax through December 31, 2026.聽
  • Connecticut Gov. Ned Lamont鈥檚 proposed supplemental budget for the 2025鈥�27 fiscal biennium calls for reducing hospital provider taxes by $275 million. Connecticut increased supplemental payments and provider taxes during the 2025 legislative session, but the governor鈥檚 proposal would reduce the inpatient hospital provider tax rate from 6 percent to 4.1 percent. 
  • Illinois projects that most of the budgetary impacts will begin in FY 2028, with federal Medicaid support reduced by approximately $2.8 billion annually by FY 2031. 
  • New York Gov. Kathy Hochul鈥檚 budget proposal updates the managed care tax spending plan and estimates the state will collect $1.5 billion fewer receipts than anticipated in fiscal 2027. 

Implementation Costs: Staffing, Systems, and Administrative Burden 

Along with the decreased federal funding, implementing OBBBA carries significant administrative and operational costs, compounding pressure on state budgets. 

According to an Associated Press  of 25 state budget protections, states will need to spend up to $1 billion in federal and state funds on technology upgrades and additional staff to fully implement the Medicaid work and community engagement requirements. Many FY 2027 budgets reflect this reality, with new investments focused on expanding staffing capacity and modernizing eligibility and data systems. For example:

  • 惭颈肠丑颈驳补苍鈥檚 proposed budget, for example, includes $186.6 million from the state general fund to fully implement OBBBA, including $80.3 million in all funds to hire additional full-time employees who can meet the increased workload. 
  • Missouri proposes $294.6 million and dedicated staff members to comply with OBBBA. 
  • Arizona proposes a $14.4 million one-time investment and dedicated OBBBA implementation staff. 

Several governors also propose investments to help beneficiaries remain enrolled amid more frequent eligibility checks and new requirements. For example: 

  • Kentucky proposes $35.6 million in FY 2027 and $11 million in FY 2028 to modify the Medicaid information technology systems and other administrative systems to cover increased costs for the more frequent six-month eligibility redeterminations and to implement the new community engagement and work requirements. 
  • Rhode Island proposes $32.7 million for technology modifications to the RIBridges software to maintain compliance for various health and human services programs to align with OBBBA. 

What to Watch: FY 2027 Budget Decisions and Medicaid Financing Risks 

Upcoming provider tax phase downs and caps on state-directed payments constrain core funding tools just as implementation costs for staffing and systems are rising, forcing difficult decisions about coverage, provider support, and administrative capacity. Providers face growing uncertainty as tax supported supplemental payments are reduced or restructured, with potential implications for cash flow, service availability, and network participation. 

Managed care plans, meanwhile, must navigate shifting rate development assumptions, changes in provider payment arrangements, and increased enrollment churn tied to eligibility and redetermination changes. 

While the timing and magnitude of effects vary, these proposals underscore that provider tax and supplemental payment changes are more than abstract future concerns. They already are shaping FY 2027 budget decisions and long-term Medicaid financing strategies. 

Most state legislatures are still debating their spending plans, making it critical to track which proposals are included in FY 2027 budgets, which are scaled back, and which are eliminated. These budget decisions will play a central role in determining market stability, access to care, and program sustainability in the years ahead. 

黑料不打烊IS will publish additional reports in the coming months summarizing each state鈥檚 enacted budget. The first iteration is expected in May 2026. 

Connect with Us 

As the policy and funding landscapes continue to evolve, states and other stakeholders need to remain flexible. 黑料不打烊 brings the expertise, tools, and insights needed for stakeholders to stay on top of the rapidly changing environment. For questions or to connect with an 黑料不打烊 expert, contact Andrea Maresca and Kathleen Nolan. 

The full report is available to 黑料不打烊IS subscribers. Questions can be directed to Maddie McCarthy. 

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Connecting the Dots: Medicaid Community Engagement Requirements and State Readiness for 2027

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New federal Medicaid community engagement requirements, along with more frequent redetermination and a reduced retroactive聽eligibility timeframe, take effect January 1, 2027. These changes are reshaping state Medicaid policy agendas, budget decisions, and聽eligibility system design as states prepare to implement federally mandated聽work and聽community engagement requirements聽for the Affordable Care Act (ACA) expansion population.聽This blog addresses the forthcoming policy changes, key issues related to eligibility and information systems, and聽timely聽actions for state partners preparing to meet the new requirements.

Community engagement requirements聽often聽are聽discussed聽in broad terms: whether they encourage聽self-sufficiency聽or create barriers.聽For state Medicaid agencies, managed care plans聽(MCPs), and providers, however,聽the more聽immediate and consequential question is operational:聽Is the Medicaid program鈥攁cross eligibility systems, data flows, partner roles, and communications鈥攔eady聽to administer these requirements without losing eligible people?聽

Based on our work with states, Medicaid programs, and community partners, the answer is dependent on the approach to execution. Specifically, it hinges on how states prepare their systems and partners for compliance with community engagement requirements without placing undue burden or expectations on beneficiaries, government agencies, MCPs, and community partners. 

Federal Context: Medicaid Community Engagement Requirements Beginning in 2027 

Under , states that extended Medicaid to able鈥慴odied adults in the ACA Medicaid expansion population (up to 138 percent of the federal poverty level) must: 

  • Apply community engagement requirements to expansion adults, unless they qualify for an exemption聽
  • Conduct聽eligibility redeterminations at least every聽six聽months聽for these enrollees聽
  • Reduce retroactive coverage eligibility from聽90聽to聽30 days聽
  • Verify聽community engagement聽or exemptions using available data sources聽
  • Enforce consequences for noncompliance beginning in 2027聽

Forthcoming federal guidance and regulations will clarify key implementation details. In the interim, states are using the statutory framework to design the necessary policy changes. For example, many states will move beyond a simple 鈥渞equirement鈥� model toward support-oriented programs that make compliance achievable for enrollees, minimizes administrative churn, and leverages available data and information systems functionality to reduce compliance burden. In so doing, states need to use existing federal guidance to answer the following questions: 

  • Who is in scope and who is聽exempt听补苍诲听how聽are聽exemptions聽verified聽without creating new burdens聽on聽enrollees聽and the people and systems that support them?聽
  • What counts as聽a 鈥渜ualifying activity鈥� for compliance聽with the community engagement聽requirement聽(e.g., education/training and caregiving)?聽
  • Which聽data sources can聽be聽deemed聽as聽鈥渁uthoritative鈥澛爁or聽verifying聽compliance?聽
  • How聽and when聽will聽beneficiaries be notified, supported, and given opportunities to聽supply聽missing information?聽
  • How聽do they聽track compliance with the community engagement聽requirement听补苍诲听address聽its聽intended and unintended impacts?聽
  • How聽do聽the聽verify eligibility聽for new聽applicants and what process聽do they聽use to聽monitor聽ongoing compliance for existing enrollees?聽

Analyis and planning for聽community聽engagement聽is underway now,聽state by state, and will determine whether the mandates聽will聽increase employment, education, and volunteerism聽and yield the expected health听补苍诲听economic benefits聽or drive avoidable coverage loss.聽

From Policy Requirement to Workable Medicaid Community Engagement Implementation 

The  touch multiple components of a Medicaid enterprise, including: 

  • Eligibility and enrollment systems and renewal workflows聽
  • Data sources (wage databases, SNAP/TANF interfaces, workforce systems, education/training records)听
  • Managed care member services聽and,聽potentially,聽capitated聽payments聽
  • All engagement with contact聽centers聽(e.g.,聽phone, chat, text messaging,聽email,聽beneficiary portal, etc.)听
  • Document processing聽
  • Notices, appeals, fair hearing processes, and case management聽
  • Reporting, audit trails, and quality assurance聽

In other words, the backend systems that support compliance with the community engagement requirement must be designed and built for real-world administration and meet oversight requirements. Backend system readiness is among the most important operational issues for expansion states, as it will dictate the overall timeline and success in meeting Medicaid leaders鈥� goals. 

How Medicaid MCPs and Providers Will Support Enrollees 

The Centers for Medicare & Medicaid Services (CMS) collaborated with  to meet the compressed community engagement implementation timeline, the scale of system changes required across eligibility and verification workflows, and long-standing cost and capacity constraints. States are being asked to implement these complex new expectation largely within existing eligibility platforms, which were designed for purposes other than continuous activity tracking or cross-agency data exchange. 

Although these arrangements may improve affordability and speed, states must still assess whether vendor-offered solutions align with their specific policy choices, data sources, partner roles, and operational risk tolerance. 

Medicaid MCPs and provider groups, including hospitals and federally qualified health centers (FQHCs), will be on the front lines of enrollee retention. These organizations should engage with states now to ensure systems and information flows support their work. MCPs should focus on access to: 

  • Timely actionable information聽regarding聽which聽members are subject to the requirement聽
  • Visibility into exemption status and pending聽verification聽
  • Clear rules and data feeds that support proactive outreach聽
  • Alignment on plan member communications聽

Primary care providers, hospitals, FQHCs, and behavioral health providers play a critical role in identifying and supporting exemptions. If the exemption processes are slow, unclear, or burdensome, patients with legitimate medical or functional limitations may lose coverage and providers may incur increased uncompensated care costs. Providers should be engaging states to solidify: 

  • Streamlined, clinically grounded exemption processes聽
  • Clear guidance on documentation standards聽
  • Fast, predictable exemption determinations聽
  • Feedback loops when exemption requests are denied or incomplete聽

Community engagement requirements will require coordination with nontraditional partners, such as: 

  • Departments of Labor/Workforce聽Development聽
  • Community colleges, adult education, and training programs聽
  • SNAP/TANF agencies (and their employment and training programs)听
  • Community-based听补苍诲听faith-based organizations,聽organizations聽that聽offer聽volunteer and community service opportunities,聽and local workforce boards聽
  • Employers, chambers, and sector-based workforce intermediaries聽

These partners can become essential to making the policy workable for enrollees, but they often have timelines, data standards, funding streams, and performance incentives that differ from Medicaid鈥檚. Partners should be in conversation with states now about investments in a cross-agency and cross-sector governance structure that answers practical questions about the definitions, systems and workflows, and beneficiary experience. 

States Should Act Now 

A real and preventable risk is embedded in the 2027 timeline: coverage loss among healthy, working adults who remain eligible but cannot navigate new processes. States must look across every part of their Medicaid system, decide what they need each partner to do, and ensure those partners have the information, tools, and authority to act. Plans and providers must be clear and advocate for what they need to prevent eligible individuals from losing coverage. 

Handled well, this is an opportunity to modernize systems, strengthen cross-sector coordination, and may demonstrate whether community engagement can yield a net benefit to members鈥攏ot just add steps to maintaining coverage. 

Connect with Us 

黑料不打烊 Medicaid experts assist Medicaid and state policymakers with the following: 

  • Policy-to-operations design聽
  • Cross-agency governance and partner alignment聽
  • Information聽systems聽impact assessment, change planning,聽testing聽strategies聽and readiness metrics聽
  • Scenario聽planning and beneficiary impact analysis聽
  • Communications聽and operational playbooks聽
  • Program聽integrity, reporting, and audit support聽

黑料不打烊 contributors to this article include Erin Dorrien, Kaitlyn Feiock, Andrea Maresca, and Juan Montanez. 

黑料不打烊 Blog Series 

The 黑料不打烊 (黑料不打烊) Connecting the Dots blog series brings our experts together to examine the major policy, program, and market forces shaping healthcare coverage, delivery systems, and financing in 2026. The posts look beyond individual changes to connect emerging developments across programs and markets to help leaders understand what鈥檚 changing, why it matters, and how their decisions shape the path ahead. This month our experts weigh in on preparations for Medicaid Work and Community Engagement Requirements.  

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PBM Reform Accelerates: New Rules, Broader Oversight, and What鈥檚 Ahead

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The first quarter of 2026 marked a turning point in federal oversight of pharmacy benefit managers (PBMs), the intermediaries that manage prescription drug benefits for most health plans across the commercial insurance market, Medicare Part D, and other programs. New legislation, agency rulemaking, and enforcement activity collectively signal a new phase of oversight that could materially reshape PBM contracting, compensation, and transparency requirements. 

Most notably, the following developments stand out: 

  • 罢丑别听US Department of Labor (DOL)听聽new disclosure requirements for PBMs聽that聽serve聽self-insured聽Employee Retirement Income Security Act聽(ERISA)听plans.聽
  • 罢丑别听Consolidated Appropriations Act聽of聽2026 (CAA 26),聽聽February 3,聽2026, establishes聽comprehensive PBM聽transparency and contracting聽requirements聽in the聽commercial insurance market and Medicare Part D.聽
  • 罢丑别听Federal Trade Commission (FTC)听聽a settlement聽with Express Scripts, Inc.聽(ESI),聽requiring significant聽changes to聽ESI鈥檚聽business practices.聽

Together, these actions signal a trend toward greater PBM accountability, with implications for plans, pharmacies, manufacturers,听补苍诲听consumers.聽This article provides a high-level overview of the major聽recent聽developments聽in the PBM reform policy landscape, along with key considerations for聽stakeholders.聽

Medicare Part D: Key Statutory Changes 

Beginning in plan year 2028, CAA 26 makes significant changes for PBMs operating in Medicare Part D. Key provisions include: 

  • Requiring聽PBMs to聽provide聽annual reports to聽plan sponsor clients聽detailing aggregate and drug-specific costs聽
  • Restricting聽PBMs compensation聽structures, prohibiting payments tied to drug prices, rebates, or price-based benchmarks听补苍诲听limiting PBMs to only receive聽bona fide service fees that reflect聽fair market value聽
  • Stipulating聽additional聽parameters related to rebate guarantees, contract terminology, and audit rights聽

Additional provisions that will take effect in beginning with plan year 2029 include: 

  • A requirement that聽plan聽sponsors and PBMs聽comply with聽forthcoming聽standards for 鈥渞easonable and relevant鈥澛爌harmacy聽contracting terms and conditions聽
  • Expansion of聽the聽enforcement infrastructure聽to avert聽potential violations of聽the program鈥檚聽pharmacy contracting聽requirements聽

Key considerations: The Centers for Medicare & Medicaid Services (CMS) has broad discretion in implementing these provisions, including setting pharmacy contracting standards, determining which PBM affiliates are subject to new requirements, and defining 鈥渇air market value.鈥� PBMs will face expanded reporting and compliance obligations, while plans and other stakeholders will have opportunities to shape implementation through the regulatory process. 

Commercial Health Insurance Market: Key Statutory Changes 

For the commercial market, CAA 26 establishes similar transparency requirements for PBMs that serve fully insured and self-insured plans, with reporting required up to four times per year. Unlike Medicare Part D, the statute does not prohibit pricelinked compensation in the commercial market, but it does require detailed disclosure of PBM fees and revenue streams. For contracts with selfinsured plans, PBMs must remit 100 percent of rebates and fees tied to drug utilization, subject to specified limitations. 

Key considerations: These provisions significantly expand federal oversight in the commercial market. PBMs will need to scale compliance infrastructure, while employers and other plan sponsors may seek enhanced analytical and actuarial support to interpret disclosures and assess PBM performance. 

Medicaid Left Out, For Now. 

Unlike prior , CAA 26 does not include Medicaid-specific PBM reforms, such as  on spread pricing (i.e., a PBM charges a payer more than the amount it pays the dispensing pharmacy for a prescription) and expanded National Average Drug Acquisition Cost () reporting. 

Key considerations:聽These policies聽continue to have聽听补苍诲听could聽reemerge in legislation.聽States,聽PBMs,聽and managed care plans聽should continue聽monitoring聽for聽renewed federal action聽on these policies.聽

DOL鈥檚 Proposed PBM Fee Disclosure Rule 

DOL鈥檚 proposed , 鈥淚mproving Transparency Into Pharmacy Benefit Manager Fee Disclosure,鈥� would require PBMs serving self-insured ERISA plans to  information about rebates, manufacturer fees, pharmacy payments, and spread pricing. In late February, DOL  the public comment period to April 15 to allow stakeholders to address how the proposed rule should align with the newly enacted CAA 26 provisions. 

Key considerations: DOL could withdraw the proposal in favor of the statutory framework or could finalize the rule to take effect before the CAA 26 requirements begin. Either path would further increase near-term compliance for PBMs and plan sponsors, and stakeholders should monitor this space closely. 

FTC Settlement with ESI 

罢丑别&苍产蝉辫;贵罢颁鈥檚&苍产蝉辫; with ESI resolves insulin-focused  against the PBM and imposes extensive requirements related to transparency, compensation, rebates and fees, and benefit design. The settlement also includes less common provisions, such as a commitment to reshore and increase disclosures related to ESI鈥檚 rebate group purchasing organization (GPO) functions. 

Key considerations: If similar settlements are reached with other PBMs, the FTC could play an expanded role in shaping PBM market behavior, supplementing legislative and regulatory reforms with enforcement-driven standards. 

State Efforts to Regulate PBMs 

States continue to pursue PBM reforms, with  of laws enacted in recent years addressing licensure, reporting, pharmacy reimbursement, and contracting standards. Although the Supreme Court鈥檚 2020  in Rutledge v. PCMA opened the door to certain state-level reforms,  have narrowed the scope of permissible state regulation, particularly when ERISA preemption or Medicare Part D conflicts arise. 

Key considerations: Stakeholders operating across multiple markets and states will continue to face a complex and evolving patchwork of requirements, underscoring the importance of ongoing policy tracking and compliance coordination. 

Connect with Us 

Recent federal and state actions suggest that PBM reform is entering a more operational phase defined by transparency听补苍诲听enforceable standards governing compensation, contracting, and market聽behavior. As implementation unfolds, stakeholders across the prescription drug supply chain will need to engage closely with regulators, assess new data flows, and adapt聽their聽business practices to a more prescriptive oversight environment.聽

For more information about the policies described鈥痠n this article and the PBM policy landscape more broadly, please contact our experts  or Stephen Palmer. 

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Outlook 2026: What CMS鈥檚 Proposed 2027 NBPP Signals for ACA Marketplaces, States, and Consumers

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The Centers for Medicare & Medicaid Services (CMS) proposed  marks a notable shift in Marketplace policy, expanding lower premium plan options, relaxing certain federal standards, and moving more implementation and oversight responsibility to states and Marketplaces. It also introduces eligibility and verification policies that could significantly affect enrollment, operations, and market stability. 

To unpack what this could mean for plan year 2027 and beyond, Andrea Maresca spoke with Zach Sherman, Managing Director for Coverage Policy and Program Design at 黑料不打烊 (黑料不打烊); Lina Rashid, Principal at 黑料不打烊; and , PhD, Principal at Wakely, an 黑料不打烊 company, who, alongside colleagues, published a Policy Brief on state-level and consumer impacts, as well as a Wakely  on the proposed rule. 

 Q: When you zoom out from the technical details, what are the big takeaways from the proposed 2027 NBPP for states, consumers, and issuers? 

Lina Rashid: At a high level, the proposal reallocates risk and responsibility across the system. Consumers may see more lower premium options through expanded catastrophic plan eligibility and more flexible bronze plan design, but often with more cost-sharing, higher deductibles, or greater complexity. For consumers, affordability is about more than just premiums; it鈥檚 about how much healthcare costs for individuals and their families overall and the cost of care when they need it. 

States are being given options to take on more oversight and operational responsibility but without additional federal funding. And issuers are being given more flexibility, but it comes with uncertainty regarding enrollment and risk mix. 

Zach Sherman: The rule鈥檚 cumulative effect matters more than any one policy. Expanded catastrophic eligibility, higher out-of-pocket exposure, relaxed network standards, and tighter verification requirements all interact. Together, they raise questions about access, affordability, and whether Marketplaces are equipped to manage administrative and enrollment disruption. 

Q: The paper highlights potentially significant enrollment effects. What鈥檚 driving that dynamic? 

Michael: Two things stand out. First, the proposal implements statutory changes that remove advance premium tax credit (APTC) eligibility for certain lawfully present immigrants beginning in 2027. CMS estimates more than a million people could lose eligibility, and it鈥檚 reasonable to expect most of them will exit the individual market. 

Second, the proposed income verification changes could generate millions of data matching issues (DMIs) that temporarily or permanently cut off access to advance premium tax credits. While CMS projects a relatively modest disenrollment effect, our analysis suggests losses could be meaningfully higher depending on how quickly issues are resolved. We estimate that approximately 4.7 million enrollees could receive DMIs under the proposal, and upward of 80 percent of them could temporarily or permanently lose access to APTCs, putting coverage at risk. 

Zach: If consumers can鈥檛 afford the full premiums while resolving a data issue, many will drop coverage. That creates churn and administrative strain that Marketplaces must manage. 

Q: How do these policies affect state Marketplaces and regulators specifically? 

Zach: States are being asked to do more across multiple fronts. Network adequacy oversight is shifting toward states that conduct effective rate review. States may also choose or feel pressure to take on Essential Community Provider (ECP) review authority, including for new non-network plans. Accepting that responsibility requires legal authority, staff capacity, and technical infrastructure. 

At the same time, states may need to stand up the State Exchange Improper Payment Measurement (SEIPM) program, which CMS acknowledges will increase administrative burden. 

The proposed State Exchange Enhanced Direct Enrollment (SBE-EDE) option is also a significant shift. Rather than operating a centralized consumer enrollment platform, Marketplaces would focus on certifying, overseeing, and monitoring multiple third-party entities. As a former director of a state-based Marketplace program, I know this is a fundamentally different operational posture that comes with oversight and compliance costs. 

Q: The proposal also introduces non-network plans. What should stakeholders be watching here? 

Michael:  may offer lower premiums, but they change how access works. Provider participation depends on the willingness to accept the plan鈥檚 payment as payment in full. On paper a plan may meet access standards, but in practice consumers could face difficulty finding care. That places additional oversight responsibility on states to determine whether access is sufficient in practice. If aggressively priced non-network plans disproportionately attract healthier enrollees, it can create financial risk for issuers and for the broader market. 

Q: What does this mean for market stability going forward? 

Zach: Stability will vary by state. States that invest in oversight, consumer assistance, and operational readiness鈥攐ften a state-based Marketplace鈥攎ay be better positioned to manage these changes. Others may see sharper enrollment declines or access issues. That divergence across states is an important signal from this proposal. 

Q: What should states and stakeholders be doing right now? 

Zach: States should be doing scenario planning, assessing which flexibilities to adopt, where to maintain higher standards, and whether they have the capacity to take on expanded responsibilities. These decisions will shape how the rule plays out on the ground. 

Michael: Issuers should be , risk adjustment exposure, and operational readiness. All stakeholders should remember that comments on the proposed rule are due March 13, 2026. 

尝颈苍补:听Notably, CMS聽is not done with聽regulatory reforms.聽罢丑别听agency solicited聽comment聽on聽medical聽loss聽ratio (MLR)听policies听补苍诲听paused聽Essential Health Benefit聽benchmark updates,聽as well as issues not covered in this proposed rule, such as revisions to the Section 1332 waiver and聽Section聽1333 interstate compacts.聽States and issuers should be tracking what may come next, not just what鈥檚 in this proposal.

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Strategies to Address Fraud, Waste, and Abuse in Non-Emergency Medical Transportation

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Fraud, waste, and abuse (FWA) in Medicaid non-emergency transportation (NEMT) remain a persistent challenge for state Medicaid programs and health plans because of the scale and complexity of the benefit. NEMT is a critical, mandatory benefit intended to ensure eligible Medicaid beneficiaries without reliable transportation can get to necessary medical appointments. Numerous investigations and audits, however, have revealed that some transportation providers bill for trips that never occurred, inflate mileage, fabricate tolls, or even recruit patients with kickbacks to generate fraudulent claims, diverting limited program funding away from legitimate care needs.

The NEMT benefit represents a small share of Medicaid costs鈥攅stimated at around 1 percent of total Medicaid spending. With the codification of NEMT as a required benefit in 2020, market analysts forecast NEMT will grow considerably, nearly doubling in market size from 2021 to 2028.

Comprehensive, nationwide estimates specific to NEMT FWA are limited. Federal and state audits like those in , , and , however, have uncovered millions of dollars in claims that did not comply with federal and state requirements, underscoring systemic vulnerabilities in oversight and documentation. For example, a 2022 federal audit of New York Medicaid NEMT found an estimated $84 million in unallowable federal reimbursements and another ~$112 million that may not have complied with requirements over two years.[1]

Furthermore, individual criminal cases have involved schemes of $1 million to more than $2 million in falsely billed transportation services. Isolated settlements and audits indicate that fraud and abuse can be substantial locally even if we lack a clear, reliable national aggregate estimate.

A 2025 report by 黑料不打烊 (黑料不打烊) about NEMT contracting approaches found an opportunity for states and health plans that administer non-emergency transportation to leverage technology and require or incentivize new strategies to improve program integrity and quality in NEMT going forward. Some of the identified strategies to address FWA include:

  • Adopting or requiring digital solutions鈥攕uch as GPS trip verification, electronic visit logs, and real-time data analytics鈥攖o detect irregular billing patterns before claims are paid, replacing outdated paper logs and manual reconciliations that were prone to error and exploitation.
  • Focusing trip verification efforts on standing orders (pre-approved authorizations often for repeated treatments), given that they comprise the largest share of trips and are often vulnerable to fraud.
  • Positioning and educating medical facilities to be critical partners in preventing FWA by confirming appointment attendance, either via phone or signature on the trip log.
  • Automating mileage reimbursement (for enrollees who drive themselves or are driven by family members or friends) through a mobile app, which enabling riders to schedule and track their trips and submit claims quickly while allowing NEMT brokers to verify the mileage using GPS. This system would also allow brokers to better target their anti-fraud efforts, such as requiring additional documentation only for higher reimbursement amounts.

Since the publication of that report, several state Medicaid programs have issued NEMT procurements that maintain a strong emphasis on preventing FWA. For example, the 2025 Wisconsin NEMT RFP included provisions to promote greater collaboration between the Wisconsin Department of Health Services (DHS) Office of Inspector General (OIG) and NEMT broker, including 鈥渜uarterly and ad hoc meetings to discuss open complaint investigations, red flag patterns, and establish safeguards for ongoing or suspected fraud, waste, and abuse鈥� and imposed penalties for fraud incidents that go undetected by the broker.

FWA in Medicaid NEMT may represent a fraction of overall program spending, but the consequences are outsized: Every improper payment diverts resources away from beneficiaries who depend on transportation to access essential care. As states, health plans, and NEMT brokers modernize contract requirements, strengthen oversight, and embed technology-driven verification into their contracts and operations, the focus is shifting from retrospective recovery to proactive prevention, transparency, and accountability in transportation services.

Continued collaboration among Medicaid agencies, brokers, medical providers, and oversight entities will be critical for sustained progress. By pairing smarter contracting with real-time data tools and clear accountability, states and Medicaid health plans can better safeguard public dollars while ensuring that NEMT remains a reliable lifeline for the people it is designed to serve.

Learn more about how 黑料不打烊 Helps NEMT Stakeholders Overcome Challenges. If your organization is ready to talk about how 黑料不打烊 can help advance your NEMT goals, please contact one of our experts below.

Related Resources:

[1] US Department of Health and Human Services, Office of Inspector General. New York Claimed $196 Million, Over 72 Percent of the Audited Amount, in Federal Reimbursement for NEMT Payments to New York City Transportation Providers That Did Not Meet or May Not Have Met Medicaid Requirements. September 12, 2022. Available at: .

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The Value Shift in Medicare Advantage: What 2026 Benefits Tell Us 黑料不打烊 the Market鈥檚 Next Chapter

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The Medicare Advantage (MA) program continues to evolve as plans respond to shifting policy signals, market pressures, and beneficiary expectations. A new paper from Wakely, an 黑料不打烊 Company鈥斺�攑rovides a data-driven examination of how MA benefit designs are changing and what those changes signal about the future direction of the program. 

This paper refreshes Wakely鈥檚 ongoing MA , updating  with the latest 2026 plan enrollment data. It builds on Wakely鈥檚 established work examining benefit design, supplemental offerings, and the relationship between bids, rebates, and plan value, including . 

This article highlights findings from the proprietary value-add metric that Wakely developed to provide a comprehensive assessment of MA plan value. Although it can be used as a comparative metric to evaluate relative changes year over year, it is not intended to represent pricing. 

From Benefit Expansion to Optimization 

Over the past decade, MA plans have steadily expanded benefit offerings, supported by strong enrollment growth and favorable rebate dynamics. The 2026 benefit landscape suggests that plans have been taking a more measured approach (see Figure 1). Wakely鈥檚 analysis finds that plans are becoming more strategic in how benefits are designed and deployed, maintaining or enhancing benefits that are best aligned with quality performance, affordability, and target populations while pulling back in other areas. 

Plans appear to be optimizing benefits to better align with member needs, quality performance, and financial parameters. Examples include refining supplemental benefits, adjusting cost-sharing structures, and rethinking how benefits support care management and health outcomes. 

Figure 1. Change in Plan Value-Add from 2025 to 2026

 The shift reflects an MA market in which differentiation and long-term sustainability are increasingly important. 

Supplemental Benefits: More Targeted, More Strategic 

Supplemental benefits remain a defining feature of Medicare Advantage, but their role is evolving. Wakely鈥檚 paper highlights a move away from expanding the number of benefits toward targeted benefit offerings that are more clearly connected to member engagement and outcomes. 

Plans are homing their focus on benefits that support daily living, chronic condition management, and access to care, particularly for populations with higher needs. This targeted approach suggests plans are thinking about value, operational complexity, and how benefits contribute to overall value propositions. 

Between 2025 and 2026, the percentage of members with access to common supplemental benefits has, on average, stayed consistent or slightly decreased among the general enrollment population (Figure 2). The percentage of members who are enrolled in plans that offer over-the-counter (OTC) drug, transportation, and Flex Card benefits has decreased by 11 percent, 6 percent, and 4 percent, respectively. Conversely, the Dual Eligible Special Needs Plan (D-SNP) population saw an increase in member access to all supplemental benefit categories except transportation (an 8% decrease). 

Figure 2. Percent of Enrollment in Common Supplemental Benefits 

For stakeholders across the healthcare ecosystem, this trend underscores the importance of understanding not just what benefits are offered, but why. 

Shifts in Cost Sharing and the Enrollee Experience 

Wakely鈥檚 analysis also points to notable shifts in cost sharing and premium structures. There is continued attention to balancing affordability for members with the need to manage plan liability amid changing benchmarks and utilization patterns. 

These decisions directly affect the member experience. Small shifts in copays, deductibles, or benefit limits can influence enrollment, retention, and satisfaction, particularly in competitive markets. As plans fine tune these levers, data-driven insights become critical to understanding how benefit changes may resonate with different member segments. 

2026 Signals for Future Bid Cycles 

The benefit trends identified in 鈥�The Value Shift鈥� series suggest several broader signals for the MA market: 

  • Value over volume: Plans are prioritizing benefits that support quality, outcomes, and sustainable growth.聽
  • Greater segmentation: Benefit designs are increasingly tailored to specific populations and market dynamics.聽
  • Data-informed decision-making: As margins tighten, plans are relying more heavily on analytics to guide benefit strategy.聽
  • Special needs plans continue to drive growth.聽Enrollment in Chronic Condition Special Needs Plans (C-SNPs)听is聽the fastest-growing segment聽in MA.聽

These dynamics have implications for MA organizations and for providers, policymakers, and partners seeking to understand how MA continues to shape care delivery and costs. 

Value-Add Metric and Benefit Design Insights 

In this paper, Wakely paired its actuarial and analytic expertise with tools that enable detailed benefit and market analysis. One of those tools, Wakely鈥檚  (WMACAT), calculates a comprehensive value-add metric that integrates five core components into a consistent framework that allows for apples-to-apples comparisons across plans, markets, and years. In addition, Wakely鈥檚  (SMART) supports broader competitive assessments by layering enrollment weighting, geographic variation, and plan positioning into the analysis. 

As an 黑料不打烊 company, Wakely鈥檚 work is complemented by broader policy, market, and strategy expertise, helping organizations connect benefit decisions to regulatory developments, operational considerations, and long-term goals. 

For health plans and healthcare organizations navigating the next phase of Medicare Advantage, these combined capabilities can respond to questions such as: 

  • How competitive is our benefit design today,聽and where are the risks?聽
  • Which benefits are most aligned with our population and quality strategy?聽
  • How might future policy or payment changes affect benefit sustainability?聽

Looking Ahead 

MA benefit design remains an important signal of market direction by showing how plans are responding to policy change, market competition, and financial pressure. As plans shift from broad expansion to more targeted value strategies, the ability to measure, compare, and interpret benefit changes becomes essential as plans look ahead to the 2027 and 2028 bid cycles. 

Wakely will continue to build on this work with upcoming analyses, including deeper dives into Part D design changes and the implications of the sunset of the Value-Based Insurance Design (VBID) program. 

For information about this analysis and the Wakely tools, contact  and . 

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2027 NBPP Proposed Rule Signals Further Marketplace Changes

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The Centers for Medicare & Medicaid Services聽(CMS)听聽proposed rule,聽published February 11, 2026,聽arrived聽at a pivotal moment for the聽Affordable Care Act (ACA)听Marketplaces. The temporary enhanced premium tax credits (ePTCs), first expanded in 2021 and extended through 2025, expired at the end of last year, returning Marketplace subsidies to their original ACA structure in 2026.聽As we discussed in earlier articles聽(here听补苍诲听here), that shift is already affecting affordability, plan selection, and enrollment dynamics鈥攑articularly for consumers who聽are ineligible聽for聽premium assistance.聽

The proposed 2027 NBPP represents a significant reset for the Marketplace, reflecting CMS vision and policy priorities to strengthen program integrity while expanding plan design flexibility and consumer choice as a pathway to affordability, as well as policies to defer to state authority. Healthcare organizations and other interested stakeholders may submit comments on the proposed rule through March 13, 2026. 

The remainder of this article addresses the key policy proposals and considerations for issuers, states, and consumer groups. 

颁惭厂鈥檚&苍产蝉辫;笔谤辞辫辞蝉补濒蝉&苍产蝉辫;

The proposed NBPP for 2027 sets standards for the Exchanges and ACA-compliant individual and small group markets and updates payment parameters for risk adjustment and risk adjustment data validation (RADV). The rule also implements changes approved under the , (P.L. 119-21, OBBBA) and includes a range of policies spanning plan certification, eligibility and verification, and Exchange oversight. 

Expanded Plan Design Flexibility 

CMS proposes to discontinue standardized plan options in the Federally-facilitated Marketplace (FFM) and remove limits on the number of non-standardized plans offered by issuers on the FFM and state-based Marketplaces on the federal platform (SBE-FPs). Issuers would be permitted to decide whether to discontinue existing standardized or chronic condition plans or continue them with modified cost sharing. 

Considerations: This change is designed to allow greater innovation in plan design. It also raises questions about the potential return of a more complex Marketplace shopping experience for consumers who will have to shift through more plans. 

Certification of Non-Network QHPs 

One of the most consequential proposals would allow 鈥渘on-network鈥� plans to be certified as qualified health plans beginning in 2027. These plans would not rely on contracted provider networks. Instead, they would set benefit payment amounts and require issuers to demonstrate that sufficient providers鈥攊ncluding Essential Community Providers (ECPs) and mental health and substance use disorder providers鈥攁re willing to accept those amounts as payment in full. 

Considerations: CMS positions non-network plans as a way to create lower premium options. For states and issuers, this proposal introduces new oversight and operational considerations related to access standards, consumer protections, the risk of balance billing or access gaps for consumers, and potential market instability. 

Changes in Catastrophic and Bronze Cost Sharing 

The proposed rule would further expand access to catastrophic plans by codifying hardship exemptions for individuals ineligible for advance premium tax credits (APTCs) or cost-sharing reductions (CSRs) because of projected income. CMS also proposes to allow multiyear catastrophic plans with contract terms of up to 10 consecutive years. In addition, CMS proposes new flexibility for certain bronze plan designs in the individual market. In both cases, CMS proposes to allow catastrophic and bronze plans to exceed the annual maximum out-of-pocket limit. 

Consideration: These policies reflect CMS鈥檚 emphasis on affordability through lower premiums and expanded consumer choice, while shifting more financial risk to enrollees through higher cost sharing. 

Network Adequacy and Essential Community Providers 

CMS proposes to give states greater discretion in provider access for network adequacy and ECP certification reviews, including allowing federally funded exchange (FFE) states to conduct their own reviews if CMS determines they have sufficient authority and technical capacity. CMS also proposes to reduce the minimum percentage of ECPs that issuers must include in their networks from 35 percent to 20 percent. 

Considerations: These changes reduce federal prescriptiveness and could lower issuer compliance costs but also place more responsibility on states to monitor access and ensure that vulnerable populations are not adversely affected. 

Essential Health Benefits and State Mandates 

The proposed rule would prohibit issuers from including routine non-pediatric (adult) dental services as an Essential Health Benefit (EHB). More significantly for states, CMS proposes changes to cost defrayal requirements for state-mandated benefits, requiring states to cover the cost of benefits considered 鈥渋n addition to EHB鈥� under specified criteria, even if those benefits are embedded in the state鈥檚 EHB benchmark plan. 

Consideration: These changes could have direct budgetary implications for states, pricing implications for issuers, and could stunt or potentially decrease benefits for consumers. 

Program Integrity and Increased Eligibility Verification 

CMS includes a robust set of program integrity provisions, including: 

  • Strengthened聽standards for agent, broker, and web聽broker marketing practices聽
  • Required use of a聽US聽Department of Health and Human Services (HHS)-approved consumer consent and application review form聽
  • Codification of聽聽policies聽and reintroduction of聽聽provisions聽not聽previously聽implemented,聽including聽expanded special enrollment period (SEP) verification听补苍诲听increased eligibility standards for enrollees applying for APTCs聽(see聽Navigating CMS鈥檚 2025 Marketplace Rule: What It Means for ACA Marketplaces, Insurers, and Consumers)听
  • Implementation of the State Exchange Improper Payment Measurement (SEIPM) program for state-based Marketplaces聽

Consideration: These policies continue CMS鈥檚 heightened scrutiny of enrollment activity and subsidy eligibility. CMS鈥檚 policies are likely to increase data matching issues (DMIs), which could increase burden on Marketplaces and enrollees, resulting in reduced enrollment. 

Preparing for Policy Driven Changes in ACA Marketplaces 

The 2027 NBPP underscores a clear policy shift away from extending federal subsidies toward advancing a Marketplace framework that emphasizes program integrity, state flexibility, and expanded plan design options as mechanisms to promote affordability and consumer choice. 

The proposed rule sets the stage for significant strategic and operational decisions for issuers and states ahead of the 2027 plan year. 黑料不打烊 (黑料不打烊), including Wakely, an 黑料不打烊 company, works with issuers modeling enrollment and risk shifts and to assist in pricing decisions. States also should consider the need for new strategies and approaches to adapt to federal policy changes that are expected for ACA Marketplace programs. 

For more information about the policies described鈥痠n this article, support with scenario-based modeling of enrollment and data-informed strategy development for 2027 and beyond, please contact鈥痮ur experts , Lina Rashid, or Zach Sherman. 

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Outlook 2026: Medicare Advantage Advance Notice鈥擶hat It Means for the 2027 Market

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In this conversation, Andrea Maresca, Senior Principal at 黑料不打烊 (黑料不打烊), caught up with , Director, Wakely, and , Co-Founder & Managing Partner at Health Transformation Strategies, LLC, to unpack the biggest questions emerging from the Calendar Year (CY) 2027 Medicare Advantage (MA) and Part D Advance Notice. Of particular interest was the Centers for Medicare & Medicaid Services鈥檚 (CMS鈥檚) proposed risk adjustment and diagnosis source changes, which are drawing significant attention across the industry. 

Q: The headline is 鈥渇lat鈥� payments. How should the market interpret CMS鈥檚 projected rate change? 

Tim Courtney: CMS  a net average payment change of just +0.09 percent for CY 2027鈥攁bout $700 million (M). The effective growth rate is about 4.97 percent, but it鈥檚 largely offset by risk model and normalization changes and the proposed diagnosis source policy. 

Jon Blum: Exactly. It鈥檚 important to note that CMS鈥檚 impact projections are based on the change in its average payments. Its proposed policies will have much more far-reaching distributional impacts, depending on the diagnoses of their enrolled members. At the same time CMS recently proposed changes to its Star Ratings methodologies. Over time, we could see quite significant changes to the balance of Medicare Advantage payments distributed across the country that could significantly affect benefit offerings and premium amounts. 

Q: What鈥檚 most surprising in the Advance Notice for 2027? 

Blum: The diagnosis source tightening is the big one. CMS proposes excluding diagnoses from 鈥渦nlinked Chart Review Records鈥� from risk score calculation starting in CY 2027. That signals a continued progression by the agency toward encounter-anchored data integrity. Assuming this policy is finalized, Medicare Advantage plans must continue to invest in systems to respond to CMS鈥檚 program integrity focus. 

Courtney: And it鈥檚 not only chart review. CMS also proposes excluding diagnoses from audio-only services for Part C and similarly for Part D. Operationally, that鈥檚 a big deal. Plans need to understand where diagnoses originate, how they鈥檙e supported, and what the downstream risk adjustment factor (RAF) impact looks like by segment and provider channel. 

Q: The Wakely team estimates a different 鈥渇eel鈥� than CMS鈥檚 topline. What does Wakely鈥檚 analysis add? 

Courtney:  helps translate CMS components into both benchmark and plan payment change. 

Blum: This point is really key. Wakely鈥檚 analysis flags that rebasing/repricing impacts aren鈥檛 fully reflected yet, which means county-level outcomes can diverge materially once the final Rate Announcement is released. The rebasing could be particularly volatile this year as CMS adjusts for rural emergency hospital payments and the removal of anomalous and suspect DME claims. Both adjustments vary by geographic area. 

Q: How should plans think about bid strategy and benefit pressure for 2027? 

Courtney:聽The tighter risk adjustment environment could squeeze rebates and supplemental benefit richness鈥攅specially if bids聽don鈥檛聽adjust quickly. Wakely estimates risk-adjusted bid and rebate revenue is down roughly聽0.35聽percent聽under a set of simplifying assumptions, underscoring the margin sensitivity.聽

Practically this means plans should run a few scenarios: 1) RAF compression from diagnosis source changes, 2) normalization updates, and 3) Star-related shifts鈥攅ven if the Star change is estimated to be small nationally. 

Blum: I鈥檇 add provider contracting and clinical program return on investment (ROI) will likely be an even greater focus for Medicare Advantage plans. When risk score lift is constrained, the value of medical cost management and quality performance becomes more important. We have seen tremendous pushback by healthcare providers over the greater use of prior authorization, with some major health systems dropping their contracts with Medicare Advantage plans altogether. Medicare Advantage plans will have to carefully balance the need to reduce medical expenditures and maintain their provider networks to attract enrollment. Establishing strong partnerships with provider systems will be more important than ever. 

Q: What do plans need most right now? 

Courtney: This is where integrated strategy and actuarial and policy expertise really matter. 黑料不打烊 is supporting stakeholders with payment impact modeling, scenario analysis, and advisory services tied to benchmark rebasing, risk adjustment, Star Ratings, product strategy, and Part D payment policy, so clients can translate the Notice into concrete bid and operating decisions. 

From Wakely鈥檚 side, the detailed benchmarking and methodology interpretation helps clients quantify what CMS鈥檚 technical updates mean in dollar terms and across geographies. 

The CY 2027 Advance Notice is also a reminder that average impacts hide portfolio impacts. The plans that model 鈥渨here the change hits鈥� (diagnosis sources, provider channels, county mix, Stars trajectory) will be best positioned heading into April鈥檚 final Rate Announcement. 

Blum: And from a policy lens, plans need to connect the dots. CMS鈥檚 proposed rate notice is both an articulation of its current priorities and continued progression toward more payment accuracy, encounter-linked data, and program integrity. Medicare Advantage plans should be both prepared to operationalize these policies and to work with the agency to ensure its policies better serve Medicare beneficiaries. 

Medicare Advantage plan leaders will be those organizations that operationalize these policy directions early, constructively engage in the policy process, and form far stronger partnerships with health care providers. 

You can find more insights on the important proposed changes in plan payments, risk adjustment, and other financial and regulatory requirements for 2027 in Wakely鈥檚 summary analysis, . 

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CBO鈥檚 New Baseline Signals Shifting Cost and Risk Dynamics in Medicaid and Medicare

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On February 11, 2026, the Congressional Budget Office (CBO) released  report. The publication, which represents the first time CBO has released Medicare and Medicaid spending baseline projections since , reflects the impact of the 2025 Budget Reconciliation Act (P.L. 119-21, OBBBA), recent changes to Medicare reimbursement for skin substitute products, and the latest Medicare Part D and Medicare Advantage bids.

CBO鈥檚 baseline serves many functions, including serving as the official 鈥渟corekeeping鈥� benchmark used for cost estimates of proposed legislation under consideration in Congress.

Changes to CBO鈥檚 Medicaid Baseline

CBO decreased its projections of 2026鈥�2035  by approximately $514 million from its January 2025 baseline update. The main driver of that reduction is the impact of the Medicaid provisions in the 2025 Budget Reconciliation Act, which CBO expects will reduce total Medicaid enrollment by 13.1 million people in 2035. The drop in Medicaid spending from the OBBBA-related enrollment reductions was partially offset by technical changes CBO made to the Medicaid baseline.

Medicaid costs per enrollee grew by 16 percent in 2025, which was more than CBO had anticipated. The agency attributes the cost per enrollee growth to a reported decrease in the average health status of Medicaid enrollees following the end of the COVID-era continuous eligibility policy.

CBO anticipates that payment rates for Medicaid managed care plans will begin to rise in 2026 because of this decrease in the average health status of enrollees, and the agency has updated the Medicaid baseline accordingly (see Figure 1).

Source: 黑料不打烊 analysis of CBO鈥檚  and F reports.

Changes to CBO鈥檚 Medicare Baseline

Compared with its January 2025 baseline, CBO increased its projections of  by about $1 trillion (roughly $942 billion, by 黑料不打烊 (黑料不打烊) calculations). The main driver of that increase came from CBO鈥檚 updates to its Medicare Part D spending projections, which were increased to reflect higher than expected 2026 bids from private insurance plans that administer the Part D benefit. According to their 2026 bids, Part D plans anticipate a 35 percent increase in their annual per enrollee costs in 2026鈥攁 trend that CBO was not expecting and . Part D spending per beneficiary in 2035 is now projected to exceed $4,000, up from less than $3,000 in the January 2025 baseline (See Figure 2).

The agency鈥檚 Medicare Part A fee-for-service (FFS) spending projection increase was the result of larger than expected increases in 2025 enrollment and per enrollee spending. Those trends were also seen in Medicare Part B FFS but were partially offset by the Centers for Medicare & Medicaid Services鈥檚 (CMS) recent reimbursement changes to skin substitute products. Overall, CBO estimates that the skin substitute reform issued in CMS鈥檚  and  final rules will save $245 billion over the 2026鈥�2035 period, including the effects on the Medicare Advantage (MA) program (see Figure 3).

Finally, CBO reduced its spending projections for MA compared to the January 2025 baseline. This change was made to reflect lower-than-expected Medicare Advantage enrollment in 2025, although the spending implications of lower enrollment were partially offset by higher-than-expected bids in 2026 by providers of MA plans (see Figure 4).

Source: 黑料不打烊 analysis of CBO鈥檚  and  reports.
Source: 黑料不打烊 analysis of CBO鈥檚  and  reports.
Source: 黑料不打烊 analysis of CBO鈥檚  and  reports

Contact an 黑料不打烊 Expert Today

Interested in understanding how CBO鈥檚 latest baseline update affects the federal budgetary implications of certain Medicare or Medicaid policy topics or proposals? Contact our experts, Mark Desmaris and Rachel Matthews, to learn more about 黑料不打烊鈥檚 鈥淐BO-style鈥� federal budgetary scoring work, which relies on The Moran Company鈥檚 long-standing methodology. [1]

Beyond federal budget scoring, 黑料不打烊 is working with states, health plans, and providers to assess how changes in enrollee health status are affecting utilization, costs, and payment rates鈥攁nd what those trends may mean for Medicaid and MA organizations and providers. Our teams support states in evaluating managed care rate setting and program design, help Medicaid and MA plans anticipate risk and bid implications, and assist providers in understanding how changes in patient acuity could affect care delivery, contracting, and financial performance.

[1]Specifically, we apply our understanding of CBO precedents to predict how CBO will likely evaluate the budgetary impact of the legislation in question. We use our best judgment to adopt the assumptions CBO would tend to use, with the understanding that any variance in the assumptions CBO ultimately adopts could cause our estimate to differ from theirs.

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