Medicare

Medicare

How CMS’s Proposed MSSP Changes Could Strengthen ACO Growth and Sustainability

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Last week’s Health Management Associates (HMA) Weekly Roundup reviewed the Calendar Year (CY) 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program (PFS) proposed rule (CMS-1848-P). That overview highlighted provisions that signal a broader shift in how the Centers for Medicare & Medicaid Services (CMS) is approaching physician payment, primary care, digital healthcare, and value-based care. 

This week, our focus turns to the rule’s proposed changes to the Medicare Shared Savings Program (MSSP). 

Why CMS Is Proposing MSSP Changes 

The proposed updates are designed to address feedback and challenges that accountable care organizations (ACOs) have identified over multiple agreement periods, including benchmark volatility, concerns about rebasing, and questions about whether financial incentives adequately reward ongoing performance. 

CMS is seeking to make the program more predictable while continuing to encourage accountability for quality and total cost of care. The proposals also reflect broader agency goals to make the MSSP more attractive to current and prospective ACOs, strengthen primary care, and improve access for beneficiaries in underserved and provider shortage areas. The impact, however, will vary by region and practice. 

In a July 27, 2026, paper, CY 2027 MSSP Proposed Rule Analysis: What the Medicare Shared Savings Program Changes Mean for ACOs, Wakely, an HMA Company, explains that the financial effect of certain provisions depends on an ACO’s track, agreement period, historical savings, regional efficiency, risk profile, beneficiary assignment, and provider growth strategy. 

Key Proposed Changes to MSSP 

Several proposed changes stand out for ACO leaders and provider organizations, including: 

  • Higher Shared Savings for BASIC Level E ACOs. CMS proposes to increase the BASIC Level E shared savings rate from 50 percent to 60 percent for agreement periods beginning in 2027 or later. This change could make the highest-risk BASIC track more attractive relative to other options and improve financial returns for ACOs that are successfully managing cost and quality performance. 
  • Changes to Benchmark Methodology. CMS proposes to modify how prior savings are incorporated into future benchmarks. The changes are intended to better recognize organizations that have generated savings while addressing long-standing concerns among providers that benchmark rebasing can diminish incentives for high-performing ACOs over time. 
  • New Accountable Care Prospective Trend (ACPT) Guardrails. The proposal would establish guardrails and annual recalculation mechanisms for the ACPT to reduce the likelihood that prospective spending projections diverge significantly from actual national cost trends. CMS also proposes applying certain guardrail provisions to payment years 2025 and 2026, potentially before many 2027 provisions take effect. For agreement periods beginning in 2027 or later, CMS proposes a two-sided guardrail and annual recalculation approach designed to reduce the risk that the prospective trend materially diverges from observed national spending trends.
  • Qualifying Provider Network Growth Incentive and Quality Reporting Updates. CMS proposes a new incentive to support ACO growth and participation. Provider entities should evaluate how beneficiary assignment interacts with provider expansion. As Wakely’s actuaries note, adding providers does not necessarily translate into meaningful assignment growth or financial benefit. The proposed rule also includes changes to quality reporting policies intended to reduce administrative burden and better align program operations with care delivery realities, particularly in rural and underserved areas and markets with access constraints. 

Potential Market-Shifting Effects 

The proposed MSSP changes could influence market behavior beyond annual participation decisions. By making changes to BASIC Level E economics, refining benchmark rules, and adding protections against certain trend-related volatility, CMS may encourage more organizations to consider where they want to be on the spectrum of risk -based arrangements.  

Regionally efficient ENHANCED ACOs that rebase or enter the program in 2027 could face less favorable benchmark adjustments. Lower-risk ACOs may have less room under the proposed risk-adjusted benchmark cap. Organizations that pursue provider growth without corresponding increases in assigned beneficiaries may not realize the intended network growth incentive. These dynamics could create winners and losers based on local market position, historical performance, patient mix, and each organization’s financial and operational strategy. 

How HMA and Wakely Can Help 

ACO and provider leaders should use the proposed rule period to assess how the MSSP changes could affect their 2027 strategy and near-term financial projections. Current ACOs should revisit payment year 2025 and 2026 forecasts, evaluate the proposed ACPT guardrail, and model how the 2027 benchmark changes may affect renewal, track selection, and downside risk exposure. Organizations considering MSSP entry should evaluate whether the proposed changes improve the business case for participation and what capabilities would be needed to succeed. 

Although the proposals focus on MSSP, their significance extends beyond Medicare ACOs. The changes reflect CMS’s broader effort to strengthen participation incentives, improve benchmark stability, and refine value-based payment models based on operational experience. As a result, the proposals may influence how Medicare Advantage plans, Medicaid programs, and commercial payers structure risk arrangements.

Providers and partners should also prepare comments grounded in data and operational experience. HMA and Wakely help ACOs, providers, health systems, payers, enablement organizations, and investors evaluate the policy, actuarial, operational, and market implications of Medicare accountable care changes. Our teams support MSSP strategy, benchmark and shared savings modeling, risk assessment, provider network analysis, care management design, comment letter development, and implementation planning. 

As CMS considers comments and moves toward a final rule, organizations should not wait to understand how the proposed MSSP changes could affect participation decisions, market strategy, and accountable care capabilities. HMA and Wakely can help stakeholders translate the proposed rule into actionable scenarios and prepare for the financial and operational choices ahead. 

CY 2027 PFS Proposed Rule Signals Major Changes for Physician Payment, Primary Care, Digital Healthcare, and Value-Based Care

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The calendar year 2027 Medicare Physician Fee Schedule proposed rule signals continued efforts at the Centers for Medicare & Medicaid Services to modernize physician payment, recalibrate reimbursement, strengthen accountable care incentives, and prepare Medicare for evolving care delivery models. 

The Centers for Medicare & Medicaid Services (CMS), on July 14, 2026, released the Calendar Year (CY) 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program (PFS) proposed rule (CMS-1848-P). The proposal outlines policies that, if finalized, would take effect January 1, 2027, including annual payment updates and offers signals about the agency’s broader Medicare payment reform agenda. 

This article summarizes the scope of the proposed rule and highlights five provisions and policy signals that may have significant financial, operational, and strategic implications across the healthcare system. In future weeks, Health Management Associates (HMA), experts will examine the proposed changes specific to the Medicare Shared Savings Program (MSSP). 

HMA’s Take on the Proposed Rule 

CMS continues to advance several long-term priorities, including strengthening accountable care models, rethinking primary care payment, recalibrating payment rates and methodologies, modernizing quality reporting, expanding access to preventive and lifestyle-based interventions, and aligning Medicare payment policy with technology-enabled care delivery. The rule also includes several Requests for Information (RFI) that point to potential future reforms of physician payment, valuation, coding, and care delivery infrastructure. 

The CY 2027 PFS proposed rule is notable for the signals CMS is sending about the future direction of Medicare physician payment with policy proposals and RFIs designed for transformational reform over the long term and reduced dependency on the legacy physician payment infrastructure. Targeted payment proposals and methodology changes will begin to peel back what CMS perceives as layers of outdated payment policies and billing conventions that no longer fully reflect how healthcare services are delivered. Policies in this proposed rule create opportunities for stakeholder engagement with CMS on new ideas, alternative approaches and scaling value within Original Medicare. 

CMS will accept comments on the proposed rule through September 14, 2026. Organizations that may be affected by these proposals should use the comment period to provide data, operational examples, and policy recommendations that will inform the final rule and influence the next phase of Medicare physician payment reform. 

Key Changes in the PFS Proposed Rule 

1. Reimagining Primary Care Reimbursement and Care Management Within Traditional Medicare 

CMS seeks feedback on how to “reimagine” primary care payment in Original Medicare, including alternatives to existing coding and fee-for-service (FFS) reimbursement. The agency is considering prospective primary care payment and outcomes-based approaches, including potential permanent implementation of prospective primary care payment within the MSSP. 

CMS also is asking for input on how care management coding and payment could be redesigned to better reflect technology-enabled, team-based, and longitudinal care while maintaining program integrity. These questions build on concerns that documentation requirements, cost sharing, and fragmented coding may limit broader adoption of care management services. 

HMA Analysis:CMS is signaling that primary care reform remains central to its long-term Medicare strategy. Although the rule does not immediately replace the foundational FFS architecture, the call for public input creates an important opportunity for stakeholders to shape how CMS defines comprehensive primary care, how it measures outcomes, and how payment could better support sustained patient engagement, team-based care, and digital healthcare models.

2. CMS Proposes Stronger Incentives for Accountable Care and Value-Based Models 

CMS continues to promote ongoing, whole person care and clinician participation in accountable care organizations (ACOs). The agency proposes higher reimbursement for qualifying office visits furnished to beneficiaries in the MSSP and the forthcoming Long-term Enhanced ACO Design (LEAD) model when visits meet additional complexity thresholds.

CMS also proposes to replace the current flat-dollar payment for code G2211 with a percentage-based modifier approach. Under the proposal, visits furnished in eligible accountable care arrangements would receive a larger payment adjustment than similar complex visits furnished outside an ACO setting. CMS also proposes broader MSSP changes to strengthen participation in two-sided risk, encourage new entrants, refine beneficiary assignment, and improve the financial methodology. 

In addition, CMS proposes several technical and operational refinements to the Ambulatory Specialty Model, a mandatory Innovation Center model designed to test specialty-specific value-based payment arrangements. 

The agency also continues to move quality reporting toward more focused, clinically meaningful measures. CMS proposes to eliminate the Merit-based Incentive Payment System (MIPS), which has been in place for many years, and transition to specialty-specific MIPS Value Pathways (MVPs) by 2029. The agency’s rationale is that MVPs are more streamlined and would reduce physician burden. CMS also proposes to add three more MVPs in diabetes, hypertension, and hospital-based care to increase the opportunities for physicians to report relevant MVPs. 

HMA Analysis:CMS is using the PFS to drive the healthcare system toward rewarding higher-value, longitudinal care and away from isolated FFS encounters. Although the proposed payment differential for complex visits in accountable care arrangements could strengthen the business case for ACO participation, it also creates operational and financial questions for clinicians and organizations that remain outside these models. CMS also continues to refine its quality reporting structures and seeks to reduce burden on physicians to better measure the quality of care delivered to Medicare beneficiaries.

3. Physician Payment Would Decline Overall, Despite Statutory Updates 

Despite a positive statutory update of 0.75% for qualifying Alternative Payment Model (APM) participants or 0.25% for non-qualifying clinicians, and a slight increase resulting from budget neutrality calculations, the proposed Medicare PFS Conversion Factor (CF) will decline in CY 2027 because the one-time statutory 2.5% increase Congress provided for CY 2026 expires before CY 2027.

As proposed, the qualifying APM conversion factor would decrease by approximately 1.19%, from $33.57 in 2026 to $33.17 in 2027. The non-qualifying CF would decrease by approximately 1.68% from $33.40 in CY 2026 to $32.84 in CY 2027. 

CMS also projects significant specialty-level variation from proposed relative value unit changes. Clinical social workers and clinical psychologists would receive the largest aggregate increases, while otolaryngology and dermatology would see the largest estimated reduction at −9%. The impact of changes in relative value units (RVUs) on allowed charges are aggregate projections. 

HMA Analysis: Although the CF reductions are relatively modest compared with some recent physician payment debates, the cumulative effect of annual updates, budget neutrality adjustments, and specialty-specific RVU changes remains material. The effect on practices and clinicians will vary by service mix, specialty, payer mix, and Medicare FFS volume. Physician practices, health systems, and specialty groups should model both aggregate and service-level impacts in their comments to CMS and begin planning for potential payment changes in 2027. 

4. CMS Proposes Targeted Payment Recalibration for Procedures, Visits, and Practice Expenses 

CMS proposes several changes to the service/procedure payment methodology to improve accuracy, transparency, and consistency in PFS rate setting. One notable proposal would reduce payment when the same physician or another clinician in the same group practice furnishes a separately identifiable Evaluation and Management (E/M) service the same day as a procedure by the same physician or another clinician in the same group practice. 

Under the proposal, Medicare would pay the highest-priced service at 100% and all other same-day surgical procedures or E/M visits at 50%. CMS states that efficiencies occur when the same practitioner (or a practitioner in the same group practice) provides an E/M service in conjunction with a procedure that already includes pre-service, intra-service, and post-service work through a “global period”). CMS expects the largest negative impact on otolaryngology, dermatology, and podiatry.

HMA Analysis: These proposals reflect CMS’s continued interest in updating payment methods that the agency views as outdated or misaligned with care delivery. The same-day E/M and procedure proposal could create meaningful revenue pressure for certain procedural specialties. 

5. CMS Proposes to Align PFS Payment with Technology, Prevention, and Program Integrity Priorities 

The proposed rule includes several policies and RFIs that signal CMS’s interest in modernizing Medicare payment for technology-enabled healthcare while improving outcomes and strengthening program integrity. Remote patient monitoring is an area of particular focus for CMS. Consistent with recent Office of Inspector General reports and recommendations calling for additional oversight, CMS proposes guardrails for currently reimbursed technologies, including remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM). The proposed guardrails require that these services be furnished only to established patients and only to allow payment for RPM or RTM services performed by clinical staff employed by the practice—not when those services are delivered by contractors. CMS also is proposing revising how the agency will pay for these services given concerns about possible overvaluation of these services and outlines consideration of four new bundled codes. 

CMS also plans to shift reimbursement for software as a medical service (SaMS) analysis of laboratory tests from the Clinical Laboratory Fee Schedule (CLFS) to contractor pricing. In parallel, the agency requests comments on whether payment for SaMS analyses should align with policies proposed for hospital outpatient department that increasingly support clinical diagnosis, monitoring, and care management. 

Consistent with broader prevention and Make America Healthy Again priorities, CMS also proposes national valuation and payment conditions for health and well-being coaching services, payment for diagnosis and management of suspected adverse vaccine reactions, increased reimbursement for smoking and tobacco-use cessation services, and feedback on multi-domain interventions that may slow Alzheimer’s disease progression. CMS also proposes to recognize diabetes self-management training and medical nutrition therapy as qualified preventive services covered and paid as stand-alone billable visits under the Rural Health Clinic benefit. 

HMA Analysis: The proposed changes signal CMS’s interest in distinguishing between technology that supports integrated, clinician-led care and arrangements the agency believes may increase fragmentation or inefficient or concerning billing practices. Digital health, remote monitoring, software, laboratory, and AI interest-holders should consider the payment opportunities and compliance priorities CMS signals. Prevention-focused providers and rural health organizations also should assess how proposed coverage and payment changes could expand access to services that historically have been difficult to scale. 

Looking Ahead

HMA experts are analyzing the rule’s potential impact across physician specialties, health systems, ACOs, rural providers, digital health companies, and other interest-holders. Contact HMA’s Medicare experts to discuss how these proposals might affect your organization’s payment strategy, Medicare operations, and long-term positioning in this evolving healthcare landscape.  

CY 2027 OPPS Proposed Rule Signals Major Changes for 340B Hospitals, Site-Neutral Payments, and Digital Health

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The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2027 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centers (ASC) proposed rule (CMS-1850-P), July 2, outlining policies that would take effect, if finalized, January 1, 2027. Although the proposed rule includes annual payment updates, it also offers insights into the agency’s broader policy agenda. 

CMS continues to advance several long-term priorities, including site-neutral payment reform, elimination of the inpatient only list to migrate services to lower-cost settings, and efforts to align reimbursement more closely with acquisition costs for pharmaceuticals purchased through the 340B Drug Pricing Program. CMS is refining its policies that encountered operational or legal challenges, most notably in the case of its 340B payment proposals. 

The rule also signals how CMS is preparing Medicare for the next generation of healthcare delivery. As software-based therapies, artificial intelligence, and other health technology become increasingly integrated into care delivery, the agency is laying the groundwork for payment policies that reflect evolving care models and emerging medical innovation.   

This article highlights five proposals that may have significant financial, operational, and strategic implications across the healthcare system.  

Highlights of Key Changes in the OPPS Proposed Rule 

1. CMS Intends to Cut to Reimbursement for Drugs Acquired Under the 340B Program 

Based on findings from a survey of hospital acquisition costs, CMS proposes reducing reimbursement for drugs acquired through the 340B Drug Pricing Program from Average Sales Price (ASP) plus 6 percent to ASP minus 33.4 percent beginning in CY 2027. CMS estimates the policy could reduce Medicare fee-for-service (FFS) drug spending by $4.55 billion in its first year, which would be redistributed to non-drug service payments under OPPS’s budget neutrality rules. 

The proposal would similarly reduce payment rates for 340B drugs paid under alternative methodologies, including those reimbursed using Wholesale Acquisition Cost (WAC). Vaccines, pass-through drugs, and certain non-opioid pain management products would remain exempt, as would Children’s Hospitals, Sole Community Hospitals, and PPS-exempt cancer hospitals. 

CMS also proposes applying the policy to 340B drugs administered in non-excepted off-campus provider-based departments while leaving reimbursement for non-340B drugs unchanged. 

Health Management Associates (HMA) Analysis: CMS is effectively continuing a policy discussion that has been ongoing for nearly a decade. Although prior litigation altered the agency’s approach, the proposal demonstrates CMS’s continued interest in aligning Medicare reimbursement more closely with acquisition costs for 340B drugs. The financial implications will vary significantly across hospitals depending on their reliance on 340B savings. At the same time, providers with limited 340B exposure may benefit from the budget-neutral redistribution of savings elsewhere in the OPPS payment system. 

2. Because of the 340B Payment Cuts, Hospitals Will See an Increase in the Conversion Factor Used to Set Payments for Most Non-Drug Items and Services  

CMS proposes an overall 2.4 percent payment increase in OPPS payments for CY 2027, but payment levels will vary under the rule based on major policy changes. The proposed 340B payment reduction, for instance, would trigger an 8.44 percent increase in the conversion factor for non-drug services. CMS is also proposing a conversion factor reduction of 3 percent intended to recover increased payments hospitals received for non-drug items and services as a result of CMS’s remedy related to prior 340B reimbursement cuts.i 

HMA Analysis: The proposed payment updates illustrate how interconnected Medicare payment policies have become. Organizations should look beyond the headline increase and evaluate how individual provisions interact. The proposed reduction in 340B reimbursement serves as a budget-neutral offset that increases the OPPS conversion factor, creating winners and losers across provider categories. Separately, the proposal would accelerate the pace and magnitude of legal-remedy-related rate reductions originating from the termination of an earlier iteration of the 340B payment reduction policy. Understanding this redistribution effect will be critical for forecasting organization-specific financial effects. 

3. More Proceduresare Moving to the Outpatient Setting 

CMS proposes removing 638 procedures from the Medicare Inpatient Only (IPO) list in CY 2027, representing nearly half of the remaining procedures designated as such. The proposed removals focus on less complex services across several clinical areas, including digestive, endocrine, respiratory, urinary, maternity, and other procedural categories. 

HMA Analysis: This proposal continues CMS’s long-term strategy of shifting appropriate services to outpatient settings. As the IPO list continues to shrink, hospitals will have greater flexibility to conduct procedures in the outpatient setting than in the past. At the same time, hospitals billing for certain previously IPO-listed services in inpatient settings could encounter greater scrutiny and pressure to migrate towards outpatient sites. Because many commercial coverage policies and utilization management approaches have historically relied on Medicare’s IPO framework, the proposal may accelerate broader market movement toward outpatient care, creating operational, capacity, and revenue implications for providers. 

4. Site-Neutral Payment Reform Remains a Long-Term CMS Priority

CMS proposes extending site-neutral payment policies to imaging services without contrast provided in excepted off-campus provider-based departments (PBDs). The agency notes substantial growth in the utilization and spending associated with these services over the past decade and views the proposal as a continuation of broader efforts to reduce payment differentials across sites of care. This proposal follows CMS’s recent expansion of site-neutral payment policies for drug administration services. 

HMA Analysis: The proposal reinforces that site-neutral payment reform remains a priority for CMS. Although the immediate policy targets imaging services without contrast, stakeholders should view the proposal within the context of a broader and continuing effort to reduce payment differentials between hospital outpatient departments and physician office settings. Hospitals with significant outpatient imaging capacity—particularly in off-campus PBDs—should evaluate the potential financial impact and consider how future site-neutral policies could affect other service lines. Hospitals should also anticipate incremental additions to this framework in the future, as CMS continues to scrutinize site-of-care allocations for services.  

5. A Future Framework for AI and Digital Health is in the Works, While Maintaining Existing Policies in the Short Term  

Recognizing the growing role of software and AI-enabled technologies in healthcare delivery, CMS proposes using CY 2027 as a bridge year while it develops a longer-term payment approach for technologies categorized as Software as a Medical Service (SaMS). Under the proposal, technologies currently assigned to New Technology Ambulatory Payment Classifications (NT-APCs) would generally maintain their payment assignments during CY 2027. 

HMA Analysis: Although the proposal preserves near-term payment stability, it may be one of the most consequential signals in the rule for manufacturers, digital health companies, investors, and providers adopting new technologies. CMS is exploring how software-based interventions, AI-enabled tools, and algorithm-driven services generate value and how that value should be reflected in Medicare payment policy. Future reimbursement methodologies will likely place greater emphasis on demonstrated clinical outcomes, efficiency gains, and measurable impacts on healthcare utilization. Organizations developing or deploying these technologies should view CY 2027 as an opportunity to prepare for a more mature reimbursement framework in the years ahead and to engage with CMS on preferred policy approaches. 

Looking Ahead 

The CY 2027 OPPS proposed rule provides insight into the direction of Medicare reimbursement policy, changes in Hospital Conditions of Participation (CoP) for obstetrical services, and planned revisions to the exceptions to the “four walls” requirement under the Medicaid clinic benefit for Indian Health Services/Tribal clinics, behavioral health clinics, and clinics located in rural areas. For hospitals, health systems, manufacturers, life sciences companies, digital health organizations, and investors, now is the time to assess potential impacts and evaluate strategic responses before policies are finalized. Comments on the proposed rule are due August 31, 2026. 

HMA is helping organizations understand the financial, operational, and market implications of the proposed rule through: 

  • Customized financial impact modeling 
  • 340B reimbursement and redistribution analyses 
  • Site-neutral payment impact analyses 
  • Clinical service line and specialty-specific analyses 
  • Medicare and Medicaid policy scenario planning and forecasting 
  • Regulatory comment strategy development 

As CMS continues to pull the thread on several long-term policy priorities, organizations that begin planning now will be better positioned to navigate the changes ahead. Contact HMA’s Medicare experts to discuss how these proposals may affect your organization and explore potential strategic responses before the final rule is released.

Clover Health Star Ratings Decision Signals Need for MA Plans to Engage in Scenario Planning

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On May 27, 2026, a federal court ruled that the Centers for Medicare & Medicaid Services (CMS) unlawfully included certain quality measures in Clover Health’s 2026 Medicare Advantage (MA) Star Ratings, raising important questions for MA issuers.

In an exclusive webinar for clients, Wakely, an HMA Company, addressed the court ruling, its implications, and the resulting policy and financial issues, some of which remain unanswered.

Clover Decision Requires Careful Interpretation

The US District Court for the Southern District of Georgia ruled that CMS acted unlawfully when it incorporated certain quality measures into Clover’s Star Ratings. According to the decision, CMS relied on data sources beyond those permitted and did not follow required procedural steps, including notice and comment rulemaking. As a result of the decision, CMS was required to recalculate Clover’s 2026 Star Ratings, removing the disputed measures from the rating process.

Although the judgment applies specifically to Clover, the underlying legal reasoning raises broader questions that could affect how the Star Ratings program is administered for MA plans going forward.

Clover Decision Raises Strategy Questions for Other Plans

Wakely Consulting modeled the revenue impact of the 20 Stars measures specific to the Clover case as well as three scenarios based on the court’s ruling:

Key takeaways for MA plans include:

  1. The Clover decision creates a meaningful degree of uncertainty for the Star Ratings program and its future design. Carriers need to have nimble approaches and resources that respond to the evolving legal and policy landscape.
  2. The ruling is limited to the 20 measures Clover disputed in its lawsuit; however, the legal reasoning in the case and the US District Court ruling could apply to other measurements.
  3. Although the judgment only directly affects Clover, other MA plans have already cited the decision in separate, ongoing litigation, which increases the possibility that similar arguments could be applied more broadly. Organizations participating in the MA market should closely monitor these developments.
  4. CMS’s near-term steps will be critical for the market and current strategy. It is still unknown whether CMS will appeal the decision. MA organizations should be watching for further legal filings as well as additional guidance from the agency. Potential future guidance could address whether rebids will be permitted and, if so, the scope and timing of that process.
  5. MA organizations also need to keep an eye on the federal policies that will inform future federal policy decisions related to the design and implementation of the Star Ratings program. The Clover decision and related litigation may determine policy proposals advanced by Congress, CMS, or both.

Decision Creates Urgency for Modeling and Scenario Planning

The range of possible outcomes requires carriers to undertake robust scenario planning to ensure they are prepared to act on the options available to them and the multiple pathways that are likely to emerge.

Wakely’s actuarial and policy team will continue to monitor guidance from CMS as well as the ongoing legal process. To discuss specific scenarios and implications for your organization specifically and the market generally, contact our actuarial team.

Join us at HMA’s 2026 National Conference: Signals, Signs & Flashing Lights

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Registration is now open for the Health Management Associates (HMA) 2026 National Conference, US Healthcare 2026: Signals, Signs & Flashing Lights, October 5–7 in New Orleans, LA. 

HMA’s conference is intentionally structured to bring together leaders who are shaping decisions across sectors—those setting policy, managing risk, leading clinical operations, and innovating approaches to improve outcomes—to engage in candid conversations about what is working, what is not, and what is changing in Medicare, Medicaid, Marketplace and adjacent programs. In an environment defined by new challenges and “flashing lights,” even the most seasoned healthcare leaders will find value in stepping out of their day‑to‑day roles to compare strategies, test assumptions, and learn from peers facing similar pressures. 

This year’s conference is designed to reflect the environment healthcare leaders are navigating today—one defined less by policy certainty and more by shifting expectations and competing pressures on cost, access, and performance. Our experts are crafting discussions to address how organizations are approaching policy engagement in this environment, including new strategies for interpreting signals from federal and state policymakers and negotiating policy frameworks that directly shape market dynamics. 

Across plenary sessions, breakout discussions, and HMA’s signature coffee conversations, the conference will focus on how organizations are interpreting these signals and translating them into practical strategies. 

Programming will center on four cross-cutting themes shaping healthcare decision-making: 

  • Managing risk and cost amid continued financial pressure. Discussions will examine the drivers of utilization and affordability trends across Medicare, Medicaid, and commercial markets and which strategies are demonstrating measurable impact. 
  • Sustaining access and system stability. The agenda also will focus on how providers, health systems, and state programs are maintaining access amid workforce challenges, coverage transitions, and ongoing financial strain.
  • Turning innovation into impact. Sessions will explore where artificial intelligence (AI) and digital health tools are delivering measurable operational or clinical impact and what it takes to implement them effectively. 
  • Building partnerships that last. Conversation will highlight how stakeholders are aligning incentives, funding, and strategy to move from short-term responses to long-term, sustainable solutions. 

As in prior years, the HMA National Conference is structured to support candid dialogue, actionable takeaways, and meaningful connections. Attendees consistently highlight the opportunity to move beyond high-level trends and engage in practical discussions that inform decision-making in their organizations. 

Early-bird registration is now available for a limited time. The 2026 Sponsor Prospectus includes new opportunities for your organization. Additional agenda details, featured speakers, and interactive programming announcements will be released in the coming weeks. 

Outlook 2026: A Conversation on Medicare Draft Payment Rules

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As the Centers for Medicare & Medicaid Services (CMS) advances through the 2027 Medicare payment rule cycle, stakeholders across Medicare Advantage (MA) and the provider community are assessing how proposed changes could affect payment, utilization, and longer-term revenue. To better understand what to watch as draft rules move toward finalization, Jen Colamonico, Vice President, Strategy and Communications at Health Management Associates (HMA), caught up with Rachel Stewart, Senior Consulting Actuary with Wakley, an HMA Company. Of particular interest was CMS’s decision to eliminate the Inpatient Only List (IPO) over a three- year period.

Q: As CMS begins releasing draft payment rules for 2027, what stands out most to you from a budgetary perspective?
Rachel: Timing and uncertainty really stand out. These policies don’t operate in isolation. Changes to Medicare fee-for-service (FFS) payment ultimately affect Medicare Advantage benchmarks, provider contracting, and long-term revenue expectations. Because bids, budgets, and contracts are set before rules are finalized, modeling different scenarios becomes essential. 

Q: One issue that has garnered significant interest is CMS’s decision to phase out Medicare’s Inpatient Only (IPO) policy, which is a list of procedures and services that must be provided on an inpatient basis. In 2026, CMS eliminated nearly 300 services, mostly musculoskeletal services, from the IPO list. How are Medicare Advantage plans thinking about the Inpatient Only list specifically? 

Rachel: Historically, many MA plans have followed the IPO policy even though they weren’t required to do so, largely because it simplified operations and aligned with Medicare fee-for-service payment systems. Plans do have flexibility in how they contract with providers, and we see a wide range of approaches in the market. Some contracts closely mirror FFS, while others incorporate more customized arrangements or risk sharing. Because of that, the direct impact of IPO changes will vary significantly across plans and provider relationships. 

Q: Where do you see the biggest potential impact for Medicare Advantage?
Rachel: I think the bigger impact may be indirect rather than tied to individual contract changes. Medicare Advantage benchmarks are driven by underlying fee-for-service spending trends. If CMS anticipates lower overall inpatient spending as procedures move to outpatient or ambulatory surgical center settings, that expectation could show up in benchmark growth rates. Even relatively small changes in benchmark growth can affect plan revenue, rebates, and benefit flexibility. 

Q: Are you already seeing signs of that in the data?
Rachel: We do see lower inpatient trends reflected in the 2027 and 2028 US per capita cost projections. It’s still unclear what’s driving those trends—whether its assumptions related to the IPO list removal or other factors. We’ve asked CMS for more clarity. From an actuarial standpoint, understanding what’s baked into those projections is critical, because so many MA financial decisions flow from them. 

Q: How does this uncertainty affect provider planning, especially for hospitals?
Rachel: Providers are understandably concerned about potential revenue shifts if cases move out of the inpatient setting. But in Medicare Advantage, the picture is more nuanced than in fee-for-service. Many MA arrangements include risk sharing, medical loss ratio targets, and quality incentive payments. If overall costs decline, providers may share in savings through those mechanisms. So, while there may be pressure on inpatient revenue, it’s not necessarily a one directional loss. 

Q: Does that mean the overall impact may be less dramatic than it appears?
Rachel: Potentially, yes—especially for organizations already participating in value-based arrangements. A reduction in unit costs doesn’t automatically mean a reduction in total provider revenue in MA. The redistribution of dollars through shared savings and quality bonuses can offset some of that pressure. That’s why understanding contract structure is just as important as understanding the policy itself. 

Q: What about quality and patient safety as procedures move to lower cost settings?
Rachel: Quality is always central in Medicare Advantage, and plans are already managing a lot of complexity related to Star ratings and quality measurement. We haven’t yet seen specific quality safeguards tied to the IPO list changes, but I would expect more discussion in the forthcoming proposed rules. From the MA side, contracting remains a key lever. Plans still have flexibility to ensure procedures are performed in appropriate settings and to align incentives with quality outcomes. 

Q: What steps do you recommend to stakeholders to prepare for the final rule and for 2027?
Rachel: Modeling helps organizations understand the range of possible outcomes rather than betting on a single assumption. We’re looking at different utilization scenarios, site of care shifts, and benchmark growth trajectories. For providers, modeling can inform contract negotiations and capital planning. For plans, it helps assess revenue risk and benefit design flexibility. It doesn’t eliminate uncertainty, but it helps organizations make informed decisions. 

Q: If you could change one thing about how these policies are rolled out, what would it be?
Rachel: Transparency. The more clarity CMS can provide around cost projections and assumptions—especially those affecting benchmarks—the better positioned actuaries, plans, and providers will be to respond. So much of Medicare Advantage pricing relies on understanding how fee-for-service is expected to evolve. Greater transparency helps everyone plan more responsibly. 

HMA’s Medicare Practice Group Can Help 

As CMS moves closer to finalizing the 2027 payment rules, actuarial modeling will continue to be an important tool for translating policy direction into financial strategy. For MA plans and providers alike, early analysis and scenario planning can help mitigate risk and identify opportunity as Medicare’s payment landscape continues to evolve. 

For additional insights, listen to Rachel Stewart and Zach Gaumer on HMA’s Vital Viewpoints podcast. Learn more about our Medicare services and solutions. 

CMS Proposes Modest Hospital Payment Updates and Signals Expanded Use of Mandatory Value-Based Models

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On April 10, 2026, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the Fiscal Year 2027 Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS). The proposal combines a modest net increase in hospital payments with policy signals around quality reporting and mandatory episode-based payment models—most notably a proposed nationwide expansion of the Comprehensive Care for Joint Replacement (CJR) model. 

These proposed updates underscore CMS’s continued emphasis on value-based purchasing, episode accountability, and alignment across quality programs. In addition, CMS resurfaces ongoing debates with hospital stakeholders about the adequacy of Medicare payment updates amid rising costs and coverage disruptions. 

This article reviews several key provisions in the FY 2027 proposed rule. 

Hospital Payment Updates: Headline Increase Masks Net Impact 

Under the proposed rule, CMS would increase base IPPS and LTCH PPS payment rates by 2.4 percent in FY 2027. However, after accounting for proposed reductions to uncompensated care payments for disproportionate share hospitals (DSH) and changes in outlier payments for extraordinarily high-cost cases, CMS estimates the effective payment increase would be closer to 1.2 percent. 

In aggregate, CMS projects the proposed update would translate to approximately $1.4 billion in additional payments to acute care hospitals next year. Hospital industry groups—including the American Hospital Association (AHA) and the Federation of American Hospitals (FAH)—have pushed back, arguing that the proposed update does not sufficiently reflect medical inflation, workforce pressures, or anticipated growth in the uninsured population. 

These concerns reflect a long-standing dynamic in annual hospital payment rules: CMS seeking to balance statutory updates and budget neutrality constraints against the hospital industry’s concern that Medicare payments are lagging behind underlying costs. 

Quality Reporting and Program Alignment 

The proposed rule would also make notable updates to the Hospital Inpatient Quality Reporting (IQR) Program. CMS proposes adding three new quality measures to be phased in during 2029 and 2030, while modifying eight existing measures to include Medicare Advantage patients. CMS also proposes shortening the performance period for certain measures from three years to two—a change designed to accelerate feedback and better align measures across programs. 

These changes continue CMS’s broader effort to harmonize quality measurement across Medicare payment and value-based programs, reduce reporting lag, and incorporate a more comprehensive view of patient populations. 

Updates to Mandatory TEAM Model 

CMS also proposes several updates to the Transforming Episode Accountability Model (TEAM), the mandatory episode-based payment model finalized last year. Key proposals include: 

  • Expanding the list of MS-DRGs included in the spinal fusion episode 
  • Aligning TEAM quality measurement performance periods with the IQR Program 
  • Making targeted technical refinements to payment methodology 

In addition, CMS is seeking stakeholder feedback on whether ambulatory surgery centers (ASCs) should participate in TEAM and whether participation should be voluntary for physician-owned hospitals, signaling potential future expansion or recalibration of the model. 

Proposed Expansion of Joint Replacement Bundles 

CMS proposes to expand the existing Comprehensive Care for Joint Replacement Expanded (CJR-X) Model nationwide beginning October 1, 2027. The agency also plans to make participation mandatory for most IPPS hospitals. 

CMS tested the original CJR model in 34 metropolitan areas between 2016 and 2024, generating improved patient outcomes and net Medicare savings, according to agency evaluations. CJR-X would become the fifth Center for Medicare and Medicaid Innovation model to meet the statutory criteria for nationwide expansion. 

Under CJR-X, hospitals performing lower extremity joint replacements would be accountable for the cost and quality of care for the initial procedure and most related spending during the subsequent 90 days. Although the overall structure mirrors the original CJR model, CMS proposes several important updates: 

  • Expansion of episodes to include ankle replacements, in addition to hip and knee procedures 
  • Adoption of a more robust risk adjustment methodology with significantly more variables, aligning closely with the TEAM model 
  • Introduction of a 5 percent stop-loss policy for hospitals that serve higher proportions of dually eligible beneficiaries and certain smaller hospitals 

Participation would be mandatory for most IPPS hospitals, with exceptions for hospitals already participating in TEAM, which includes a lower extremity joint replacement episode; Maryland hospitals operating under global budgets; and hospitals not paid under both IPPS and the Outpatient Prospective Payment System, such as Critical Access Hospitals. 

Why It Matters 

The 2027 IPPS and LTCH PPS proposed rule reinforces several clear policy signals: 

  • Pressure on hospital margins is likely to persist, as payment updates continue to trail hospital-reported cost growth. 
  • Mandatory episode-based models remain central to CMS’s value-based strategy, with CJR-X representing a significant escalation in scope and scale. 
  • Program alignment and MA inclusion are accelerating, with implications for hospital data systems, care coordination strategies, and reporting infrastructure. 

Hospitals and health systems will need to assess not only the near-term financial impact of the proposed payment updates, but also their readiness to accept expanded episode accountability and meet evolving quality measurement requirements. 

Comments on the proposed rule will shape final decisions regarding payment levels, quality program changes, and the scope of mandatory participation in CJR-X. Stakeholders will be watching closely to see whether CMS moderates its approach to mandatory models or doubles down on episode-based accountability as a cornerstone of Medicare payment reform. 

In parallel, CMS has released several other proposed payment rules this month, including those that would affect skilled nursing facilities, hospice providers, inpatient rehabilitation facilities, and inpatient psychiatric facilities. For these entities, CMS generally proposes payment updates of approximately 2.4 percent and 2.3 percent for inpatient psychiatric facilities. As part of its broader program integrity focus, CMS also has proposed new transparency measures for hospice providers; this follows recent enforcement actions related to fraudulent enrollment. 

Connect with Us 

Health Management Associates, Inc. (HMA), monitors federal regulatory and legislative developments in the inpatient setting and assesses the impact on hospitals, life science companies, and other stakeholders. Our experts interpret and model hospital payment policies and assist clients in developing CMS comment letters and long-term strategic plans. Our team replicates CMS payment methodologies and model alternative policies using the most recent Medicare fee-for-service and Medicare Advantage (100%) claims data. We also support clients with DRG reassignment requests, New Technology Add-on Payment (NTAP) applications, and analyses of Innovation Center alternative payment models. 

For more information about the proposed policies, contact one of our Medicare experts. 

HMA Resource Provides Key Insights about the Evolving Medicare-Medicaid Integration Landscape

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People who are dually eligible for Medicare and Medicaid remain a central focus for policymakers and healthcare organizations, given their complex care needs, disproportionate share of spending, and the long-standing challenge of coordinating coverage across two programs. One of the primary vehicles for advancing integration has been Dual Eligible Special Needs Plans (D-SNPs), which continue to play an increasingly prominent role as federal and state policymakers encourage tighter Medicare-Medicaid alignment.

As states play a more active role in shaping enrollment rules, Medicaid contracting, and procurement strategies, the duals market is becoming more structured and more explicitly guided by state policy decisions. Health Management Associates (HMA’s) 2026 Duals Integration Environmental Inventory, examines how this shift shapes the integration landscape in 2026. This comprehensive inventory is based on a review of the 2026 market, insights from states, and other publicly available resources.

This article examines key trends from HMA’s 2026 inventory and addresses federal policy changes scheduled to take effect for 2027, which contribute to this dynamic environment.

What to Expect in 2026

As the landscape for duals integration evolves, the central question has shifted from whether D-SNPs operate in a state to the more consequential question of how states are using Medicaid policy levers (i.e., enrollment rules, procurement, contracting, and managed care structures) to drive tighter alignment between Medicare and Medicaid. 

At the federal level, recent Medicare Advantage and Part D rulemaking is reinforcing that movement. The Contract Year 2025 Medicare Advantage and Part D Final Rule finalized the second phase-down of the D-SNP look-alike threshold to 60 percent for 2026 and established 2027 rules that limit enrollment in certain D-SNPs to members of an affiliated Medicaid managed care organization. The rule also limits the number of D-SNP benefit packages that can be offered alongside an affiliated Medicaid managed care organization. More recently, the Contract Year 2026 Medicare Advantage and Part D Final Rule requires certain D-SNPs to use integrated member ID cards and integrated health risk assessments beginning in 2027. 

Together these rules signal a continued federal emphasis on linking D-SNP enrollment and operations more closely to Medicaid coverage and delivery systems, with states playing a greater role in determining how alignment is achieved. 

What the 2026 Inventory Shows

HMA’s 2026 Duals Integration Environmental Inventory shows how these policy signals are translating into state action. More specifically: 

  • Statewide exclusively aligned enrollment appears in 16 states in the 2026 inventory, up from nine in 2025. 
  • Applicable Integrated Plans (AIPs) are present in 22 states, up from 14, and default enrollment is in place in 21 states, up from 16. 
  • The inventory also captures 6,084,997 total D-SNP enrollees, including 1,975,250 in Highly Integrated SNPs (HIDE) and 743,683 in Fully Integrated SNPs (FIDE-SNPs). 

Those changes are already visible in state markets: 

  • Illinois, Massachusetts, Ohio, and Rhode Island entered 2026 with a greater FIDE-SNP presence tied to legacy Medicare-Medicaid Plan transitions. 
  • Michigan launched MI Coordinated Health as a HIDE-SNP in selected regions in 2026, with statewide expansion planned for 2027. 
  • Delaware also stands out: Although it already had AIPs in the 2025 inventory, it adds statewide exclusively aligned enrollment in 2026 and shows both HIDE-SNPs and coordination-only D-SNPs. 

A Resource to Track State Market Direction

HMA’s 2026 Duals Integration Environmental Inventory, available to HMA Information Services (HMAIS) subscribers, includes a state-by-state view of the Medicaid policy, contracting, and program structures shaping duals integration and D-SNP markets. In addition to enrollment trends, the inventory documents the integration model each state is pursuing, whether long-term services and supports or behavioral health are included in managed care, and how procurement and contract decisions may inform future market activity. 

HMA experts work with clients to apply this information and deepen their understanding of state integration approaches, inform assessments of their market readiness and alignment opportunities, and develop strategies that support more effective Medicare-Medicaid integration. 

Looking Ahead

Notably, HMA’s inventory reflects a point in time understanding of where an individual state is today and what is known at this time about their next steps and plans. However, we expect changes in many states as they seek guidance from the Centers for Medicare & Medicaid Services and the D-SNP community to implement required changes and adopt new regulatory provisions that support state goals and priorities. 

The 2026 inventory suggests that more states are using formal alignment tools, that more enrollment is concentrated in integrated products, and that more markets are being shaped by the interaction between Medicaid structure, procurement, and D-SNP strategy. 

Connect with Us 

For organizations seeking to understand where the market is headed, the Duals Integration Inventory offers a clear view of how state policy and market structure are evolving and where tighter Medicare-Medicaid alignment is taking hold. 

Contact Holly Michaels Fisher and Julie Faulhaber to discuss your organization’s questions and needs regarding an integration strategy and market analysis. For information about the HMAIS subscription, access to the Duals Environmental Inventory contact Andrea Maresca and Gabby Palmieri. 

CMS’s LEAD Model: A New Phase for Accountable Care and Application Considerations

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The Long‑term Enhanced Accountable Care Organization (LEAD) Model represents the next major step in the Centers for Medicare & Medicaid Services (CMS) accountable care strategy and reinforces a federal commitment to value-based participation in Traditional Medicare. Announced as the successor to ACO REACH, LEAD is a voluntary, nationwide, 10‑year model that will operate from 2027 to 2036, making it the longest-running accountable care organization (ACO) model the Center for Medicare and Medicaid Innovation has tested.

Momentum around the LEAD ACO model has accelerated since CMS’s recent release of the Request for Applications (RFA), which formally moves LEAD from policy design to implementation. The RFA requires prospective participants to evaluate program design choices, financial implications, and operational readiness on a compressed timeline. Notably, CMS has indicated that additional opportunities to express interest will follow for organizations that are not prepared to apply for participation in the initial cohort.

This article explains key design elements of the LEAD model and identifies considerations for organizations assessing whether and when to pursue participation in LEAD.

Core Design Evolutions of the LEAD Model

While LEAD builds on many of the elements from ACO REACH, its design reflects how the Innovation Center intends to address challenges with previous ACO models, such as the Medicare Shared Savings Program (MSSP). At its core, LEAD seeks to establish a pathway to long‑term engagement in value-based care that creates an attractive option for all types of providers, including ACOs with a history of engaging in value-based care and providers that have yet to meaningfully participate.

LEAD introduces a set of targeted design changes intended to improve predictability, alignment accuracy, and long‑term participation in accountable care—most notably through revised benchmarking, updated beneficiary alignment, and expanded flexibility for engaging specialists and high‑needs populations.

1. Revising Benchmarking Policies to Support Predictability and Success

  • LEAD provides a major win for ACOs seeking long-term predictability by setting a long-term benchmark that will not rebase for the entirety of the 10-year model. In MSSP, many ACOs eventually face the “ratchet effect” in which benchmarks erode after rebasing to reflect the ACO’s more recent spending patterns. It can create a significant hurdle for ACOs that have already successfully reduced spending, as their own prior success lowers their benchmark. By not rebasing for the entirety of the model period, LEAD provides an attractive alternative to the MSSP, which rebases every five years.
  • LEAD will also support historically successful ACOs by transitioning to a fully regional rate book by the end of the model period. As a result, benchmarks will be set based on overall spending in the region where an ACO operates rather than an ACO’s historical spending. While ACO REACH also used a regional rate book to inform some ACO benchmarks, LEAD goes further by seeking to transition all ACOs to a benchmark based fully on a regional rate book while also adding protections for higher-spending ACOs by transitioning regions at different timelines to ensure that newer ACOs have the opportunity to implement the kinds of care delivery changes that lead to lower spending before they are subject to penalties.
  • Other notable changes to benchmarking include a variety of ACO-specific adjustments and the addition of an administrative component to benchmarking. ACOs will be eligible to receive a boost to their benchmarks with either a regional efficiency adjustment for ACOs with lower spending or a prior savings adjustment for ACOs with a demonstrated history of achieving savings. LEAD also introduces an administratively set component to benchmarking—the Accountable Care Prospective Trend—which already is used in the MSSP, though LEAD adds a new guardrail policy to promote predictability.

2. Improving Accuracy in Beneficiary Alignment

  • LEAD’s new “hybrid” alignment option increases accuracy and responsiveness. Monthly additions of voluntarily aligned beneficiaries and mid-year recognition of new participant taxpayer identification numbers (TINs) adopted after the start of the performance year (PY) allow alignment to better reflect real-time care relationships, averting lag and operational friction.

3. Adding Support for High-Needs Beneficiaries

  • LEAD expands support for beneficiaries with complex needs through a universal High Needs category and recalibrated risk adjustment. By moving away from ACO REACH’s population‑exclusive model, LEAD lowers barriers for organizations that serve a disproportionate share of high‑needs and dually eligible populations. In addition, CMS will test Medicare‑Medicaid alignment in two states, and help states develop arrangements supporting the provision of value-based care between ACOs and state Medicaid agencies or managed care organizations.

4. Promoting Deeper Engagement with Specialists

  • LEAD increases flexibility for engaging specialists in value‑based arrangements. New Non‑Primary Care Capitation options and episode-based risk arrangements (CMS‑Administered Risk Arrangements (CARAs)), allow ACOs to share risk with specialists without Total Care Capitation, reducing operational complexity while expanding accountability beyond primary care.

5. Advancing Technology Adoption and Innovation

  • LEAD introduces structured pathways to promote technology adoption. Planned Artificial Intelligence (AI)‑inferred risk adjustment will be phased in following successful testing and validation, while the Tech Enabler Initiative and Rapid Cycle Innovation Program seek to reduce administrative burden and accelerate evidence generation—particularly for smaller or resource‑constrained ACOs.
Next Steps

The Innovation Center is operating on an accelerated timeline for the initial LEAD cohort. Prospective ACOs have fewer than 50 days to digest a detailed Request for Applications and model potential performance. Applications are due May 17, 2026. ACOs that participated in ACO REACH in PY 2026 will be well-positioned, as many of the provisions in LEAD will be familiar, and the agency is permitting this group of ACOs to submit an abbreviated application for participation.

For organizations not ready to apply for the first cohort, CMS will release a standardized Letter of Interest form by April 17, 2026, to gauge interest in future application rounds. In this context, organizations considering LEAD participation should be assessing not only near‑term application readiness, but also longer‑term strategic alignment with the model’s 10‑year commitment, risk structure, and operational requirements. Key considerations include benchmarking predictability, readiness to manage regional benchmarks, capacity to engage specialists and high‑needs beneficiaries, technology capabilities, and alignment with broader value‑based care strategies across Medicare and Medicaid.

Connect with Us

Health Management Associates (HMA), supports organizations across the LEAD decision continuum, including those pursuing immediate application and those preparing for future cohorts. HMA can help organizations:

  • Interpret LEAD’s policy and financial design relative to existing ACO and MSSP participation
  • Model performance scenarios under alternative benchmark, alignment, and risk configurations
  • Assess operational readiness across care management, contracting, analytics, and compliance
  • Develop application strategies and supporting materials, including responses to the LEAD RFA
  • Choose to defer application on steps that preserve future optionality

As CMS advances LEAD under an ambitious timeline, early analysis and disciplined decision‑making will be critical for organizations seeking to align participation with their long‑term value‑based care strategies.

For questions contact Amy Bassano and Rebecca Nielsen.

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

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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 Health Technology Ecosystem, information blocking enforcement, Health Data, Technology, and Interoperability (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. 

The 2026 HIMSS Global Health Conference & Exhibition (HIMSS26), March 9–12, in Las Vegas, NV, marked a marked a turning point in which the industry began translating that message into tangible organizational decisions. Two Health Management Associates (HMA), companies actively engaged in the program: the Leavitt Partners digital health team moderated sessions in the preconference forums and Interop Experience Pavilion, and Wakely Consulting Group, lent their expertise in Medicare Advantage (MA), Medicaid managed care, risk adjustment, and quality measurement—the 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—an 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’ 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’s 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 Leavitt Partners Principal Ryan Howells, Dr. Thomas Keane 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 (TEFCA), 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—a 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—ingesting EHR data daily, normalizing it against common models, making it computable across 34 hospitals—because 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‑assurance digital identity, privacy‑preserving design, and consistent credentialing. Progress in this area reduces friction for patient‑directed 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’s 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 — critical to medication management, managed care, and complete longitudinal records—are 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 — 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—the Oral Health Interoperability Alliance and the Pharmacy Interoperability and Clinical Services Alliance (PICSA)—are 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 — 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® FHIR® 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 — HL7® FHIR® 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’s 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. HMA 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—data, identity, standards, governance—will be positioned to move faster and more responsibly as AI capabilities continue to advance. 

We Can Help 

HMA 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 HMA Companies, and does not constitute legal or regulatory advice

 

 

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