May 13, 2026
Turning Insight into Action: The New Operating Reality in Behavioral Health
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Why Children’s Behavioral Health Demands Action Now
Practical Strategies for Medicaid, Schools, Hospitals, and Communities
During Children’s Mental Health Awareness Week, May 3–9, and Mental Health Awareness Month, we are spotlighting actionable solutions across the US children’s behavioral health system. This post is intended for children’s behavioral health providers, state Medicaid agencies, school-based health centers, hospitals, local government agencies, local education agencies (LEAs), child welfare agencies, and philanthropic organizations that are working to strengthen prevention, crisis response, care coordination, and community-based continuums of care. HMA has a robust and growing team of behavioral health experts who support this work and have developed a series of case studies showcasing practical strategies implemented with clients—from crisis system design and referral pathway improvements to financing and implementation roadmaps.
Children’s Mental Health Awareness Week is a reminder that children’s behavioral health and youth mental health are not niche issues. They are systemic issues that require coordinated action across Medicaid, education, public health, hospitals and health systems, child welfare, and local government—especially where schools and community partners are on the front line.
The need remains substantial. The Centers for Disease Control and Prevention’s (CDC’s) 2023 Youth Risk Behavior Survey results, released in 2024, showed that 40% of high school students reported persistent feelings of sadness or hopelessness, even as some measures improved from 2021 levels. CDC also highlighted how bullying, safety concerns at school, racism, unfair discipline, and frequent social media use are tied to youth mental health risks.
The Substance Abuse and Mental Health Services Administration’s (SAMHSA’s) 2024 National Survey on Drug Use and Health, released in 2025, adds another important dimension. Among adolescents ages 12–17, the 2024 survey found that:
- 15.4% experienced a major depressive episode within the past year
- 10.1% had serious thoughts of suicide
- About 40% who had a major depressive episode in the past year did not receive mental health treatment
The data show that progress is possible when systems respond with real capacity, access, and support. That is why this moment calls for more than awareness. It calls for action that is operational, financeable, and grounded in what works.
At HMA, we work with child-serving systems that are trying to solve real problems, including how to strengthen crisis response, improve referral pathways, build a more coherent continuum of care, and connect strategy with implementation.
Over the coming weeks, we will feature three examples that reflect different parts of the children’s behavioral health landscape.
1. Children’s hospital mental health strategy and crisis response
This case study will highlight work to help a children’s hospital strengthen its mental health approach and support next-stage crisis system design.
In this engagement, HMA partnered with Rady Children’s Hospital Orange County to move pediatric behavioral health from strategy to implementation—aligning emergency department (ED) mental health workflows, clarifying pediatric crisis pathways, building an investment-ready fiscal pro forma, and advancing priority programs to strengthen access and care coordination. This work can inform hospitals and health systems, Medicaid agencies, and community partners seeking to reduce ED boarding and improve pediatric crisis response.
2. County-level ecosystem and referral system improvement
This case study will show how local systems can bring multiple stakeholders together to improve referral pathways and make behavioral health more accessible for children, youth, and families.
HMA supported a county-led effort to strengthen cross-system referral pathways by aligning agencies around shared intake and triage practices, clearer roles and accountability, and more navigable access points for families. This approach is relevant for local government agencies, LEAs, school-based health centers, child welfare agencies, and community providers working to reduce fragmentation and speed connection to the right level of care.
3. Building a stronger children’s behavioral health continuum in New Orleans
This case study will focus on assessing gaps, identifying opportunities, and supporting a more coherent community-based continuum for children’s behavioral health.
HMA helped deliver the first integrated view of pediatric behavioral health in New Orleans, LA, aligning schools, healthcare, philanthropy, and government around a shared understanding of unmet needs and critical system gaps, as well as charting a prioritized roadmap to strengthen and better coordinate the continuum of care.
What It Means for Key Child-Serving Audiences
- Children’s behavioral health providers: Prepare for stronger care coordination expectations (warm handoffs, follow-up after crisis, shared care plans) and increased demand for community-based alternatives to the ED
- State Medicaid agencies: Focus on financeable crisis continuums (including pediatric crisis response), payment and contracting approaches that support access and continuity, and data/reporting that demonstrates outcomes
- School-based health centers and LEAs: Strengthen referral pathways, clarify roles between schools and providers, and build protocols that support early identification while keeping students connected to safe learning environments
- Hospitals and health systems: Improve pediatric ED mental health workflows, create clearer crisis pathways, and develop investment-ready business cases for behavioral health capacity and partnerships
- Local government agencies: Convene cross-system partners, establish shared intake/triage and accountability, and use implementation roadmaps to move from planning to operational change
- Child welfare agencies: Align behavioral health access for children and youth involved with child welfare, reduce handoff failures, and integrate crisis planning into placement stability and permanency strategies
- Philanthropy: Target catalytic investments that fill continuum gaps, build capacity for implementation (not just planning), and support cross-system governance and measurement
The common thread among these examples is a simple belief: Children’s behavioral health improvement does not happen through aspiration alone. It happens when organizations and public systems translate urgency into design, partnerships, financing strategies, and implementation steps.
That is also why children’s behavioral health is so relevant. National data still point to high levels of distress and suicide risk among adolescents, despite recent improvements. CDC’s findings show how strongly youth mental health is shaped by the environments in which they live, learn, and play—especially their schools and communities.
For leaders in Medicaid, behavioral health, child welfare, education, county government, hospitals, and provider organizations, the question is not whether children’s behavioral health deserves attention, but rather is how to build systems that respond earlier, coordinate better, and support children and families more effectively.
We hope this series contributes to that conversation by sharing practical examples of work that can inform future action.
Other Resources on Children’s Behavioral Health and Youth Mental Health
- Children’s Behavioral Health Consulting: Cross‑System Solutions for Schools, Health Systems, and State & Local Agencies
- Improving Youth Behavioral Health Through School-Based Initiatives.
- Beyond the Agency: A Public Health Approach to Child Welfare
- MAHA Children’s Health Strategy Report: Driving a New Era for Child Health Policy
- Child and Teen Mental Health and the Lifting Voices initiative
- HMA Report: Los Angeles County Child Welfare-Involved Population Medi-Cal Analysis
- Webinar Replay – Youth mental health access: school-based intervention strategies
Contact us to discuss how HMA can support your children’s behavioral health strategy—whether you work for a Medicaid agency, hospital/health system, school-based health partner, LEA, local government agency, child welfare agency, provider organization, or philanthropic funder. We can help with crisis continuum planning, care coordination design, referral pathway improvement, financing and pro forma development, and implementation support.
Children’s Behavioral Health Consulting
HMA Solutions
Children’s Behavioral Health Consulting
Cross‑System Solutions for Schools, Health Systems, and State & Local Agencies
The US children’s behavioral health system is facing significant strains. Workforce shortages, fragmented funding and accountability, and rising demand are converging in the places where children spend time and receive care. Healthcare systems are seeing the impact in emergency departments and inpatient units, schools are expected to respond to student needs without sufficient capacity, and state and local agencies face pressure to align policy, financing, and programs across behavioral health, Medicaid, child welfare, and education.
How HMA Can Help
HMA partners with child-serving systems to translate urgency into practical, financeable, implementable improvements, strengthening the continuum from prevention and early intervention to crisis response and recovery. Examples of services we provide include:
Landscape assessments and needs analyses (qualitative and quantitative)
Stakeholder engagement and facilitated convenings (including family, youth, community, and cross-agency partners)
Gap analysis and service continuum design (school-, community-, and facility-based)
System and model redesign, including governance, referral pathways, and care coordination across settings
Strategic planning and implementation support (operational roadmaps, change management)
Regulatory and policy analysis to support compliant, scalable program models
Workforce strategy and provider training to build sustainable capacity
Financial modeling, including fiscal pro formas and revenue cycle considerations
Site assessments and facility studies to support service expansion and optimization
Who We Serve
We support providers, health systems, children’s hospitals, schools, school-based entities (including local education agencies [LEAs]), state and local government agencies and community-based partners working to improve children’s behavioral health.
Common Challenges
Fragmentation across child-serving systems,
Workforce shortages and training needs,
Misaligned financing and accountability, and
The operational challenge of coordinating care across school, community, and clinical settings.
Where We Help
Hospitals and Health Systems
Strengthen pediatric behavioral health strategy and operations—improving crisis pathways, clarifying roles across ED/inpatient/outpatient settings, and connecting clinical services to community and school-based partners
Schools, LEAs, and School-Based Entities
Build sustainable school mental health approaches—right-sizing service tiers, strengthening referral and care coordination, and aligning school-based services with Medicaid, community providers, and crisis systems
State and Local Government, Child-Serving Agencies, and Community-Based Partners
Advance cross-system solutions—aligning policy, financing, and accountability across behavioral health, Medicaid, child welfare, and education, while building implementable continuums of care that improve access and equity.
HMA Differentiators
Cross-setting expertise. We work across schools, community-based systems, and healthcare delivery settings, helping partners design handoffs and shared accountability rather than isolated programs.
Implementation and financing. We connect strategy to operations and the realities of financing, reimbursement, and sustainability so plans can move toward successful implementation and delivery.
Multidisciplinary team. Our team includes clinicians, program administrators, researchers, and former state and local leaders with deep knowledge of children’s behavioral health ecosystems. Many of us are parents and grandparents ourselves who are passionate about and personally invested in this work.
Partnership-first approach. We bring a collaborative, community-grounded process that centers children, youth, and families and builds durable cross-sector relationships.
Local context, national perspective. We tailor solutions to market dynamics, resources, and policy environments while bringing lessons learned from diverse geographies and client types.
Let’s strengthen children’s behavioral health—together.
Whether you’re leading in a hospital or healthcare system, a school or LEA, or a state or local agency, we can help you align partners and build an implementable plan across the continuum of care.
Contact us to discuss your priorities and identify next steps.
Join us at HMA’s 2026 National Conference: Signals, Signs & Flashing Lights
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.
The New Uninsured: State Policy Options for Californians Losing Medi-Cal Coverage
HMA’s new report for the California Health Care Foundation explains how recent federal and state policy changes could cause up to two million Californians to lose Medi-Cal coverage. These changes will place new strains on the state budget and safety-net system. The report outlines practical short-term program paths California could use to preserve access to care while full-scope coverage is restored. It summarizes the policy and fiscal context (including work requirements, more frequent eligibility checks, and immigrant eligibility restrictions), describes stakeholder-informed design goals (statewide access, privacy protections, fiscal prudence, scalability, and safety-net stability), and presents two illustrative coverage alternatives with modeled cost ranges and key trade-offs in benefits, provider payment rates, cost sharing, and bridge-period design.
Outlook 2026: A Conversation on Medicare Draft Payment Rules
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.
Early Signals from a Pivotal ACA Enrollment Year
On April 15, 2026, Wakely Consulting Group, an HMA company, published “Who Paid, and Who Stayed? Early 2026 Enrollment Trends in the Individual Market,” the first comprehensive nationwide look at 2026 enrollment trends in the Affordable Care Act (ACA) market. While the Centers for Medicare & Medicaid Services (CMS) has released 2026 plan selection data, the Wakely report addresses who retained coverage and who did not, what we still don’t know, and what we should be watching for throughout the rest of the 2026 plan year.
This article highlights key findings in the report, related state-level data, impacts and takeaways, and actions states and other interest-holders should consider as they look to mitigate further coverage losses and address market stability in& plan year 2027 and beyond.
Key Findings from the ACA Marketplace Early Enrollment Trends Report
The Who Paid, and Who Stayed report is based on analysis of data from the Wakely National Risk Adjustment Reporting (WNRAR) project, which includes summary data from participating ACA-compliant individual market plans. WNRAR includes data from over 75 issuers representing nearly 80 percent of enrollment the individual market. Key national findings in the report include:
- Only 86% of enrollees paid their January 2026 premium.
- State variation is significant, ranging from as low as 63% paid in January to as high as 99%.
- The overall average enrollment decrease is estimated to be between 17% and 26% lower than 2025, with morbidity projected to worsen by 2.9–6.5%.
The report highlights shifts in plan choice activity driven by affordability pressures, which resulted in considerable migration away from richer benefit plans to plans with lower premiums and higher out-of-pocket maximums. Examples include:
- Silver plan enrollment fell approximately 17% from 2025.
- Bronze enrollment increased by more than 10%.
- More than 13% of 2025 Gold plan enrollees selected a lower priced, Bronze tier plan in 2026.
The report also demonstrated the importance and value of outreach, operational excellence, and state-level affordability mitigation strategies. Examples include:
- Enrollment decreases are lower in states with state-based marketplaces (SBMs) and expected to stay lower than Healthcare.gov states, largely because of proactive outreach and marketing initiatives, lower net premium increases, and state affordability programs.
- States with premium alignment and silver-loading as a policy lever for improving gold plan affordability are seeing results. Gold plan enrollment increased by 10 percentage points in states where gold plans cost less than silver plans, whereas gold enrollment did not materially change in states where silver plans cost less. For states, this provides a lever to assist consumers seeking to shift into plans with lower cost-sharing without increasing premiums.
State-Reported Early Enrollment Results
Many states warned of coverage losses as a result of changing federal policies and the expiration of enhanced premium tax credits (ePTCs). State-specific reporting for 2026 validates the findings in the Wakely report. The recently released state-level data from SBMs affirms that the drop-off in enrollment through cancellations and dis-enrollments is significant. It also illustrates that state efforts to mitigate and address affordability gaps have worked to some extent but have not been enough on their own to head off coverage losses in 2026. Examples are as follows:
- In Georgia—the only SBM without Medicaid expansion—enrollment fell 27% from an estimated 1.3 million in April 2025 to approximately 950,000 in April 2026.
- In New Jersey—a state with state-funded premium subsidies, a reinsurance program, and a mandate that residents have health insurance—enrollment has decreased by more than 11% since April 2025.
- In California—another state with premium subsidies, facilitated enrollment, and an individual mandate—effectuated enrollment decreased by 7% from February 2025 to February 2026.
- Overall, SBMs are reporting that coverage drops were 24% higher from January to March 2026 than during the same period in 2025 and that the rate of plan shifting from Silver to Bronze increased significantly, quadrupling in six states.
Downstream Impact on Healthcare Access and Uncompensated Care
While not yet apparent in the early enrollment data, the downstream impact of 1) coverage losses, 2) increased enrollment in plans with higher cost-sharing, and 3) a worsening risk pool on the health of consumers, as well as the healthcare system, will be significant. Consumers may decide to postpone or forgo necessary care, which could lead to avoidable and more costly healthcare conditions. Increases in the number of people who uninsured and underinsured will have a direct and negative economic impact on provider finances, which are already strained, and uncompensated care and demands on patient assistance programs will increase accordingly.
Looking Ahead
The individual market will continue to evolve and change in the coming years as a result of future regulatory and operational changes. A shortened Open Enrollment Period, increased Medicaid redetermination requirements, and new pre-enrollment verification requirements are notable initiatives that are expected to roll out in the coming years.
Healthcare organizations and government agencies should consider the effect of these changes, including further coverage losses and instability in the individual market driven by the administrative complexity of these changes.
In addition, there are potential federal changes such as expanded availability of catastrophic plans, the introduction of non-network plans, and additional eligibility changes, which could put further strain on ACA Marketplace operations and the individual market.
Getting ahead of these changes will be critical to mitigating coverage losses and ensuring the long-term stability and viability of the individual market. In a federal policy environment that has largely deferred acting on ACA affordability, we expect policymakers, issuers, and other interest-holders to increasingly look to governors and state legislatures for decisive action. State subsidy and reinsurance programs are established affordability mechanisms that can provide consumers with affordability relief quickly, assuming state funding is available.
These investments can pay off for consumers from an economic perspective as well. For every additional dollar spent on state subsidies or reinsurance to maintain or increase coverage, states can expect to see reductions in uncompensated care, less reliance on patient assistance programs, and decreases in the number of consumers who forgo or delay care. In addition, investments in enrollment operations and assistance, outreach, and education will be critical to ensuring consumers are aware of the changes ahead and the actions they need to take to access and stay covered.
Connect with Us
Health Management Associates, Inc. (HMA), and Wakely colleagues are closely tracking federal policy activity and state actions to address these challenges. Our experts support states, issuers, consumer groups, and other interest-holders to achieve success in the operation of and participation in the marketplaces. Our team has broad historical knowledge of the challenges and opportunities in this market and can support every step of the planning and execution processes to improve affordability and stability as it evolves in the coming months and years.
Contact our experts below with questions about the report and to discuss opportunities to address the trends and forthcoming changes in the market.
To read more about the changes ahead, see the following reports:
ACA Enrollment Declines: Implications and Options for State and Federal Policymakers
Recent and future policy changes are reshaping the ACA market. A recent Wakely report finds that only 86% of ACA enrollees nationwide paid their first premium at the start of the year, raising important questions about affordability, access, and market stability. Additionally, the 2027 Notice of Benefits and Payment Parameters (NBPP) is expected to be finalized this Spring which will have additional implications for consumers, issuers, and other stakeholders. As policymakers and state leaders consider how to respond to the shifting market composition and future policy changes, this discussion will focus on the policy implications of these shifts and the options to address affordability and coverage options to improve market stability.
Join HMA’s ACA team for a policy-focused conversation on what these projected changes mean for marketplace dynamics, including impacts to risk pools, premiums, and issuer participation. The session will explore emerging federal and state policy responses and offer insight into how today’s decisions may shape 2027 rates, plan offerings, and long-term market sustainability.
Learning Objectives:
- Analyze policy drivers: Examine how changes to federal subsidy policy are influencing ACA marketplace enrollment, affordability, and coverage continuity.
- Evaluate policy tradeoffs: Assess how enrollment declines impact market stability, including risk pools, premiums, and issuer participation.
- Inform policy strategy: Identify state and federal policy options to mitigate coverage losses and support a stable, competitive marketplace heading into 2027.
CMS Proposes Modest Hospital Payment Updates and Signals Expanded Use of Mandatory Value-Based Models
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.
Medicaid Managed Care Enrollment: Q4 2025 Trends and Early Signals Ahead of New Eligibility Policies
This week Health Management Associates (HMA), draws on its database of monthly Medicaid managed care enrollment to present its latest quarterly analysis, offering a snapshot of enrollment trends across 37 states.
The analysis comes at a critical time. As states prepare for Medicaid eligibility policy changes that take effect in 2027—including more frequent eligibility determinations and expanded work and community engagement requirements—current enrollment trends provide an early signal of how policy decisions and administrative practices are already influencing coverage levels.
The HMA Information Services (HMAIS) analysis shows that Medicaid managed care accounted for 85.6 percent of total Medicaid enrollment in December 2025. This analysis, available to HMAIS subscribers, uses data from nearly 300 health plans in 41 states. The report provides by-plan enrollment plus corporate ownership, program inclusion, and for-profit versus not-for-profit status, with breakout tabs for publicly traded plans.
Key Insights from Q4 2025 Data
The 37 states included in this review have released monthly Medicaid managed care enrollment data through public websites or in response to a public records request from HMA. The report includes the most recent data obtained and illustrates the effect of state-level choices around eligibility and administration. Key findings include:
- As of December 2025, Medicaid managed care enrollment across the 37 states declined by 2.2 million members year over year, falling to 62.5 million—a 3.4 percent decrease.
- Of the 37 states, eight—Colorado, Delaware, Mississippi, Missouri, New Jersey, North Carolina, North Dakota, and Oregon—did not experience year-over-year managed care enrollment declines, and instead showed flat enrollment or modest gains. With the exception of Mississippi, these are all Medicaid expansion states.
- Arizona and Indiana experienced double-digit percentage declines. Notably, Indiana began requiring enrollees to actively respond to renewal mailers, which aligns with enrollment declines that began in March 2025.
- Among the expansion states in the analysis, enrollment declined by 1.7 million (-3.3%) to 50.8 million. The seven non-expansion states experienced a similar decline (-3.6%), bringing enrollment to 11.7 million enrollees.
Data Considerations. The data have some important limitations. States report enrollment figures at different points during the month, with some data reflecting beginning of the month totals and others capturing end of the month enrollment. In addition, some state datasets encompass all Medicaid programs offering managed care plans, whereas others reflect only a subset of the managed Medicaid population. As a result, the findings should be viewed as indicative of broader trends rather than a comprehensive state-by-state comparison.
Market Share and Plan Dynamics
Using our data repository for 300 health plans across 41 states, HMAIS analyzes corporate ownership, program participation, and tax status among Medicaid managed care plans. As of December 2025, Centene maintained the largest share of the national Medicaid managed care market at 17.8 percent, followed by Elevance (10.4%), United (8.5%), and Molina (6.0%) (see Figure 1). These figures highlight continued concentration among large national plans, even as overall enrollment declines.
Figure 1. National Medicaid Managed Care Market Share by Number of Beneficiaries for a Sample of Publicly Traded Plans, December 2025
What to Watch
Enrollment trends observed in the fourth quarter (Q4) of 2025 and continuing into 2026 indicate increasing state attention to eligibility policy and program integrity. State legislative activity, budget pressures, and federal regulatory developments are prompting many states to assess and strengthen certain aspects of their programs related to eligibility, particularly as they prepare to implement redetermination and work and community engagement requirements.
Several states are already moving toward implementation. Nebraska is scheduled to launch Medicaid work requirements on May 1, 2026, while Montana plans to begin implementation on July 1, 2026. With additional federal guidance still emerging, most other states are working toward compliance ahead of January 2027 deadlines. In expansion states, policymakers retain authority to tighten administrative processes, alter optional benefits, or adjust provider payment levels—actions that may materially affect enrollment.
These developments underscore why Medicaid managed care enrollment trends deserve close attention. Declines in enrollment are often an early indicator of broader system impacts, including rising uncompensated care for providers, shifts in payer mix, and increased financial pressure on safety‑net systems. For managed care organizations, even modest enrollment changes can mask more significant shifts in risk profiles, geographic concentration, or service needs.
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HMA is home to experts who know the Medicaid managed care landscape and how it is evolving. HMAIS’s Medicaid enrollment data, financials, procurement tracking, and a robust library of public documents equips stakeholders with timely, actionable intelligence.
For more information about the HMAIS subscription, contact Andrea Maresca and Alona Nenko.