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Blog

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 Targeted payment proposals and methodology changes will begin to peel back what CMS perceives as layers of outdated payment policies and billing conventions that no longer fully reflect how healthcare services are delivered.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.  

HMA Weekly Roundup

July 22, 2026

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

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Webinar

Rural Health Transformation Program: Beyond the Grant Approval Phase – Implementing for Sustainability

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Rural Health Transformation Programs (RHTPs) are creating new opportunities for rural communities to improve both access to care as well as health outcomes while strengthening the long-term sustainability of local healthcare providers. This webinar will go beyond the grant planning processes and explore how an effective RHTP implementation process can support measurable improvements in population health, enhance financial viability for rural hospitals and healthcare organizations, and foster stronger systems of care across our rural communities.

Participants will explore opportunities for creating cross-initiative implementation strategies that enhance the impact of individual initiatives such as workforce, telehealth, maternal care, EMS, behavioral health and chronic disease monitoring and management.

It will be critical to deploy a robust project management function that creates synergies among all parties, begins to lay the foundation for sustainability, and creates a path for improving not just the rural healthcare delivery model but also, over time, improving the overall health status of the citizens of these rural communities.

Learning Objectives

  • Explore how the implementation of RHTP initiatives can drive sustainable improvement in the health status of the citizens of rural communities
  • Discuss ways in which RHTP implementation, when done correctly, can create a more financially viable healthcare provider model in rural communities
  • Frame out how a robust collaboration model that includes both rural providers and select tertiary or academic systems can enable success and sustainability
Brief & Report

How States Are Implementing Medicaid Section 1115 Justice-Involved Reentry Demonstrations

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Medicaid Section 1115 Justice-Involved Reentry Demonstrations allow states to provide selected Medicaid-covered services before an individual is released from incarceration. This report highlights the operational, governance, technology, and care coordination strategies needed for successful implementation across multiple jurisdictions.

HMA’s new report, Lessons Learned from Implementing 1115 Justice-Involved Reentry Initiatives: Strategic Planning and Operational Considerations, shares practical implementation strategies, lessons learned, and operational best practices drawn from supporting justice-involved healthcare initiatives in multiple states. For organizations strengthening an existing program or preparing for a new demonstration, the report offers actionable guidance to improve implementation readiness, reduce operational risk, and build sustainable systems that support better outcomes for justice-involved populations.

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Key Takeaways

Readers will learn how successful organizations are:

  • Building governance structures that align corrections, Medicaid, healthcare providers, and community partners
  • Designing operational workflows that support seamless transitions from incarceration to community care
  • Preparing correctional facilities, managed care organizations, and providers for new responsibilities
  • Addressing technology, interoperability, eligibility, and data-sharing challenges
  • Creating person-centered care coordination models that improve continuity of care
  • Identifying implementation risks before they become operational barriers
  • Using performance measurement and continuous quality improvement to strengthen long-term program success

Why Medicaid Section 1115 Justice-Involved Reentry Demonstrations Matter

For decades, individuals leaving incarceration have faced significant barriers to accessing healthcare. Interruptions in Medicaid coverage, gaps in medication, delayed connections to primary care and behavioral health services, fragmented care coordination, and limited communication between correctional and community providers have contributed to poorer health outcomes and increased reliance on emergency and crisis services.

Medicaid Section 1115 Justice-Involved Reentry Demonstrations are designed to address these long-standing challenges by allowing eligible individuals to receive selected Medicaid-covered services before being released from incarceration. Early engagement with healthcare providers establishes care prior to reentry, improves coordination with community-based organizations, and strengthens transitions into ongoing medical, behavioral health, and social support services.

As more states implement Medicaid reentry demonstrations, organizations are discovering that operational success depends on thoughtful planning, strong governance, effective partnerships, and sustainable implementation strategies.

Why Organizations Struggle with Implementation

Across states implementing Medicaid Justice-Involved Reentry Demonstrations, several consistent challenges have emerged.

Cross-Agency Governance

Correctional agencies, Medicaid programs, managed care organizations, healthcare providers, behavioral health organizations, and community-based organizations often have different operational processes, funding structures, and priorities. Building shared governance and clear decision-making processes is essential for successful implementation.

Operational Workflow Design

Organizations must create new workflows for eligibility determination, care management, medication continuity, discharge planning, provider referrals, and community handoffs—many of which have never existed before.

Technology and Interoperability

Connecting correctional electronic health records with community healthcare systems remains one of the largest implementation challenges. Secure data exchange, interoperability, privacy requirements, and real-time communication require significant planning and investment.

Workforce Readiness

Successful implementation requires training correctional healthcare staff, case managers, community providers, managed care organizations, and Medicaid partners on new roles, responsibilities, and operational processes.

Care Coordination

Person-centered care coordination begins before release and continues after individuals return to the community. Organizations must establish sustainable partnerships that support continuity of care across healthcare, behavioral health, housing, and social service systems.

The most successful organizations recognize that Medicaid Section 1115 Justice-Involved Reentry implementation is not simply a compliance exercise—it is a comprehensive system transformation effort.

HMA’s Five Pillars of Successful Medicaid Reentry Implementation

Drawing on implementation experience across multiple states, HMA has identified five foundational elements that consistently support successful implementation:

1. Governance and Cross-Sector Collaboration

Building shared leadership, accountability, and decision-making across agencies.

2. Operational Planning

Developing standardized workflows that support eligibility, care coordination, referrals, and continuity of care.

3. Technology and Data Exchange

Improving interoperability between correctional and community healthcare systems while supporting secure information sharing.

4. Person-Centered Care Coordination

Designing services around the needs of individuals transitioning from incarceration into their communities.

5. Continuous Quality Improvement

Using performance measures, implementation feedback, and operational data to improve program effectiveness over time.

Readers will gain insights into:

  • Building effective cross-sector governance and decision-making structures
  • Designing operational workflows that support continuity of care
  • Preparing correctional facilities and community providers for new responsibilities
  • Strengthening partnerships with managed care organizations and Medicaid agencies
  • Addressing technology, interoperability, and data-sharing challenges
  • Developing person-centered care coordination models
  • Measuring performance and using continuous quality improvement to refine implementation
  • Identifying common risks before they become operational barriers

Rather than focusing solely on policy requirements, the paper emphasizes the organizational strategies that position programs for long-term success.

Who Should Read This Report?

This report is designed for leaders responsible for planning, implementing, financing, managing, or overseeing Medicaid Section 1115 Justice-Involved Reentry Demonstrations, including:

  • State Medicaid agencies
  • Departments of Corrections
  • County jail administrators
  • Probation and parole agencies
  • Managed care organizations
  • Correctional healthcare providers
  • Behavioral health providers
  • Federally Qualified Health Centers (FQHCs)
  • Community-based organizations
  • County and state policymakers
  • Healthcare executives
  • Medicaid program managers
  • Reentry program leaders
  • Population health and care management leaders

Whether your organization is launching a new demonstration or refining an existing implementation strategy, this report provides actionable guidance that can accelerate implementation while improving long-term outcomes.

Why HMA?

HMA has supported Medicaid agencies, correctional systems, managed care organizations, behavioral health providers, healthcare organizations, and community-based partners across numerous justice-involved healthcare initiatives. Our experience spans policy development, implementation planning, operational design, governance, technology strategy, care coordination, and program evaluation.

The recommendations in this report reflect real-world implementation experience and practical lessons learned from helping organizations navigate the complex operational challenges of Medicaid Section 1115 Justice-Involved Reentry Demonstrations.

Frequently Asked Questions

  • What is a Medicaid Section 1115 Justice-Involved Reentry Demonstration?

A Medicaid Section 1115 Justice-Involved Reentry Demonstration allows eligible individuals to receive selected Medicaid-covered healthcare services before they are released from incarceration. The goal is to improve continuity of care, strengthen transitions to community providers, and improve long-term health outcomes.

  • What are the biggest implementation challenges?

Organizations commonly face challenges related to governance, cross-agency coordination, operational workflow design, technology integration, data sharing, workforce readiness, eligibility processes, and care coordination.

  • Who is responsible for implementing Medicaid reentry demonstrations?

Implementation requires collaboration among state Medicaid agencies, correctional systems, managed care organizations, healthcare providers, behavioral health organizations, community-based organizations, and technology partners.

  • Why is operational planning important?

Successful implementation depends on designing sustainable workflows, governance structures, technology infrastructure, and partnerships that support individuals before release and throughout their transition back into the community.

  • How can organizations improve implementation readiness?

Organizations can improve readiness by establishing cross-sector governance, investing in technology and interoperability, standardizing operational processes, strengthening care coordination, measuring performance, and continuously refining implementation based on lessons learned.

Download the Report

As additional states pursue Medicaid Section 1115 Justice-Involved Reentry Demonstrations, organizations have an unprecedented opportunity to transform how healthcare is delivered to justice-involved populations.

Lessons Learned from Implementing 1115 Justice-Involved Reentry Initiatives: Strategic Planning and Operational Considerations provides practical implementation strategies, operational recommendations, governance models, technology considerations, and lessons learned to help organizations avoid common pitfalls, accelerate implementation, and build sustainable Medicaid reentry programs that improve outcomes for individuals and communities.

Brief & Report

Community Health Workers as Trusted Messengers: Strengthening the Community Health Information Ecosystem

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Learning What Works to Foster Trusted and Effective Communication Channels

Community health workers (CHWs) are among the most trusted sources of health information, yet they often lack reliable systems for receiving, validating, and sharing timely guidance. This report examines how health information flows to, through, and from CHWs in Cook County, Illinois, and identifies strategies to strengthen the community health information ecosystem.

Key Findings

  • Community health workers are among the most trusted messengers within their communities.
  • CHWs routinely validate, interpret, and adapt health information before sharing it.
  • Information systems remain fragmented and inconsistent across organizations.
  • CHWs rely on both professional and personal community relationships to distribute trusted information.
  • Better infrastructure, governance, and financing are needed to support sustainable information sharing.
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This new report, Enabling Trusted Messengers within the Community Health Information Ecosystem, examines how public health information, guidance, and resources reach, are interpreted by, and flow through community health workers (CHWs), with a focus on Cook County. Developed by Health Management Associates with support from Michael Reese Health Trust and Community Memorial Foundation, the assessment reflects insights from community health workers and their employers, as well as advocates and program leaders designing the systems that support CHW integration within the healthcare system. The report explores the role of CHWs as trusted messengers, health educators, and connectors between healthcare, public health agencies, community-based organizations, and the communities they serve. We highlight the essential contributions of CHWs to public health communication, community engagement, and health equity.

The report describes how CHWs receive, validate, translate, and share trusted health information with individuals and families, and how the community insights they gather are used to help inform healthcare organizations, public health systems, and policymakers. It examines the broader community health information ecosystem and identifies opportunities for focused investment, improved coordination, stronger health infrastructure, and formal processes that strengthen the bidirectional flow of health information among CHWs, healthcare providers, public health agencies, community-based organizations, and the communities they serve. The findings also explore how stronger information sharing can improve care coordination, support social care integration, and advance health outcomes.

The report is especially timely given Illinois’ implementation of a new Community Health Worker Medicaid benefit, development of a statewide Social Health Care Network, and regional hubs designed to coordinate and support the delivery of social health services through community-based organizations. These initiatives represent an important opportunity to strengthen the community health information ecosystem, improve coordination across healthcare and social service systems, and build a more connected, community-centered model of care.

Findings underscore that CHWs are trusted messengers—”the voice of the community”—who often operate within fragmented, rapidly changing information environments where health misinformation, inconsistent guidance, and outdated resources create barriers to effective communication. Stakeholders described the burden of navigating unreliable information, noting that “sometimes I’m scanning the internet and the information is not up-to-date” and that “there is no one way” to access current guidance. The findings also demonstrate that CHWs do far more than deliver messages; they interpret and adapt health information, making it meaningful and actionable through trusted relationships in their work and communities. As one CHW explained, “I carry materials in my purse.”

The report offers practical recommendations for strengthening the systems that support CHWs and the broader community health information ecosystem, including trusted message validation, timely dissemination channels, multilingual and culturally grounded communication, resource verification, community feedback loops, workforce development, shared governance, and sustainable financing. Ultimately, the report concludes that strengthening the CHW information ecosystem is not simply a communications initiative, but a broader strategy for building trust, strengthening the workforce, and advancing health equity. Aligning public health, healthcare, community-based workforce, and philanthropic investments can help Cook County and Illinois partners build a more accurate, responsive, equitable, and sustainable system that improves access to care, strengthens community trust, and delivers better health outcomes.

What You’ll Learn

This report answers questions including:

  • What role do community health workers play in public health communication?
  • How do CHWs identify trusted health information?
  • What are the biggest barriers to sharing accurate health information in communities?
  • How can healthcare organizations better support community health workers?
  • What is a community health information ecosystem?
  • How can states prepare for Medicaid reimbursement of CHWs?
  • What are best practices for trusted messengers in public health?
  • How can public health agencies improve community trust?

Recommendations

The report recommends:

  • Creating trusted message validation processes
  • Establishing centralized dissemination channels
  • Supporting multilingual and culturally responsive communication
  • Improving resource verification
  • Building feedback loops between communities and health systems
  • Investing in CHW workforce development
  • Developing shared governance models
  • Supporting sustainable financing

Who Should Read This Report

This report is designed for:

  • Public health agencies
  • Medicaid agencies
  • Health systems
  • Community health workers
  • Community-based organizations
  • Foundations
  • Health policy leaders
  • Health equity professionals
  • Healthcare executives
  • State policymakers

Frequently Asked Questions

What is a Community Health Information Ecosystem?

A community health information ecosystem is the network of organizations, people, technologies, and communication channels that create, share, validate, interpret, and use health information across communities, healthcare organizations, public health agencies, and community-based organizations.

Why are community health workers considered trusted messengers?

Community health workers are trusted because they have deep relationships within the communities they serve. They often share lived experiences, understand local cultures and languages, and help translate complex health information into culturally relevant guidance. Their trusted relationships make them essential partners in improving public health communication and advancing health equity.

What challenges do community health workers face when sharing health information?

The report found that CHWs often work in fragmented and rapidly changing information environments. They frequently navigate inconsistent guidance, outdated resources, and multiple sources of information while responding to community needs. Many also spend significant time translating information, verifying resources, and adapting messages to ensure they are accurate, culturally appropriate, and actionable.

What recommendations does the report make?

The report recommends strengthening the systems that support community health workers by improving trusted message validation, creating more effective information-sharing channels, supporting multilingual and culturally grounded communications, verifying community resources, strengthening feedback loops between communities and institutions, investing in the CHW workforce, establishing shared governance, and creating sustainable financing models.

Why is this report especially relevant for Illinois?

Illinois is implementing several major initiatives that will reshape how community health workers and community-based organizations support residents, including a new Community Health Worker Medicaid benefit, a statewide Social Health Care Network, and regional hubs that coordinate social health services. The report provides practical insights that can help inform these efforts and strengthen collaboration across healthcare, public health, and community organizations.

How does strengthening the community health information ecosystem improve health outcomes?

A stronger community health information ecosystem helps ensure that accurate, timely, and culturally responsive health information reaches communities through trusted relationships. It also creates better pathways for community feedback to inform healthcare and public health decision-making, leading to more responsive services, stronger community trust, improved access to care, and better health outcomes.

Bottom line: Strengthening the community health information ecosystem requires more than better communications. It requires investing in community health workers as trusted messengers, improving information infrastructure, supporting bidirectional communication between communities and institutions, and building sustainable systems that advance health equity.

Blog

Outlook 2026: Building Coordinated Behavioral Health Systems Through Quality, Program Integrity, and Provider Partnership

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States are facing growing pressure to strengthen behavioral health systems and demonstrate outcomes. In response, states are increasingly examining how program integrity can serve not only as an oversight function, but also as a catalyst for quality improvement and value-based care. 

In this Outlook 2026 interview, Jen Colamonico speaks with Alyssa Lord, Health Management Associates (HMA) Principal and former Deputy Secretary of Maryland’s Behavioral Health Administration, about lessons from Maryland’s experience, the role of provider partnerships, and how states can use program integrity, quality measurement, regulatory modernization, and data-driven decision-making to improve behavioral health outcomes. 

Jen Colamonico: States across the country are working to improve behavioral health access and coordination while facing workforce shortages, fragmented systems, and growing demand for services. Based on your experience, what are the biggest challenges to building a truly coordinated behavioral health system? 

Alyssa Lord: One of the biggest challenges is that we still tend to think about behavioral health separately from the rest of healthcare. The head is not disconnected from the body, and, as a result, our systems, financing structures, and care delivery models often operate in silos. 

For individuals and families with complex behavioral health needs, navigating the healthcare system can be incredibly difficult. There are barriers related to access, network adequacy, stigma, and parity. The result is often delayed care and missed opportunities to address physical health, behavioral health, and social needs in a coordinated way. Building better coordination requires states to move beyond individual programs and look at how the entire continuum of care works together. 

Q: What lessons can other states learn from Maryland’s efforts to strengthen coordination and improve access? 

Alyssa Lord: One of the most important lessons is the value of stakeholder engagement. In Maryland, meaningful reforms were possible because providers, families, advocates, state leaders, and individuals receiving services all had a voice in identifying barriers and opportunities for improvement. For example, the state found that eligibility requirements for certain home and community-based behavioral health services had become so restrictive that they created barriers rather than pathways to care. By working closely with families and providers, Maryland was able to redesign the program, reduce access barriers, and improve awareness that services were available. 

Another lesson is that access and quality must be addressed together. Expanding services is important, but states also need to define what success looks like. How are services being measured? Are people receiving timely care? Are outcomes improving? States need clear performance measures that help determine whether investments produce meaningful results. 

Q: Why should healthcare leaders think differently about the relationship between program integrity and quality? 

Alyssa Lord: Too often, program integrity is viewed solely through the lens of fraud, waste, and abuse. Although those issues are important, that definition is incomplete. Program integrity also encompasses the policies, safeguards, oversight processes, and accountability structures that support patient safety, access, quality, and responsible stewardship of public resources. 

The strongest programs view program integrity and quality improvement as complementary rather than competing priorities. States have an opportunity to use program integrity frameworks to identify and reward high-performing providers, measure outcomes, and support value-based approaches that improve care. Providers that embed quality and compliance into their operations—from staff training and onboarding to internal monitoring and performance measurement—often have the strongest foundation for long-term success. 

Q: Maryland implemented a provider enrollment moratorium that attracted national attention. What problem was the state trying to solve, and what lessons emerged from that experience? 

Alyssa Lord: Maryland observed exponential growth in several behavioral health service categories without measurable improvements in quality, outcomes, or patient experience. That disconnect raised important questions about quality, utilization patterns, continuity of care, and whether individuals were receiving the right services at the right time. 

Importantly, many providers supported the state’s temporary pause on new provider enrollment effort because they shared concerns about maintaining a continuum of care and distinguishing high-quality providers from those with rapid growth that may not have been accompanied by positive outcomes. 

For states considering similar approaches, transparency and provider engagement are essential. Providers need to understand the objective is improving quality and protecting access—not simply limiting participation. 

States and payers should be focusing on metrics that matter—reductions in avoidable emergency department utilization, improved care coordination, stronger continuity of care, reduced hospitalizations, faster access to treatment, and other outcome measures that demonstrate whether services are improving lives.

This is where value-based approaches become particularly important. Rather than focusing exclusively on volume, states can align incentives around outcomes and quality, creating a more sustainable model for providers while ensuring that public resources are supporting meaningful improvements in care. 

Q: What role do technology, data, and predictive analytics play in improving care and program integrity—and where can they become a hindrance? 

Alyssa Lord: Technology and data should help organizations focus on meaningful signals rather than creating additional administrative tasks. The goal is to use data to improve decision-making, identify emerging risks, support providers, and strengthen quality improvement efforts. 

Advanced analytics can help states and health plans identify unusual utilization patterns, monitor quality measures, improve oversight, and prioritize resources where they are needed most. Better dashboards, automated processes, shared data sources, and predictive analytics all have the potential to improve both program integrity and care delivery. 

At the same time, technology can become a hindrance when it generates duplicative reporting requirements, repeated manual submissions, or additional administrative burden without producing meaningful insights. Behavioral health providers have historically faced challenges adopting technology, in part because they were often excluded from earlier investments that accelerated electronic health record adoption across the broader healthcare system. Many behavioral health providers remain small practices with limited infrastructure and resources. 

As states continue modernizing oversight and quality measurement, technology investments need to be accompanied by realistic implementation strategies, provider support, and a clear focus on reducing—not increasing—administrative burden. 

Q: We expect program integrity to remain a high priority this year and beyond. How should states and other healthcare organizations be thinking about planning? 

The future belongs to organizations that stop viewing program integrity, quality, and value as separate workstreams. The strongest behavioral health systems will be those that use all three together to improve outcomes, strengthen provider performance, and build greater trust in the care being delivered. 

HMA, including HMA companies Wakely and Leavitt Partners, is actively helping states, health plans, providers, and other stakeholders navigate the changing landscape of behavioral health delivery. HMA can support strategic planning, policy design, value-based payment design and readiness, data development and reporting. Connect with HMA to learn how we can support your organization in navigating the next phase of behavioral health transformation and care delivery. 

You can listen to the full discussion with Alyssa Lord on HMA’s Vital Viewpoints podcast, Can Better Program Integrity Lead to Better Behavioral Health? Access additional insights from HMA’s behavioral health team here.

HMA Weekly Roundup

July 15, 2026

Outlook 2026: Building Coordinated Behavioral Health Systems Through Quality, Program Integrity, and Provider Partnership

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Blog

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.

Blog

2026 Medicaid, Medicare Advantage, and Marketplace Trends Healthcare Leaders Need to Understand

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As Independence Day approaches, we have curated a selection of In Focus analyses that continue to resonate with healthcare leaders as they navigate a rapidly changing policy environment. From Medicaid work requirements and Affordable Care Act (ACA) Marketplace stability to social determinants of health initiatives, state transformation efforts, and consequential legal decisions, these articles offer insights into the developments shaping healthcare in 2026. 

  1. Act Now to Implement Community Engagement Requirements 

New Medicaid community engagement requirements are moving from policy debate to implementation reality. Health Management Associates (HMA) experts break down the critical implementation challenges and strategic decisions that cannot wait. Get the insights here. 

  1. ACA Marketplace Affordability and Coverage Stability

Coverage affordability and enrollment stability remain among the most important healthcare policy challenges facing states and issuers. HMA analyzes emerging funding approaches, policy risks, and what healthcare leaders should watch as ACA Marketplace dynamics continue to evolve. Get the insights here. 

  1. New Guidance Raises the Bar for MedicaidSection 1115 Demonstrations 

New guidance from the Centers for Medicare & Medicaid Services (CMS) fundamentally changes expectations for Medicaid Section 1115 demonstrations. HMA provides a first take on how the guidance could affect Medicaid 1115 waiver approvals and the future of state innovation. Understand the policy changes and their implications before your next strategic planning discussion. Get the insights here. 

  1. The Value Shift in Medicare Advantage: What 2026 Benefits Tell Us About the Market’s Next Chapter

Medicare Advantage (MA) is entering a new era of value management as plans rethink benefit design amid mounting financial and regulatory pressures. Drawing on proprietary analysis from Wakely, an HMA Company, this article reveals how 2026 benefit changes are reshaping member value and what they signal about the future direction of the MA market. Get the insights here. 

  1. The New Operating Reality in Behavioral Health

The rules of success in behavioral health are changing. HMA explores the market, policy, and operational trends that are redefining performance and what leaders should do now to stay ahead. Get the insights here. 

As healthcare policy, financing, and delivery systems continue to evolve, organizations need more than headlines—they need actionable insights grounded in real-world experience. HMA’s multidisciplinary team works with state agencies, health plans, providers, community organizations, and federal stakeholders to navigate complex challenges across Medicaid, Medicare, behavioral health, Marketplace coverage and healthcare transformation initiatives. 

The articles highlighted here offer a snapshot of our capabilities and expertise. Through our consulting services, research, analytics, and thought leadership, HMA provides the expertise and strategic guidance organizations need to anticipate change, manage risk, and seize emerging opportunities across the healthcare landscape. 

HMA Weekly Roundup

July 1, 2026

2026 Medicaid, Medicare Advantage, and Marketplace Trends Healthcare Leaders Need to Understand

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Podcasts

Can Better Program Integrity Lead to Better Behavioral Health?

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Behavioral health is essential to whole-person care, but obstacles include fragmented systems, rising costs, and paperwork burden. On this episode of HMA Vital Viewpoints on Healthcare, HMA Principal Alyssa Lord, former Secretary of Maryland’s Behavioral Health Administration, discusses how behavioral health integration and program integrity can work hand in hand to improve care. Alyssa shares practical strategies for building more connected, effective, and sustainable behavioral health systems by supporting Medicaid innovation that reduces administrative burden while strengthening accountability.

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