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Blog

2027 NBPP Proposed Rule Signals Further Marketplace Changes

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The Centers for Medicare & Medicaid Services (CMS) 2027 Notice of Benefit and Payment Parameters (NBPP) proposed rule, published February 11, 2026, arrived at a pivotal moment for the Affordable Care Act (ACA) Marketplaces. The temporary enhanced premium tax credits (ePTCs), first expanded in 2021 and extended through 2025, expired at the end of last year, returning Marketplace subsidies to their original ACA structure in 2026. As we discussed in earlier articles (here and here), that shift is already affecting affordability, plan selection, and enrollment dynamics—particularly for consumers who are ineligible for premium assistance. 

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

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

CMS’s Proposals 

The proposed NBPP for 2027 sets standards for the Exchanges and ACA-compliant individual and small group markets and updates payment parameters for risk adjustment and risk adjustment data validation (RADV). The rule also implements changes approved under the 2025 Budget Reconciliation Act, (P.L. 119-21, OBBBA) and includes a range of policies spanning plan certification, eligibility and verification, and Exchange oversight. 

Expanded Plan Design Flexibility 

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

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

Certification of Non-Network QHPs 

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

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

Changes in Catastrophic and Bronze Cost Sharing 

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

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

Network Adequacy and Essential Community Providers 

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

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

Essential Health Benefits and State Mandates 

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

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

Program Integrity and Increased Eligibility Verification 

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

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

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

Preparing for Policy Driven Changes in ACA Marketplaces 

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

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

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

Blog

Outlook 2026: Medicare Advantage Advance Notice—What It Means for the 2027 Market

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

Q: The headline is “flat” payments. How should the market interpret CMS’s projected rate change? 

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

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

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

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

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

Q: The Wakely team estimates a different “feel” than CMS’s topline. What does Wakely’s analysis add? 

Courtney: Wakely’s summary helps translate CMS components into both benchmark and plan payment change. 

Blum: This point is really key. Wakely’s analysis flags that rebasing/repricing impacts aren’t fully reflected yet, which means county-level outcomes can diverge materially once the final Rate Announcement is released. The rebasing could be particularly volatile this year as CMS adjusts for rural emergency hospital payments and the removal of anomalous and suspect DME claims. Both adjustments vary by geographic area. 

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

Courtney: The tighter risk adjustment environment could squeeze rebates and supplemental benefit richness—especially if bids don’t adjust quickly. Wakely estimates risk-adjusted bid and rebate revenue is down roughly 0.35 percent under a set of simplifying assumptions, underscoring the margin sensitivity. 

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

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

Q: What do plans need most right now? 

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

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

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

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

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

You can find more insights on the important proposed changes in plan payments, risk adjustment, and other financial and regulatory requirements for 2027 in Wakely’s summary analysis, Advance Notice of Methodological Changes for CY 2027 MA Capitation Rates and Part C and Part D Payment Policies. 

Blog

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

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On February 11, 2026, the Congressional Budget Office (CBO) released The Budget and Economic Outlook: 2026 to 2036 report. The publication, which represents the first time CBO has released Medicare and Medicaid spending baseline projections since January 2025, reflects the impact of the 2025 Budget Reconciliation Act (P.L. 119-21, OBBBA), recent changes to Medicare reimbursement for skin substitute products, and the latest Medicare Part D and Medicare Advantage bids.

CBO’s baseline serves many functions, including serving as the official “scorekeeping” benchmark used for cost estimates of proposed legislation under consideration in Congress.

Changes to CBO’s Medicaid Baseline

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

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

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

Source: HMA analysis of CBO’s January 2025 and February 2026 Budget and Economic Outlook reports.

Changes to CBO’s Medicare Baseline

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

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

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

Source: HMA analysis of CBO’s January 2025 and February 2026 Budget and Economic Outlook reports.
Source: HMA analysis of CBO’s January 2025 and February 2026 Budget and Economic Outlook reports.
Source: HMA analysis of CBO’s January 2025 and February 2026 Budget and Economic Outlook reports

Contact an HMA Expert Today

Interested in understanding how CBO’s latest baseline update affects the federal budgetary implications of certain Medicare or Medicaid policy topics or proposals? Contact our experts, Mark Desmaris and Rachel Matthews, to learn more about HMA’s “CBO-style” federal budgetary scoring work, which relies on The Moran Company’s long-standing methodology. [1]

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

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

Blog

Tending the Embers: Staying Ready for Medicare Advantage RADV Audits

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The Centers for Medicare & Medicaid Services (CMS) issued a memo January 27, 2026, with updates on the agency’s approach to checking whether Medicare Advantage (MA) plans are being paid correctly. These reviews are conducted through Risk Adjustment Data Validation (RADV) audits, which help CMS confirm that the diagnoses MA plans report are supported by medical records. 

The January 2026 memo signals that CMS intends to honor its commitment to strengthen oversight of MA payments, including accelerating and expanding the use of RADV audits and using AI (artificial intelligence) to streamline human coding reviews. MA organizations must now prepare to respond to the RADV audit notice within the required five-month window, while balancing their other risk-adjustment programs. 

In this article, we explain the rapidly evolving landscape affecting RADV audits. Wakely, an HMA company, addresses what these changes mean for MA organizations and key considerations to ensure they are prepared for the upcoming enhancements to federal program integrity initiatives. 

Overview of CMS’ RADV Refresh 

CMS announced a major shift in May 2025: All MA plans will undergo RADV audits—not just a small sample as before. These audits look for cases in which diagnosis information submitted by a plan does not match the documentation in the patient’s medical record. When this happens, CMS may decide the plan was overpaid and require repayment. Historically, CMS audits have identified widespread diagnosis-code documentation errors, resulting in significant revenue recoupment from MA plans. 

The 2025 announcement creates a framework for additional risk for MA plans, which could shift to risk-bearing provider groups. As we explained in an earlier article, key components of that announcement include: 

  • All MA plans will be audited starting with Payment Year (PY) 2018. 
  • CMS committed to accelerating audits by adding more staff and using new technology. 
  • CMS planned to use “extrapolation”—meaning if errors were found in a small sample of records, the error rate could be applied to the full population, which could lead to much larger repayment amounts. 
  • CMS also planned to eliminate the fee-for-service (FFS) adjuster—a policy that previously helped reduce the amount a plan would have to repay. This proposal would increase financial risk for plans. 

Both the use of extrapolation and the removal of the FFS adjuster were later challenged in court. 

Legal Challenge 

In September 2023, Humana sued CMS in federal court, arguing that the 2023 RADV final rule, which allowed extrapolation and removed the FFS adjuster, was put into place without following proper federal rulemaking procedures. On September 25, 2025, the court agreed with Humana and vacated certain parts of this final rule, meaning certain parts of the rule are no longer in effect. 

CMS appealed the ruling on November 1, 2025, which has created uncertainty about how RADV audits will work in future years. 

Navigating the Legal and Regulatory Changes in Early 2026 

The court did not say that extrapolation or elimination of the FFS adjuster is illegal—only that CMS did not follow the required process for changing the rules. Hence, the 2023 RADV final rule cannot take effect unless CMS wins its appeal or reissues the policy using the proper steps. 

In its January 2026 Health Plan Management System (HPMS) memo, CMS stated that it will comply with the order while it is in effect. 

The pending litigation does not diminish CMS’s broader commitment to increased audit activity and heightened scrutiny of MA risk-adjustment practices. 

Effect of the Ruling. During RADV audits, CMS selects a sample of enrollees and requests corresponding medical records from the MA plan. These records are reviewed to confirm that the documented diagnoses meet CMS requirements. If unsupported diagnoses are found, CMS may recalculate payments and recover overpayments from the health plan. This audit process maintains program integrity and ensures accurate payments. 

Plans that submit incomplete records could owe significant repayments to CMS. 

CMS’s January 2026 memo clarifies how the agency plans to roll out additional RADV audits starting with PY 2020. CMS also addresses the agency’s plans to:  

  • Reduce burden on plans and providers, for example by extending the submission window  
  • Balance the volume of medical record submissions needing review by using smaller sample sizes where appropriate 
  • Use AI to further accelerate the review process 

Preparing for What’s Next 

Given CMS’s stated direction and the still unsettled litigation environment, MA plans should remain vigilant and audit ready.

Key steps include: 

  • Prioritizing timely and complete chart submission processes 
  • Strengthening internal criteria to identify and prioritize charts most likely to support diagnoses 
  • Improving documentation and coding accuracy through provider engagement 
  • Conducting proactive self‑audits to identify potential vulnerabilities 
  • Partnering with expert RADV consultants to navigate audit strategy, documentation, and submission readiness 

Connect with Us 

Wakely assists plans with their RADV initiatives and development of robust RADV playbooks. For more information about Wakely’s RADV playbooks, contact Debbie Conboy. 

Blog

Congress Advances FY 2026 HHS Appropriations Bill with Health Extenders and PBM Reforms

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On February 3, 2026, Congress finalized federal funding for fiscal year (FY) 2026, with the House passing the Consolidated Appropriations Act (CAA), 2026, with a vote of 217-214, following Senate approval last week. The president signed the CAA (H.R. 7148) shortly thereafter. The law provides full-year appropriations for the Departments of Health and Human Services (HHS), Housing and Urban Development, Labor, and several other departments. 

This year’s HHS funding bill is notable not only for what it includes, but also for what it omits. It restores or maintains funding for key public health and research agencies previously proposed for elimination in the president’s FY 2026 budget request, extends several healthcare programs, and contains a significant package of pharmacy benefit manager (PBM) reforms. All of this activity comes as the Administration announces new grant programs and policy efforts related to its signature priorities. 

In this article, we review the major funding and policies approved in the HHS spending bill. We also address key considerations for healthcare organizations as they anticipate downstream funding and policy developments and develop advocacy initiatives for federal FY 2027 bills. 

HHS Funding Levels and Direction 

The bill provides $116.8 billion for HHS, an increase of $210 million over FY 2025, and rejects large-scale structural reorganizations proposed in the president’s FY 2026 budget. This provision preserves funding for the Agency for Healthcare Research and Quality (AHRQ), Centers for Disease Control and Prevention (CDC), Health Resources & Services Administration (HRSA), and the Substance Abuse and Mental Health Services Administration (SAMHSA) 

Table 1. HHS Agency Funding Highlights, FY 2026 

Agency  FY 2026 Funding  (+/-) Compared with FY 2025 
Administration for Strategic Preparedness and Response (ASPR) $3.7 billion +$58 million  
CDC $9.2 billion level funding 
Centers for Medicare & Medicaid Services (CMS), administrative expenses only  $3.7 billion level funding  
 HRSA $8.9 billion +$415 million  
National Institutes of Health (NIH) $48.7 billion  +$929 million  
SAMHSA $7.4 billion  +$65 million  

The bill also extends mandatory funding for community health centers, special diabetes programs, the National Health Service Corps, and Teaching Health Center Graduate Medical Education. 

PBM Reforms in the Package 

In one closely watched area of federal policymaking, the FY 2026 package includes a substantial set of PBM-related reforms that largely mirror the bipartisan package negotiated but not enacted in December 2024. These reforms have implications across Medicare Part D, commercial insurance, and employer-sponsored plans. 

The legislation contains the following PBM reforms: 

  • Prohibits PBMs from deriving remuneration linked to drug prices for Medicare-covered Part D drugs 
  • Restricts spread pricing in Medicaid, eliminating a major driver of PBM revenue 
  • Requires contractual transparency, mandating that PBMs clearly define pricing terms in agreements with Part D plan sponsors 
  • Adds new PBM reporting obligations, including drug price reporting and rebate disclosures 
  • Requires 100 percent passthrough of rebates in ERISA-regulated plans for new, renewed, or extended contracts beginning 30 months after enactment 
  • Expands audit rights for plan sponsors 
  • Codifies the “any willing pharmacy” requirement for Medicare plan sponsors 

These provisions position 2026 as a consequential year for PBM regulation, increasing transparency, strengthening plan leverage, and heightening HHS oversight. 

Healthcare Extenders and Program Reauthorizations 

The bill includes a broad set of Medicaid, Medicare, and public health program extenders, affecting providers, patients, states, and managed care plans. 

Medicaid 

  • Postpones reductions in the Disproportionate Share Hospital (DSH) allotments until FY 2028 
  • Changes the DSH cap calculation to broaden which patient costs count toward Medicaid shortfall 
  • Requires states to develop and implement a process to allow certain out-of-state pediatric providers to deliver services without additional screening for three years 
  • Removes age limits on Medicaid’s Ticket to Work program, allowing adults older than age 65 to participate and requires state compliance by January 1, 2028 
  • Establishes new maternity care reporting requirements for rural hospitals, with dedicated federal funding for hospitals and states to comply with the reporting 

Medicare 

Congress extends several key programs and payment provisions, including: 

  • Telehealth flexibilities through December 31, 2027 
  • Incentive payments for participation in eligible alternative payment models through payment year 2028 (for performance year 2026) and applies an adjustment amount of 3.1 percent for 2028 
  • Acute Hospital Care at Home waivers through 2030 
  • Low-volume and Medicare-dependent hospital payment adjustments 
  • The 1.0 work geographic practice cost index floor used in the calculation of payments under the Medicare physician fee schedule through December 31, 2026 
  • Add-on payments for ambulance services 
  • Continuation of Part D coverage for certain antivirals and modifications to hospice payment caps 

Behavioral Health Policy 

The appropriations bill was finalized as the administration announced new funding and policy initiatives to support behavioral health, crisis services, workforce expansion, and youth mental health—efforts mirrored in SAMHSA’s increased appropriations. 

SAMHSA’s $7.4 billion budget includes: 

  • $1.6 billion for State Opioid Response grants 
  • $1.01 billion for the Mental Health Block Grant 
  • $535 million for the 988 Suicide and Crisis Lifeline 

Considerations for Stakeholders 

Federal funding and policy developments affect state budget dynamics as many states are now releasing 2026–2027 budget proposals as well as the operational and growth plans of healthcare organizations and partners. 

A few key takeaways from the FY 2026 funding bill include: 

  • Federal appropriations signal congressional and administration priorities and have downstream impact on upcoming rounds of grant cycles, including SAMSHA and HRSA awards. 
  • The approved funding and certain policy extensions provide operational stability and reduce near-term fiscal pressure, such as the further delay of Medicaid DSH cuts. The extra time will allow healthcare entities to prepare for future reductions and plan for financial sustainability. 
  • Agency and program funding emphasize oversight, program integrity, and compliance. In addition, fraud and program integrity priorities are woven into certain new policies and program extensions, including PBM reforms, flexibility for pediatric care across state borders, and rural maternity cost reporting requirements, among others. 

Connect with Us 

If you would like deeper analysis or state and stakeholder-specific effects, HMA’s policy experts are available to assist. 

Blog

2026 Marketplace Open Enrollment: Where the Numbers Currently Stand

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On January 28, 2026, the Centers for Medicaid & Medicare Services (CMS) posted a national snapshot detailing 2026 Open Enrollment (OE) results. Although this report is neither a complete nor final picture of 2026 Marketplace enrollment activity, it is likely to be the last OE data CMS publishes for some time. A comparison of 2026 and 2025 Open Enrollment results can be found in Table 1.

Table 1. Comparison of 2026 and 2025 Open Enrollment

20262025Net Change
Total22,973,21924,166,491(1,193,272)
New Consumers3,382,1893,938,907(556,718)
Returning Consumers19,591,03020,227,584(636,554)

A summary of our analysis on these 2026 OE results and how they compare with 2025 data can be found below. This analysis builds on the findings in Wakely’sIndividual ACA Open Enrollment Insights So Far from January 2026.

  • Overall, topline plan selections are down from last year. Total enrollment decreased by 5%, with new enrollment down 14% and renewals down 3%.
  • State-based marketplace (SBM) enrollment declined modestly, but the data are as of January 10, and many SBMs are continuing to enroll people through the end of January.
    • New Mexico plan selections increased by 14% over last year, the largest increase of any state, driven by state-funded subsidies mirroring the expired enhanced premium tax credits (ePTCs).
    • Georgia plan selections decreased by 14%, the largest SBM year-over-year decline.
  • The federally facilitated marketplace (FFM) experienced an overall decrease of 5%. FFM data are as of January 15 and therefore measures plan selections after the OE period has ended. Within the FFM, state-by-state results varied significantly.
    • Texas led all FFM states with a 5% increase, whereas Ohio and North Carolina experienced 20% and 22% decreases in enrollment, respectively.
    • Some of this variation is surprising and not readily explainable from the available data and will be a focus of future Health Management Associates and Wakely analyses.
  • The data include neither effectuated enrollment nor paid enrollment—data which will be key to fully understanding 2026 enrollment trends and the impact of changing federal policies, including the ePTC expiration and changing eligibility standards introduced in 2026 as the result of P.L. 119-21 (OBBBA).
    • Initial data from SBMs suggest significantly higher rates of cancellations and disenrollments than in previous years.
    • SBMs are also sharing that they expect high rates of affordability-driven voluntary and non-payment terminations throughout the first half of 2026.
    • Monitoring paid enrollments, attrition, and grace period dynamics, including retro-terminations, will be key to understanding market dynamics and 2027 pricing.

HMA and Wakley experts have considerable experience working with states, insurers, and federal policymakers with jurisdiction over the Marketplace. We work with these entities to inform, analyze, and influence federal policies and conduct impact analyses on pricing, enrollment, administration, and operations. HMA also provides strategic and project management support for the implementation of finalized policies.

Please contact Taylor Gehrke at [email protected], Michael Cohen at [email protected], or Zachary Sherman at [email protected] with questions, follow-up, or if you would like expert assistance exploring any of the issues discussed in this post.

Related Resources:

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CMS ACCESS Model: A New On-Ramp to Outcomes-Based, Tech-Enabled Care in Traditional Medicare

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The Centers for Medicare & Medicaid Services (CMS) Innovation Center recently published applications for its new ACCESS Model (Advancing Chronic Care with Effective, Scalable Solutions), a 10-year voluntary initiative beginning July 2026. The model is designed to advance outcomes-based, technology-enabled care delivery in Original Medicare and aligns with the Innovation Center’s priorities of strengthening prevention, empowering beneficiaries, and promoting performance-based competition. ACCESS is particularly suited to organizations with mature clinical operations and data infrastructure, offering a new pathway for tech-supported services. 

This article summarizes the model’s design, highlights key considerations for prospective applicants, and addresses common questions our Medicare and technology experts fielded during a recent Health Management Associates (HMA)/Leavitt Partners webinar. 

What the ACCESS Model Is Testing 

ACCESS evaluates whether Outcome-Aligned Payments (OAPs)—recurring payments contingent on measurable clinical improvement—can reduce spending while maintaining or improving quality for beneficiaries with chronic conditions. The model tests whether incentivizing technology supported care can produce reliable clinical outcomes while complementing traditional care delivery. 

Who may participate? Organizations must be Medicare Part B–enrolled providers or suppliers (excluding DMEPOS [Durable Medical Equipment, Prosthetics, Orthotics, and Supplies] and labs). Participants may enroll beneficiaries directly, operate across multiple clinical tracks, and manage all qualifying conditions within each selected track. Beneficiary participation is voluntary, and individuals may switch ACCESS participants every 90 days. 

Clinical tracks. At launch, the four clinical tracks reflect high-prevalence chronic conditions with established care pathways and strong evidence for technology-supported interventions: 

  • Early Cardio-Kidney-Metabolic (eCKM) 
  • Cardio-Kidney-Metabolic (CKM) 
  • Musculoskeletal (MSK) 
  • Behavioral Health (BH) 

Payment. OAPs vary by track and performance period. CMS pays a portion prospectively each quarter and withholds 50 percent pending reconciliation based on: 

  • Clinical outcomes attainment: The percentage of aligned beneficiaries who complete the 12‑month performance period and achieve track‑specific clinical targets relative to their baseline. 
  • Substitute‑spend test: Ensures beneficiaries do not receive duplicative fee-for-service (FFS) services for conditions managed under ACCESS. 

Technology and data exchange. ACCESS takes a tech-forward approach. Key expectations include use of Fast Healthcare Interoperability Resources (FHIR®) based Application Programming Interfaces (APIs) for eligibility, consent, claims sharing, and care coordination—part of the broader federal push to modernize the health data ecosystem. CMS also plans to publish a public directory that lists participants, tracks, cost-sharing policies, and risk-adjusted outcomes to enable consumer and clinician choice. 

Regulatory coordination. To complement ACCESS and expand the pipeline of technology-supported interventions, the US Food and Drug Administration’s (FDA) TEMPO (Technology-Enabled Meaningful Patient Outcomes) pilot allows selected US-based digital health device manufacturers to participate while generating real-world evidence. Up to 40 device manufacturers may participate across clinical areas. 

This coordinated CMSFDA effort is intended to reduce barriers to innovation and accelerate access to safe, effective digital tools that can support chronic disease management. 

Key Considerations for Applicants 

Program integrity and fraud/abuse. CMS has emphasized program integrity across Medicare and Medicaid, and ACCESS reflects that emphasis. Applicants and their parent organizations should expect rigorous screening. Participants must also operationalize controls to pass the substitute spend test and maintain auditable evidence of outcomes and beneficiary consent. 

Overlap with Accountable Care Organizations (ACOs) and other models. Patients may participate in ACCESS and be aligned with an ACO simultaneously; however, “participant overlap” raises important operational and financial issues. ACCESS includes an FFS exclusion policy that prohibits participants or affiliated entities from billing Medicare FFS for any services delivered to the same beneficiaries for the duration of their ACCESS episode. As a result, traditional providers, ACO-aligned clinicians, and integrated delivery systems must assess whether they can segment patient populations or if partnering is more feasible. 

Eligibility and clinical scope. ACCESS is focused on relatively stable, chronically ill beneficiaries and excludes those with more acute/severe conditions. Participants must accept responsibility for all qualifying conditions a beneficiary has within a track. 

Outcomes performance. The ACCESS Model places substantial emphasis on clinical performance and care coordination. Participants are paid in full only if enough patients hit outcomes targets. Early cohorts will likely skew toward organizations with mature clinical protocols, robust engagement models, and demonstrated outcomes. Applicants should be financially prepared to tolerate withholds, beneficiary switching, and follow-on period payment reductions after year one. 

Digital infrastructure and interoperability. ACCESS presumes API-driven data exchange, including consent capture, eligibility checks, claims/clinical data integration, and bidirectional information sharing with the patient’s broader care team. Applicants should ensure they have a FHIR API server and meet the requirements described in the CMS Health Tech Ecosystem pledge.

Go-to-market and referral strategy. Beneficiary alignment is voluntary and will be facilitated by CMS’s planned public directory with risk-adjusted outcomes. Access participants will benefit from strong referral relationships—especially with ACOs and primary care providers—both to enroll eligible beneficiaries and to minimize substitute services. A field strategy grounded in evidence, patient engagement, and interoperability with local providers is critical to success. 

Connect with Us 

Applications for the first ACCESS Model performance period are due April 1, 2026, with model launch in July 2026; applications submitted later would start January 1, 2027. Because ACCESS is a rolling, decade-long model, some organizations may choose to stage entry. 

ACCESS is the most explicit Innovation Center opportunity to date on outcomes-based, tech-enabled chronic care in Traditional Medicare. It offers digital health and advanced care organizations a direct line to FFS beneficiaries with payment tied to results, not activities. Success will favor teams that combine clinical excellence, consumer-grade engagement, and API-level interoperability, as well as manage program integrity, ACO overlap, and beneficiary churn. 

For questions or support assessing readiness, developing an application, or operationalizing the model, contact Amy Bassano, Ryan Howells, or Kate de Lisle. 

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CMS Releases 2027 Advance Notice with Medicare Advantage and Part D Rates

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The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2027 Advance Notice and Payment Policies for the Medicare Advantage (Part C) Part D Prescription Drug Program on January 26, 2026. The Advance Notice begins CMS’s annual rate-setting cycle and describes proposed updates to Medicare Advantage (MA) growth rates, benchmark rebasing, risk adjustment, Star Ratings, and Part D payment parameters. CMS previously released a proposed rule in November 2025 that included policy changes to the Star Ratings system and enrollment policies for MA and Part D starting in contract year 2027. (Read the Health Management Associates (HMA) summary here.) 

Comments on the Advance Notice are due February 25, 2026, and CMS will publish the final CY 2027 rate announcement no later than April 6, 2026.  

This article provides an early look at the proposed methodological updates and draft capitation rates. Wakely, an HMA Company, will publish a detailed analysis of the Advance Notice in early February. 

Payment Impact on Medicare Advantage Organizations 

CMS estimates a national per capita MA growth rate of 5.10 percent from 2026 to 2027, with fee-for-service (FFS) non-end-stage renal disease (non-ESRD) growth of 5.10 percent and FFS dialysis end-stage renal disease (ESRD) growth of 6.17 percent. 

The 5.10 percent growth rate reflects projected increases in per capita FFS Medicare spending for beneficiaries who are aged/have disabilities and serves as the primary driver of 2027 benchmark updates, interacting with rebasing and risk adjustment changes to determine final capitation payments. The growth rate reflects updates to how CMS pays for skin substitutes in the 2026 Medicare Physician Fee Schedule. These updates resulted in significantly lower projected costs and materially reduced the growth rate. 

These preliminary estimates inform the development of MA benchmarks and may change in the final rate announcement. 

Table 1. Estimated Impact of Proposed Payment Changes on Medicare Advantage Plan Payments, CY 2027 

                                        Year-to-Year Percentage Change 
Impact  CY 2027 Advance Notice  
Effective Growth Rate4.97%
Rebasing/Re-pricingTBD
Change in Star Ratings-0.03%
MA Coding Pattern Adjustment0%
Risk Model Revision and Normalization-3.32%
Sources of Diagnoses-1.53%
Expected Average Change0.09%
Source: Centers for Medicare & Medicaid Services. 2027 Medicare Advantage and Part D Advance Notice. January 26, 2026. Available at: https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice. 

Medicare Advantage Benchmarks, Rebasing, and Risk Adjustment 

The Advance Notice describes CMS’s approach and changes that will affect payment to plans, including: 

  • Excluding from the risk adjustment process diagnoses submitted from chart reviews with unlinked claim records. In the Fact Sheet, CMS estimates this change will reduce Part C payments by 1.53 percent. 
  • Rebasing county FFS rates for 2027 using 2020–2024 claims data, continuing CMS’s practice of updating benchmarks annually to reflect the most current FFS experience. The Advance Notice also reiterates the statutory framework for calculating benchmarks, including applicable and specified amounts, benchmark caps, and quality bonus payments. 
  • Updating the CMS Hierarchical Condition Category (CMS-HCC) and Prescription Drug Hierarchical Condition Category (RxHCC) risk adjustment models and associated normalization factors for CY 2027 and continuing to apply the statutory MA coding pattern difference adjustment to account for systematic differences in diagnosis coding between MA and FFS. 

Quality Bonus Payments, Star Ratings, and Part D Updates 

CMS states that contracts with 4 or more Stars receive a 5 percentage-point quality bonus, while new and low-enrollment contracts receive a 3.5percentage-point bonus. The Advance Notice also includes updates related to Part C and Part D Star Ratings measures and methodological refinements. 

For Part D, CMS outlines proposed updates to the defined standard benefit parameters for CY 2027, as well as changes to Part D risk adjustment, normalization, premium stabilization, reinsurance, and risk-sharing, with additional policy context provided in the Contract Year 2027 Medicare Advantage and Part D proposed rule. 

Connect with Us 

The CY 2027 Advance Notice provides early signals on benchmark growth, rebasing, and payment methodology changes that will shape MA and Part D payments in 2027. Stakeholders should begin evaluating the potential implications for bid development, benefit design, and financial performance as CMS moves toward finalizing rates in April. 

HMA supports Medicare Advantage and Part D stakeholders with payment impact modeling, scenario analysis, and strategic advisory services related to benchmark rebasing, risk adjustment, Star Ratings, and Part D payment policy to help organizations prepare for the CY 2027 rate announcement. 

For details about the finalized payment and policy rules, contact our featured experts,  Tim Courtney and Rachel Stewart. 

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Preparing for Change: A Look at Proposed State Fiscal 2027 Budgets

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As of January 1, 2026, nine governors had released proposed budgets for state fiscal year (SFY) 2027. With the phase down of federal funding and substantial policy changes approved in the 2025 budget reconciliation act (P.L. 119-21, OBBBA), these proposals offer insights into how governors plan to manage mounting fiscal pressures, navigate new federal mandates, and position their programs for long-term sustainability. 

Today, Health Management Associates Information Services (HMAIS) published its first preliminary review of proposed SFY 2027 budget proposals. The initial installment includes budgets from Alaska, Colorado, Florida, Mississippi, New Mexico, South Dakota, Utah, Virginia, and Wyoming, with the latter two proposals covering the fiscal 2026–28 biennium. 

HMAIS will release periodic updates as additional governors publish their budget proposals—the same rolling approach we used in 2025 (here and here). Because 15 states enacted 2025–27 biennial budgets last year, HMAIS also might review substantial mid-biennium health-related adjustments or supplemental funding. 

The remainder of this article provides a snapshot of several notable themes and emerging trends detailed in the full report. 

Implementation of New Federal Requirements 

State leaders are preparing budgets for SFY 2027 at a time of heightened fiscal stress and structural uncertainty. Entering 2026, governors are facing reductions in federal funding, particularly in Medicaid and Supplemental Nutrition Assistance Program (SNAP) funding. In addition, they are preparing for new federal requirements that will begin to take effect later this year, including narrower flexibilities for financing and Medicaid community engagement policies and more frequent eligibility redeterminations. 

Against this backdrop, governors are using FY 2027 budget proposals to comply with OBBBA’s mandates and to stabilize their safety net programs and realign state operations around stricter fiscal realities. 

Medicaid Work Requirements. Virginia’s proposed budget includes funding to implement federal Medicaid community engagement requirements, including a recommendation to add nine new authorized positions in SFY 2027 and 12 more in fiscal year 2028 to meet workload demands. In addition, South Dakota’s governor proposed amending the state’s 2026 budget to secure funding to implement these requirements. 

Eligibility and Redetermination. Several governors are proposing investments to support heightened eligibility checks across Medicaid, SNAP, and Temporary Assistance for Needy Families (TANF). For example, Colorado Gov. Jared Polis’s budget proposes $19.1 million to improve the state’s eligibility system for programs such as Medicaid, SNAP, and TANF. Utah’s proposed budget includes a recommended allocation of nearly $16.5 million to the Department of Workforce Services for “H.R. 1 Medicaid Eligibility Administration,” and nearly $10 million for the “H.R. 1 SNAP Administrative Services.” 

SNAP Changes. States are backfilling lost federal funding and investing in error reduction and system modernization. New Mexico Gov. Michelle Lujan Grisham’s proposed budget, for example, includes $37 million to replace the decrease in federal funding for SNAP administration ($4 million of which will support 150 new full-time positions), as well as $8.9 million for systems improvements to reduce payment errors in SNAP. South Dakota Gov. Larry Rhoden’s proposed budget includes $5.5 million to offset a reduction in SNAP federal funding. 

Strategic Cost Containment 

Considering OBBBA implementation and the effects that it will have on their budgets, our first review of governors’ budget proposals signals that states are taking an aggressive posture toward limiting expenditure growth in 2026 and 2027. Initial proposals include targeted reductions, tighter utilization management, and restrictions on benefits. 

Since the 2025 legislative session, Colorado has taken multiple steps to prepare for declining federal revenue. For example, Governor Polis’s proposed budget accounts for multiple actions approved through an amended executive order that would reduce spending to brace for OBBBA’s impacts. Examples include: 

  • Reducing provider rates to 85 percent of the Medicare reimbursement rate 
  • Establishing limits on Community First Choice services 
  • Adjusting the home health nursing and therapy services payment methodology 
  • Introducing cost controls for Medicaid benefit categories that have shown disproportionate growth 
  • Implementing a $3,000 annual cap on adult Medicaid dental benefits and a $750 annual cap on dental benefits for individuals in the Cover All Coloradans program 
  • Changing the Cover All Coloradans behavioral health program from managed care to fee for service 
  • Reviewing provider fees in anticipation of possible State Directed Payment approval from the Centers for Medicare & Medicaid Services (CMS) 

Former Virginia Gov. Glenn Youngkin’s budget—now inherited by Abilgail Spanberger following her inauguration January 17, 2026—includes multiple cost-containment proposals, such as: 

  • Anticipated adjustments to capitation rates after a review of Medicaid managed care organizations 
  • A $2,000 annual limit on adult dental services Medicaid coverage 
  • Elimination of both automatic rate increases for psychiatric residential treatment facilities and qualifying addiction and recovery treatment services providers and automatic biennial inflation increases for medical assistance providers 
  • Restrictions on emergency maternity services to Medicaid enrollees who are ineligible for Medicaid because of their citizenship status 
  • Standardized hourly limits across home and community-based services waivers 
  • Actions related to “ensuring appropriate utilization” of services, such as applied behavioral analysis and crisis services 

States are expected to include additional cost-containment tools throughout 2026 and beyond as OBBBA’s fiscal effects become clearer over the coming months and years. 

What to Watch 

The budget proposals indicate the resources that executive agencies need and preview governors’ policy agendas for the year ahead. Stakeholders should track program reductions and rate changes, eligibility system investments, and shifts in care models. 

In addition, some of the announced budget proposals consider federal awards to states under the Rural Health Transformation Program (RHTP). For example, the Alaska Department of Health budget request addresses the state’s RHTP implementation plans, and Wyoming’s budget proposal outlines RHTP priorities. Many states are preparing RFP processes to operationalize their RHTP strategies and make progress on the goals of their initiatives. 

Connect with Us 

As federal funding uncertainties continue, states and other stakeholders will need to adapt their delivery systems, administrative structures, and financing models throughout OBBBA’s multiyear rollout. HMA offers expertise, analytics, and strategic advisory services needed to navigate this evolving landscape. For details contact Andrea Maresca and Kathleen Nolan. 

The full state of the states and governor budget report is available to HMAIS subscribers. In addition, HMAIS maintains a Rural Health Transformation Program (RHTP) Tracker that incorporates details of each initiative and the first year award.  

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Outlook 2026: Rural Health Transformation Program

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As we kick off the new year, Health Management Associates (HMA) is launching a new series of brief, insightful interviews with our policy experts on issues that will define 2026—what’s changing, why it matters, and how federal, state, and industry decisions will shape what happens next. Building on our earlier analysis of the Rural Health Transformation Program ((RHTP), here and here), this week, we start with a pointed look at the Centers for Medicare & Medicaid Services’s (CMS) first year of RHTP awards. 

Rural Health, Ready or Not: CMS Wants Results in 2026

An interview with Kathleen Nolan, Senior Advisor, HMA, and Sara Singleton, Principal, Leavitt Partners, an HMA Company. 

Q: What do the new Rural Health Transformation Program awards tell us about US Department of Health and Human Services (HHS) and CMS priorities heading into 2026? 

Kathleen Nolan: One of the clearest signals is that CMS expects visible progress in 2026. This is not a program that gives states months of planning runway. The application made it clear that CMS wants states to start doing the activities they proposed right away—not just planning or propping up existing systems. CMS wants to see meaningful movement on implementation in 2026, especially in the areas of workforce, infrastructure, technology modernization, and care delivery redesign. 

Sara Singleton: Exactly, and CMS is using this investment to reinforce some of the administration’s broader policy goals. Many state proposals leaned heavily into chronic disease prevention, chronic care management, and expanding supports that promote healthier lifestyles. That alignment isn’t accidental. The Administration is looking for real traction on these priorities, and RHTP gives states both the resources and the accountability framework to make progress. So, the message from CMS is clear: Move quickly, implement strategically, and show early gains in the areas that matter for long-term population health. 

Q: Was anything in the awards themselves surprising? 

Singleton: There was a lot of speculation about how wide the spread in funding levels might be, particularly for states’ discretionary initiatives. But the distribution was relatively tight; 32 states fell in the “average” range of $190‒$230 million, with only four states above $230 million and 13 below $190 million. That suggests CMS isn’t signaling dramatic differences in expected performance or ambition. 

Nolan: It reinforces that CMS is looking for consistent, measurable progress from every state. States that struggle to implement their plans could see less funding in about years. 

Q: What should states keep top of mind heading into year one? 

Nolan: Accountability. CMS has made it clear they will adjust budgets in later years if states don’t meet expectations on reporting and evaluation. That also means states need to know where the dollars are going and what they are getting for the investment. Year one performance really matters. 

Singleton: And it’s not just CMS. Congress and the Office of Inspector General for HHS will also be watching how states use these funds. 

Q: What rural health policy developments are you watching in early 2026? 

Nolan: Decisions about the leadership for these initiatives and state legislatures. Federal investment can only go so far. States will need strong leaders and supportive policies to accelerate and sustain RHTP efforts in year one. What legislatures choose to prioritize will shape the impact of RHTP far beyond year one. 

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Executive Branch Actions Target Drug Affordability in New Pricing Models

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The federal drug pricing landscape continues to undergo significant transformation as executive branch agencies advance an ambitious suite of regulatory and model testing initiatives intended to lower the costs associated with the Medicare and Medicaid programs. In response to ongoing concerns about rising out-of-pocket costs, increasing pressure to align US prices with those paid internationally, and the continued implementation of the Inflation Reduction Act (IRA), federal agencies are reshaping how prescription drugs are priced, reimbursed, and negotiated in federally financed programs. 

The current policy environment reflects a growing emphasis on benchmarking drug prices to those in peer nations, referred to as “most favored nation” (MFN) benchmarks, and accelerating actions that require or encourage manufacturers to offer lower net prices. Health Management Associates (HMA), is tracking these developments in the public payer space, replicating Centers for Medicare & Medicaid Services (CMS) payment methodologies, and modeling alternative policies to assist life science companies, payers, and other stakeholders. 

In this article, we review the administration’s recent efforts to reduce Medicare and Medicaid spending on drugs and biologics, including confidential manufacturer negotiations and three new models that together could reshape pricing dynamics across federal programs. 

Executive Branch Negotiations Seek to Drive Access to MFN Discounts 

In 2025, the administration issued an Executive Order directing federal agencies to pursue strategies to establish MFN pricing, linking US prices for certain drugs to the lowest (or second lowest) adjusted net prices among a targeted set of peer countries. Following the order, federal officials sent letters to 17 major pharmaceutical and biotechnology manufacturers, urging them to negotiate agreements that would voluntarily align prices with MFN-based benchmarks. 

To date, 14 manufacturers have signed agreements, though full details remain confidential. These agreements are understood to accomplish the following: 

  • Provide state Medicaid programs with access to MFNbased discounts 
  • Require that new drugs be launched in the United States at MFNaligned prices 
  • Offer certain drugs at discounted directtoconsumer prices through a forthcoming “TrumpRx” program, expected to launch later this year 

Reports suggest that manufacturers entering these MFN-related arrangements may receive exemptions from several federal actions, including the Center for Medicare and Medicaid Innovation (Innovation Center) demonstration models described below and certain tariff-related policies. 

MFNLinked Models Designed to Lower Drug Costs Across Medicare and Medicaid 

Along with the negotiation efforts, the CMS Innovation Center has proposed three models that would test MFNbased pricing through structured rebate mechanisms. Each model targets different segments of the market while testing how international benchmarks could be integrated into federal drug payment policy. 

New Models Test Alternatives to Inflation Rebates 

Announced in December 2025, the Global Benchmark for Efficient Drug Pricing (GLOBE) Model and the Guarding US Medicare Against Rising Drug Costs (GUARD) Model are designed to test alternative approaches to the Inflation Reduction Act’s (IRA) inflation penalty policies. CMS plans to test the models’ potential for market driven price reductions if manufacturers choose to lower list prices instead of paying MFN-based rebates. 

Key features of the GLOBE Model are as follows: 

  • Applies to 25 percent of Medicare fee-for-service (FFS) beneficiaries using certain Part B drugs 
  • Beginning in October 2026, becomes mandatory for select drugs and targets highspending, physicianadministered Part B categories, excluding products already subject to IRA negotiations, generics, biosimilars, and certain lowspend products 
  • No changes to physician and hospital reimbursement, although beneficiaries expected to see reduced cost sharing 

The GUARD Model will similarly test whether applying MFN-based rebates to Medicare Part D drugs will lower Medicare costs. Key aspects of this model include: 

  • Fiveyear model that would start January 1, 2027 
  • Target therapeutic categories with more than $69 million in annual Part D spending 
  • No impact on plan bids and beneficiary cost sharing 

These models rely on pricing data from 19 countries. Manufacturers that voluntarily submit net price information would trigger quarterly benchmark updates; otherwise, CMS will use a fixed list price based benchmark for the entire pilot period. 

CMS is seeking comments on whether additional categories, for example cell and gene therapies, should be excluded from GLOBE. GUARD is also open for comment through February 23, 2026. 

GENErating cost Reductions fOr US Medicaid (GENEROUS) Model 

The GENEROUS model, expected to begin in 2026, creates a voluntary pathway for state Medicaid programs and manufacturers to enter supplemental rebate agreements tied to MFNaligned prices. MFN pricing under this model is based on the second lowest net price in G7 countries plus Denmark and Switzerland. GENEROUS is also expected to align with pricing commitments negotiated through the administration’s manufacturer agreements. 

Key Considerations and Potential Impacts 

The combined effect of federal negotiations and Innovation Center models could be substantial, though outcomes will depend on manufacturer participation, benchmark stability, and operational feasibility. Key considerations include: 

  • State Medicaid savings, especially the extent to which MFN‑linked rebates exceed existing supplemental rebates 
  • Reduced Medicare beneficiary cost sharing for Part B included in GLOBE 
  • Shifts in manufacturer pricing strategies, including potential changes to US launch prices 
  • Interactions with the IRA, particularly Part D redesign and Part B inflation penalties 

Connect with Us 

HMA experts continue to track the federal drug pricing landscape closely as comments, operational details, and implementation timelines evolve across these initiatives. Our team replicates CMS payment methodologies and models alternative policies using the most current Medicare FFS and Medicare Advantage (100%) claims data. 

For more information and questions about the policies described in this article, please contact our experts below.

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Webinar Replay – The ACCESS Model: Essentials for Applicants

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This webinar was held on January 22, 2026.

CMS’s new ACCESS model represents one of the most ambitious federal efforts to modernize chronic care through technology-supported services. This national, voluntary, decade-long model creates a new payment pathway for digital health tools, continuous monitoring, behavioral support, and other tech-enabled interventions that complement traditional care. With beneficiaries able to enroll directly and clinicians eligible for co-management payments, ACCESS introduces a fundamentally different approach to chronic condition management across Medicare.

During this webinar, HMA and Leavitt Partners experts broke down what is known today, what to expect in the forthcoming Request for Applications, and what organizations can do to prepare. We walked through the model’s four clinical tracks, outcomes-aligned payments, beneficiary engagement expectations, the TEMPO pilot’s implications for digital device manufacturers, and how it relates to the CMS Health Tech Ecosystem initiative.

Learning Objectives:

  • Understand the ACCESS model’s goals, structure, and clinical tracks.
  • Recognize participant and beneficiary requirements, payment approaches, and data expectations.
  • Better understand how the ACCESS and ELEVATE models relate to the CMS-aligned network commitments
  • Identify key steps to prepare for the upcoming RFA and assess organizational readiness.
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