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Why CMS Must Modernize Quality Measurement for Value-Based Care

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How should quality measurement evolve as CMS expands value-based care?

As the Centers for Medicare & Medicaid Services (CMS) shifts Medicare toward prospective payment and accountable care, quality measurement must evolve from encounter-based reporting to longitudinal, digital measurement that evaluates patient outcomes across the full care journey. Payment reform and measurement reform must advance together to support value-based care.

Key Takeaways

  • CMS is shifting Medicare toward prospective, population-based payment models.
  • Traditional encounter-based quality measures were designed for fee-for-service care.
  • Digital quality measures should evaluate longitudinal outcomes, prevention, and care coordination.
  • Interoperability infrastructure—including Fast Healthcare Interoperability Resources (FHIR) APIs and Qualified Health Information Networks (QHINs)—should enable measurement rather than function solely as a compliance requirement.
  • Healthcare organizations need integrated policy, data, analytics, governance, and technology capabilities to succeed in value-based care.

Across the Innovation Center strategy, accountable care initiatives, and the National Quality Strategy,[1] the policy direction is increasingly clear: payment models should reward positive outcomes, seamless care coordination, and high performance across the entire patient journey—not just an isolated activity.

Prospective payment encourages primary prevention, cohesive team-based care, virtual engagement, timely social needs response, and proactive follow-up. However, the quality measurement architecture supporting Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs)[2] and Promoting Interoperability (PI)[3] is not keeping pace. Too much of today’s quality measurement focuses only on encounters, service-oriented events, fixed reporting periods, and discrete measure submissions. As a result, CMS risks building future payment models on measurement logic designed for a traditional transactional healthcare system.

Success in value-based care requires the ability to manage longitudinal data, understand quality measure logic, close care gaps proactively, establish accountable care relationships, and translate digital infrastructure into measurable improvements in quality, outcomes, and cost performance.

The central challenge is not whether quality measurement becomes digital. It is whether digital quality measurement becomes truly aligned with prospective accountability.

CMS Focuses on Outcomes

CMS’s recent strategies point toward coordinated, team-based, accountable care in which clinicians and other entities are responsible for quality, cost, and outcomes over time. This policy shift recognizes that meaningful improvement often happens outside the walls of a triggering encounter: closing a care gap before a visit, preventing deterioration, reconciling medications after a transition, engaging a patient between appointments, or coordinating services across settings.

Prospective payment rewards organizations for managing risk. Quality measurement should therefore follow the same logic. Clinical quality measures used for accountability should evaluate patient-centered outcomes, longitudinal trajectories, prevention and early detection, patient experience, and cross-provider coordination. Technical capability measures matter but should not be confused with patient outcome signals.

A measurement system built for the future must be able to evaluate whether accountable entities are improving patient outcomes over time. It should capture prevention, patient experience, care coordination, and total cost management in ways that reflect real clinical accountability. That is a different task than confirming whether documentation was completed during a denominator-eligible encounter.

dQMs Should Not Simply Digitize Legacy Reporting

Digital quality measures (dQMs) are quality measures expressed as standardized computable specifications, using FHIR and Clinical Quality Language (CQL) to automate measure calculations, reduce manual data abstraction, and provide more timely insights into patient care. Traditional clinical quality measure models were developed when interoperable, electronic clinical data were limited, and manual abstraction was standard practice. Because many still reflect important evidence-based care, those measures should not necessarily be discarded, but technical specifications must be re-evaluated to effectively operate in a healthcare environment in which connected networks, APIs, and broader data liquidity make earlier identification, cross-setting coordination, and proactive outreach the new normal.

MVPs are an important evolutionary step for MIPS. By grouping measures and activities around specialties, conditions, or episodes of care, MVPs can make quality reporting more coherent and clinically relevant than traditional MIPS. However, MVPs do not automatically transform the core logic of quality measurement, nor do they enable the individual measures to function as a cohesive unit. If the measures inside an MVP remain tied to encounter-triggered denominators, legacy numerator-denominator constructs, and retrospective submissions, the program may become more organized without advancing value-based care. Successful administrative reporting is not the same as patient improvement, and any quality measurement system used for prospective population-based accountability should make that distinction explicit.

CMS’s digital quality measurement agenda[4] offers a major opportunity. Digital quality measures can draw from standardized electronic data, support FHIR-based exchange, reduce manual abstraction, and create more timely feedback loops for quality improvement. In a mature interoperable environment, data from EHRs, claims, registries, health information exchanges, devices, and other relevant sources help organizations identify care gaps before visits occur and effectively track outcomes across settings. However, digitization alone is not modernization. A quality measure can be expressed in FHIR-CQL and packaged as a dQM while still carrying assumptions from the previous era of clinical quality reporting. If the underlying logic remains anchored in payment-coded encounters and retrospective documentation, the industry will simply automate yesterday’s measurement model.

Without modernization across both quality measurement and payment, CMS will create an increasingly digital system that remains fundamentally encounter-based. Organizations may invest in coding, documentation, attestation, and measure optimization while remaining only loosely connected to the outcomes that matter to patients and purchasers. The result would be more burden, more opportunities for gaming, and weaker alignment between quality reporting and the goals of value-based care. While this might reduce some reporting friction, it would not support the prospective accountability CMS is advancing.

Promoting Interoperability Is Necessary Infrastructure

The same concern applies to PI. Interoperability is essential to modern accountability, but when PI operates primarily as a scored compliance category—through Certified Electronic Health Record Technology (CEHRT),[5] attestations, fixed reporting windows, and required measure sets—it can become a parallel administrative layer rather than the infrastructure that enables better outcomes. This creates a subtle but important policy risk: CMS may reward technical compliance even when the measurement system does not reliably demonstrate improvements in longitudinal health.

This argument is not anti-interoperability. In fact, prospective payment absolutely depends upon a reliable interoperability infrastructure. QHINs,[6] FHIR APIs, patient access capabilities, health information exchange, e-prescribing, and electronic public health reporting are all foundational to a digital learning health system and to effective longitudinal care management.

The issue is how interoperability is recognized as an integral part of a prospective quality strategy. PI should function less like an independent scoring domain and more like the infrastructure that allows accountable entities to understand their patient populations healthcare needs, efficiently exchange actionable care plans, identify care gaps, incorporate patient-generated data, and continuously evaluate outcomes over time.

Conclusion: Success in Value-Based Care Requires Operational Transformation

CMS is moving toward prospective payment, accountable care, interoperability, and outcome-based accountability, but payment reform and measurement reform must advance together. If CMS continues to place modern payment models on top of legacy measurement logic, the system may become more digital without becoming more meaningful. The next phase of quality strategy should use interoperability not as an end goal, but as the operating foundation for measuring what prospective payment is intended to reward—better outcomes across the full patient journey. For healthcare organizations, the implications are immediate. Success in value-based care will require more than compliance with reporting requirements. It will require the ability to manage longitudinal data, understand measure logic, close care gaps proactively, establish accountable care relationships, and translate digital infrastructure into measurable improvements in quality, outcomes, and cost performance.

As CMS expands accountable care and prospective payment, organizations will need quality measurement systems that evaluate outcomes across the patient journey—not simply document clinical encounters. Digital quality measurement, interoperability, longitudinal analytics, and proactive care management will increasingly become core capabilities for success in value-based care.

HMA’s perspective: Digital quality measurement should not simply automate legacy quality reporting. It should measure whether accountable organizations improve patient outcomes over time.

HMA’s Digital Healthcare Quality Transformation service brings a unique combination of expertise spanning healthcare policy, value-based care strategy, interoperability, data quality, digital quality measurement, analytics, governance, and operational transformation. We work with health plans, providers, ACOs, states, and healthcare innovators to bridge the gap between regulatory compliance and real-world performance, helping organizations build the data infrastructure, governance frameworks, care delivery capabilities, and measurement strategies needed to succeed in an increasingly digital and outcomes-driven healthcare ecosystem. By connecting strategy, technology, and execution, HMA helps clients move beyond compliance and develop the capabilities necessary to deliver measurable improvements in quality, patient outcomes, operational performance, and value.

Frequently Asked Questions

What are digital quality measures (dQMs)?

Digital quality measures (dQMs) use standardized electronic clinical data to evaluate healthcare quality and outcomes. dQMs leverage standards such as Fast Healthcare Interoperability Resources (FHIR) and Clinical Quality Language (CQL) to automate measure calculations, reduce manual data abstraction, and provide more timely insights into patient care. When implemented effectively, dQMs enable healthcare organizations to identify care gaps, monitor performance, and improve patient outcomes using interoperable data.


Why is CMS modernizing quality measurement?

The Centers for Medicare & Medicaid Services (CMS) is modernizing quality measurement to support its transition from fee-for-service reimbursement to prospective, value-based payment models. As Medicare increasingly rewards organizations for improving patient outcomes, managing population health, and coordinating care across settings, quality measurement must evolve beyond encounter-based reporting to evaluate performance across the entire patient journey.


Why are traditional quality measures no longer sufficient?

Many traditional clinical quality measures were designed for a healthcare system built around individual encounters, retrospective reporting, and manual data collection. While many remain clinically important, they often do not fully capture longitudinal care management, prevention, patient engagement, or care coordination. As payment models shift toward population-based accountability, quality measurement must better reflect how organizations improve health outcomes over time.


What is longitudinal outcomes measurement?

Longitudinal outcomes measurement evaluates patient care across time rather than during a single point in time. Instead of measuring whether a required action occurred during an office visit, longitudinal measurement assesses whether healthcare organizations identify care gaps, coordinate services, engage patients, prevent disease progression, and improve health outcomes throughout the patient’s care journey.


How do MIPS Value Pathways (MVPs) support value-based care?

Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) organize quality measures, improvement activities, and cost measures around specific specialties, conditions, or episodes of care. This approach makes reporting more clinically relevant than traditional MIPS reporting. However, achieving meaningful value-based care also requires measures within MVPs to evolve beyond encounter-based logic and better reflect longitudinal accountability and patient outcomes.


What role does interoperability play in quality measurement?

Interoperability enables healthcare organizations to securely exchange clinical information across providers, health plans, public health agencies, and patients. Standards such as FHIR APIs, Qualified Health Information Networks (QHINs), electronic health records (EHRs), and health information exchanges support more complete patient information, improve care coordination, and provide the data needed for digital quality measurement and population health management.


How are digital quality measures different from electronic clinical quality measures (eCQMs)?

Electronic clinical quality measures (eCQMs) digitized many traditional quality measures by using electronic health record data instead of manual chart abstraction. Digital quality measures (dQMs) build on this foundation by using modern interoperability standards, including FHIR and CQL, to improve data exchange, automation, and scalability. However, simply expressing a measure digitally does not modernize its underlying clinical logic.


Why is prospective payment changing quality measurement?

Prospective payment models reward healthcare organizations for managing the health of patient populations rather than billing for individual services. Because providers are increasingly accountable for outcomes, prevention, care coordination, and total cost of care, quality measurement must evaluate these longitudinal activities instead of focusing primarily on documentation associated with individual encounters.


What capabilities do healthcare organizations need to succeed in value-based care?

Success in value-based care requires more than meeting reporting requirements. Organizations need the ability to integrate longitudinal clinical and claims data, understand quality measure logic, identify and close care gaps proactively, exchange data through interoperable systems, support coordinated care teams, monitor patient outcomes continuously, and use analytics to improve quality, cost, and operational performance.

How can healthcare organizations prepare for the future of CMS quality measurement?

Healthcare organizations can prepare by investing in interoperability, data governance, digital quality measurement capabilities, analytics, and clinical workflows that support proactive care management. Organizations that align policy, technology, quality measurement, and operational transformation will be better positioned to succeed as CMS expands prospective payment, accountable care, and outcomes-based reimbursement.


[1] Centers for Medicare & Medicaid Services. CMS National Quality Strategy. Available at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.  

[2] Quality Payment Program. MIPS Value Pathways (MVPs). Available at: https://qpp.cms.gov/reporting-requirements/ways-to-report/mvp.  

[3] Quality Payment Program. Promoting Interoperability: APP Requirements. Available at: https://qpp.cms.gov/reporting-requirements/ways-to-report/app/promoting-interoperability.  

[4] Centers for Medicare & Medicaid Services. Optimal health for All Within Nation’s Health and Long-Term Care Systems: CCSQ FY2025–2028 Strategic Roadmap. March 11, 2026. Available at: https://www.cms.gov/newsroom/blog/optimal-health-all-within-nations-health-long-term-care-systems-ccsq-fy2025-2028-strategic-roadmap.  

[5] Centers for Medicare & Medicaid Services. Certified EHR Technology. Available at: https://www.cms.gov/medicare/regulations-guidance/promoting-interoperability-programs/certified-ehr-technology.  

[6] Ibid

Webinar Replay – From Policy to Practice: Exploring CMMI Value Based Care Initiatives and Unlocking Value in Safety-Net Care

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This webinar was held on May 27, 2026.

CMS, through CMMI, has multiple new models focusing on value based care, continuing to push the envelope towards improving care through their programs. In this webinar, experts examined how organizations are able to seize opportunities through operationalizing these models and what it means for safety net providers, health systems, and community-based organizations. The discussion focused on practical insights, emerging challenges, and strategic opportunities to drive impact and sustainability under new models.

Learning Objectives:

  • Understand recent and emerging CMMI models, including its policy intent, structure, and implications for Medicare beneficiaries and safety net providers
  • Examine and gain insights from organizations implementing CMMI aligned models of care, including care model design, infrastructure, and partnerships
  • Identify strategic opportunities for health systems, ACOs, and community-based providers to maximize impact and sustainability

Featured Speakers:

Royal Tuthill, SVP of Networks Pair Team

Lance Donkerbrook, ACO Executive Director P3 Health Partners

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

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

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

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

Hospital Payment Updates: Headline Increase Masks Net Impact 

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

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

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

Quality Reporting and Program Alignment 

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

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

Updates to Mandatory TEAM Model 

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

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

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

Proposed Expansion of Joint Replacement Bundles 

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

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

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

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

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

Why It Matters 

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

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

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

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

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

Connect with Us 

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

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

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

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

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

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

Core Design Evolutions of the LEAD Model

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

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

1. Revising Benchmarking Policies to Support Predictability and Success

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

2. Improving Accuracy in Beneficiary Alignment

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

3. Adding Support for High-Needs Beneficiaries

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

4. Promoting Deeper Engagement with Specialists

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

5. Advancing Technology Adoption and Innovation

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

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

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

Connect with Us

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

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

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

For questions contact Amy Bassano and Rebecca Nielsen.

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

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The Medicare Advantage (MA) program continues to evolve as plans respond to shifting policy signals, market pressures, and beneficiary expectations. A new paper from Wakely, an HMA Company—The Value Shift: How Medicare Advantage Benefits Are Evolving for 2026—provides a data-driven examination of how MA benefit designs are changing and what those changes signal about the future direction of the program. 

This paper refreshes Wakely’s ongoing MA benefit analysis, updating prior findings with the latest 2026 plan enrollment data. It builds on Wakely’s established work examining benefit design, supplemental offerings, and the relationship between bids, rebates, and plan value, including The Value Shift: Inside the C-SNP Surge

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

From Benefit Expansion to Optimization 

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

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

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

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

Supplemental Benefits: More Targeted, More Strategic 

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

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

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

Figure 2. Percent of Enrollment in Common Supplemental Benefits 

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

Shifts in Cost Sharing and the Enrollee Experience 

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

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

2026 Signals for Future Bid Cycles 

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

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

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

Value-Add Metric and Benefit Design Insights 

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

As an HMA company, Wakely’s work is complemented by broader policy, market, and strategy expertise, helping organizations connect benefit decisions to regulatory developments, operational considerations, and long-term goals. 

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

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

Looking Ahead 

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

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

For information about this analysis and the Wakely tools, contact Dani Marino and Amanda Nelessen

Webinar Replay – Value Based Care Advisory Services: HMA and Wakely Put Analysis into Action

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This webinar was held on November 20, 2025.

HMA and Wakely Share Expert Insights on VBC Landscape

In this webinar, experts from HMA and Wakely reviewed the nation’s progress in the movement to value-based payment models and looked ahead to its next chapter, sharing HMA’s views on future expectations for CMMI’s model portfolio, how shifting market and policy dynamics may impact MA contracting, and the state of value-based enablers, health systems, other risk-bearing provider entities impacted by these forces. HMA’s VBC Advisory Services team supports organizations with integrated insights across strategy, analytics, and implementation to drive measurable results in value-based care.

Learning Objectives: 

  • Review the current state of APM adoption and key trends 
  • Explore the CMS Innovation Center’s recent activities and potential focus areas for future models 
  • Understand policy and market headwinds facing Medicare Advantage plans with implications for VBC 
  • Gain insights into participation trends among health systems, enablers, and states

Related Resources:

Webinar Replay – Beyond Bundles: Preparing Hospitals for Success in TEAM and the Next Generation of Value-Based Models

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This webinar was held on September 30, 2025.

Hospitals and health systems are under growing pressure to succeed in new value-based models that demand both operational transformation and strategic alignment. In this webinar, advisors from Health Management Associates, Wakely, an HMA Company and Nixon Peabody broke down the latest regulatory and contractual developments, explored lessons learned from the Comprehensive Care for Joint Replacement (CJR) model, and discussed how organizations can prepare for upcoming opportunities.

Speakers shared practical insights on:

  • The regulatory, operational, and actuarial considerations hospitals must navigate
  • Key takeaways from bundled payment initiatives like CJR
  • How to leverage data and design strategies to build partnerships that position organizations for success in new Medicare models

This session was designed for hospital executives, provider organizations, payers, and policy leaders seeking to better understand how emerging value-based models will shape the future of care delivery and payment.

Featured Speaker:

Whitney Phelps, J.D., Partner Nixon Peabody

CMS Announces New Innovation Agenda: Here’s What You Need to Know

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On May 13, 2025, the Centers for Medicare & Medicaid Services (CMS) published its new strategic direction for the CMS Innovation Center. The strategy builds on the lessons of the first 15 years of the Innovation Center, while presenting a significant pivot in policy direction, which emphasizes evidence-based prevention, consumer engagement, and tech-enabled care, while prioritizing financial performance over broad participation.

The new strategy provides high-level direction on the Trump Administration’s vision for the next phase of value-based payment reform under the leadership of CMS Administrator Dr. Mehmet Oz and Innovation Center Director Abe Sutton. They intend to “double down on our commitment to value-based care and take the learnings from the[se] previous investments to build a health system that empowers people to drive and achieve their health goals and Make America Healthy Again.” Notably, the strategy also aligns with goals central to the Trump Administration’s Make America Healthy Again initiative.

This new direction affirms the administration’s commitment to continue advancing value-based care and opens additional opportunities for organizations seeking to enhance the delivery of services that drive positive outcomes. Health Management Associates (HMA), experts will be tracking the implementation of the Innovation Center’s new strategy, including expected forthcoming models, movement toward greater levels of downside risk, and changes to existing models to align with the administration’s priorities. In this article, our experts review the strategy and provide insights on key takeaways for stakeholders.

New Strategy Overview

CMS leaders view the Innovation Center agenda as a framework for accelerating healthy behaviors, leveraging the agency’s authority to test new approaches designed to incentivize and engage stakeholders. According to CMS officials, the Innovation Center “will work expeditiously toward the future of health—building a system in which people are empowered to achieve their health goals and providers are incentivized to compete to deliver high-quality, efficient care and improve the health outcomes of their patients.”

The strategy has three interrelated, foundational pillars:

  • Promoting evidence-based prevention
  • Empowering people to achieve their health goals
  • Driving choice and competition.

Table 1 provides more detail on each pillar.

In addition to the new agenda, CMS released a request for information (RFI) seeking industry input on strategies that can better leverage data and technology to empower consumers. The focus of the RFI aligns with the Innovation Center’s strategic pillars to use tools, information, and processes that better connect people to their health data and allow them to make informed health decisions alongside their providers.

Table 1. CMMI’s Interrelated Strategic Pillars

Takeaways and Considerations

Critical to CMS’s approach is the belief that empowering individuals to make their health decisions—through incentives, better data access, and more flexible options—can lead to better health outcomes and lower overall costs. This shift reflects an evolution in healthcare policy that places greater emphasis on personal accountability and private sector collaboration—a key theme that is emerging across the administration’s policy initiatives.

Consumer Engagement. One of the most notable aspects of the new Innovation Center strategy is the promotion of consumer engagement; it places more focus on direct consumer engagement through education and incentives compared with earlier initiatives. This is one area in which the Innovation Center plans to collaborate with the private sector to develop consumer-facing tools (e.g., mobile apps, nudges toward healthy behaviors, etc.).

The focus on consumer engagement also presents opportunities for organizations to enhance their customer experience. By understanding the needs and preferences of their patients, organizations can tailor their services and care models to better meet those demands. This personalized approach not only improves patient satisfaction, but also drives continuity of care, ultimately contributing to long-term improvements in health.

Data and Technology. The new strategy also emphasizes the importance of data, indicating intentions to better equip organizations that participate in the model with data that can inform decisions and optimize their processes. CMS officials are examining policies and collaborations that will empower private sector organizations, including model participants, researchers, and technology vendors, to develop innovative data-driven solutions to drive efficiencies and improved health.

To that end, the May 16, 2025, Request for Information (RFI) from CMS and the Assistant Secretary for Technology Policy/Office of the National Coordinator for Health (ASTP/ONC), Health Technology Ecosystem (CMS-0042-NC), focuses on Medicare beneficiaries’ use of technology to improve health outcomes. The RFI, which HMA experts analyze here [insert bookmark or link to the other In Focus article] underscores the administration’s intentions of taking “bold steps to modernize the nation’s digital health ecosystem.”

Medicare Advantage. The Innovation Center’s new strategy indicates that stakeholders should expect more models that address Medicare Advantage (MA). The agency stated that “features of a model could include testing changes to payment for MA plans, such as testing the impact of inferred risk scores, regional benchmarks, or changes to quality measures that better align with promoting health.” Additionally, the strategy references a forthcoming specialty-focused longitudinal care model within MA and Medicaid, signaling intentions to drive multi-payer alignment.

Saving Federal Tax Dollars. Another major aspect of the strategy is “protecting federal taxpayers.” This goal reflects a continued emphasis on total cost of care accountability and indicates a more aggressive shift to downside risk. The Innovation Center says it will “require all models to have downside financial risk and require providers to assume some of the financial risk..” Additional provisions of protecting tax dollars include reducing role of state governments in rate setting, simplifying model benchmark methodology, and ensuring “proper and nondiscriminatory provision of funds for health care services.”

What to Watch

For healthcare organizations, the Innovation Center’s agenda signals a need to prioritize consumer-centric models. Hospitals, providers, and insurers should anticipate the following:

  • Increased focus on preventive care initiatives to align with new model designs
  • More robust data-sharing and technology requirements, meaning investments in patient-focused digital tools will become essential
  • New opportunities in MA, given potential payment model innovations affecting plan structures and risk-adjusted reimbursement

Healthcare stakeholders should monitor possible developments related to the strategy.

  • While details on specific strategies have yet to emerge, the Innovation Center indicated it plans to provide more information on new models, as well as changes to existing models, in the coming months.
  • The Innovation Center has not provided a goal akin to the previous administration’s effort to have 100 percent of Medicare beneficiaries in accountable care relationships by 2030. It is still unknown whether these goals are forthcoming or if this will remain vague.
  • Stakeholders are still awaiting clarity on changes to existing models, including key models set to conclude at the end of 2026 (i.e., ACO REACH and Kidney Care Choices).
  • Strategy language indicates that the agency may develop payment innovation in prescription drugs, medical devices, and technology.

Connect With Us

The Health Management Associates Annual Conference, Adapting for Success in a Changing Healthcare Landscape, October 14-16, 2025, in New Orleans, LA, will feature discussions on how the new strategy is reshaping the healthcare system and care delivery for patients, particularly the opportunities to revisit provider contracts with MA plans and to integrate technology to advance the prevention of chronic conditions and achieve population health goals.

For more information about the opportunities and considerations the Innovation Center agenda presents for your organization, contact HMA’s featured experts below.

Digital Quality Measurement: A Key Driver to Value

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HMA Spotlight

Digital Quality Measurement: A Key Driver to Value

The healthcare industry is on the cusp of a seismic shift in how quality data are collected, analyzed and reported. Beginning in January 2027, new federal interoperability and prior authorization rules will require widespread data exchange, paving the way for full digital quality measurement (dQM) by 2030. This move toward dQM presents enormous opportunity to enhance quality outcomes, strengthen value-based arrangements, and streamline operations. However, it also requires substantial strategic, operational, and technological changes that most organizations simply cannot manage alone.

Regulatory Mandates

Organizations that delay preparing for the 2027 rule risk costly setbacks and non-compliance.

Opportunity for Transformation

dQM drives efficiency and quality improvement, supporting population health initiatives, care coordination, and value-based contracting.

Complexity and Risk

dQM implementation spans multiple departments—IT, quality improvement, analytics, legal, and more—creating a host of challenges requiring specialized expertise.

Competitive Advantage

Early adopters will have a first mover advantage. This advantage could result in revenue associated with auto-assignment, STARS bonus, value-based purchasing, reduced sanctions and fine, etc.

Why Partner with HMA?

HMA’s dQM consulting team understands the operational, clinical, and technical dimensions of transitioning to digital quality measurement. Leveraging deep expertise across health plans, provider organizations, and state and federal agencies, we help you plan, implement, and evaluate your dQM strategies at every stage.

1. Speed to Solution

  • Front-Seat Knowledge: HMA, together with Leavitt Partners, an HMA Company, is actively influencing and shaping national conversations on interoperability and digital measures. Our front-line insights mean you gain rapid access to the latest best practices, regulatory updates, and strategic guidance.
  • Streamlined Roadmap & Implementation: We help you develop a clear, achievable plan of action—saving you from the pitfalls of trial-and-error by fast-tracking your implementation and monitoring the results.

2. Cross-Department Coordination

  • Complexity of Transformation: dQM requires alignment across IT, quality, clinical operations, and finance—often a monumental undertaking for organizations already at capacity.  Robust change management & strategic planning and communications is crucial for success.
  • Meet Mandated Timelines: Waiting to act can result in financial risk, stressed operations, and missed opportunities to optimize reimbursement.
  • Manage Risk: Because digital quality measurement is in an emerging phase, organizations face higher levels of uncertainty. HMA mitigates risk by leveraging our extensive experience and industry partnerships.

3. Proven Expertise and Ongoing Support

  • Full Project Lifecycle: From early planning and strategy development through implementation and evaluation, we stand by you every step of the way.
  • Value Beyond Compliance: Our team identifies how dQM can drive broader business goals—improving population health, care coordination, and value-based contracting performance..

Ready to Transform Your Quality Measurement?

HMA’s expert consultants provide the advanced technical, business, and operational skills you need to succeed in today’s rapidly evolving regulatory landscape. Don’t let the complexity of dQM derail your strategic plans or burden your teams. With HMA as your partner, you can confidently navigate and optimize your transition to digital quality measurement.

Take the first step toward harnessing the power of digital quality measurement. Partner with HMA to position your organization for success today—and well into the future.

Contact our HMA dQM experts to discuss your organization’s goals and challenges:

Headshot of Jeff Booth

Jeff Booth

Principal

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Jean Glossa

Vice President, Client Solutions

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Ryan Howells

Principal

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Mark Marciante

Director

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Juan Montanez

Managing Director

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Jodi Pekkala

Managing Director, Care Delivery and Quality Improvement

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Robin A. Preston

Senior Regional Vice President

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Sarah Scholle

Principal

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Daniela Simpson

Senior Consultant II

Fraud, Waste and Abuse in Healthcare: Changing mindsets or changing reimbursement?

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Jennifer Bridgeforth, associate principal at Health Management Associates, dives into the complexities of fraud, waste, and abuse in healthcare, examining the blurred lines between inefficient processes and intentional misconduct. The conversation explores how value-based care, provider education, and technology could pave the way for more efficient and patient-centered healthcare. Listen to discover insights on navigating these challenges in a shifting healthcare landscape.

CMS Announces Medicare Advantage Value-Based Insurance Design Model Will End After 2025

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The Centers for Medicare & Medicaid Services (CMS) announced on December 16, 2024, that it will be terminating the Medicare Advantage Value-Based Insurance Design (VBID) model at the end of 2025 because of the model’s “substantial and unmitigable costs to the Medicare Trust Funds.”  This In Focus article delves into the factors driving CMS’s decision and considerations for policymakers, Medicare Advantage Organizations and other interested stakeholders.

VBID Outcomes

VBID, run by the CMS Innovation Center, is not a permanent part of the Medicare Advantage (MA) program. Innovation Center models are required to be modified or terminated if they are a cost to the program.

CMS found that costs for the VBID model totaled $2.3 billion in calendar year (CY) 2021 and $2.2 billion in CY 2022, an unprecedent amount for an Innovation Center model. CMS concluded that these substantial expenses—driven by increased risk score growth and Part D expenditures—were unmitigable through policy modifications. Therefore, consistent with statutory requirements, CMS took action to terminate the model by the end of 2025. Earlier this year, CMS announced it would discontinue the part of VBID that allowed MA plans to offer hospice services.

Next year, the VBID model will have 62 participating MA plans and is projected to offer 7 million Medicare beneficiaries additional benefits and/or rewards, including those designed to address social determinants of health and reduce cost-sharing for prescription drugs used to treat and manage chronic conditions. As part of the announcement, CMS pledged to support a stable transition for all enrollees in MA plans participating in the MA-VBID model and emphasized that key benefits available under the model will continue to be widely available, including supplemental benefits that address the whole-person healthcare needs of beneficiaries. In addition, CMS noted beneficiary cost-sharing for prescription drugs will be reduced as the result of the expansion of the low-income subsidy program under the Inflation Reduction Act and the CMS Innovation Center’s Medicare $2 Drug List Model, which is slated to begin in 2027.

As part of the announcement, CMS released an executive summary of a forthcoming evaluation report, with the full report expected to be released in early 2025.

Key Considerations

Since the MA-VBID model’s launch in 2017, the program has experienced significant growth through a series of legislative and model changes, including requirements in the Bipartisan Budget Act of 2018 that expanded eligibility to MA plans in all 50 states and allowing all types of MA special needs plans to participate in MA-VBID. Previous CMS evaluations found that the MA-VBID model led to improvements in the quality of care for beneficiaries and promoted greater adherence to prescription drugs used to treat and manage chronic conditions. Though CMS has concluded that excess costs require the termination of MA-VBID by the end of 2025, the incoming Trump Administration can be expected to closely examine this decision and look at the entire Innovation Center portfolio.

Connect with Us

Health Management Associates, Inc. (HMA), Medicare experts will continue to assess and analyze the response to CMS’s announcement, including the incoming administration’s views on the decision and potential alternatives. HMA’s experts have the depth of knowledge, experience, and subject matter expertise to assist MA organizations and interested stakeholders in analyzing and adapting to the marketplace as the MA-VBID program ends.

For further analysis of the MA-VBID decision and its impact on the market, contact our experts below.

Unlocking Solutions in the Medicaid, Medicare, and Marketplace programs

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HMA is hosting its 2024 Fall Conference October 7−9 in Chicago, IL. Unlocking Solutions in Medicaid, Medicare, and Marketplace Programs promises to enhance your ability to navigate and shape healthcare programs and systems, focusing on improving health and well-being. 

In a landscape dominated by endless video meetings, the HMA Fall Conference offers a refreshing change. Join us for an enriching experience featuring: 

  • Engagement with healthcare experts and thought leaders who are actively collaborating with stakeholders 
  • Participation in face-to-face discussions to exchange ideas and receive valuable feedback 
  • Opportunities to connect with peers who are committed to strengthening public programs and enhancing health outcomes 

Keynote Address and Sessions 

Darshak Sanghavi, MD, from the Advanced Research Projects Agency for Health (ARPA-H), will deliver the Keynote Address. He and other speakers will inspire attendees to explore innovative healthcare programs and their potential impacts on healthcare delivery, reimbursement, and health outcomes. 

The conference will feature a diverse array of speakers and participants, including C-suite executives from national, regional, and local health plans. Federal and state leaders joining panels will include: 

  • State Medicaid directors from New York, Iowa, New Mexico and Alabama  
  • State insurance commissioners  
  • Behavioral health agency officials 
  • State housing agencies 
  • Leaders from the US Interagency Council on Homelessness  

The conference will include a revamped pre-conference workshop on October 7, featuring hands-on exercises and interactive sessions led by HMA leaders. Sessions will include a value-based care contracting exercise, a value-based purchasing assessment discussion for providers, tips and tricks on navigating Medicaid section 1115 demonstrations, AI applications in healthcare, and more. 

View the agenda and event details, including speakers confirmed to date.

Registration 

Early bird registration is open until July 31. Don’t miss this opportunity to gain actionable knowledge, forge valuable connections, and discover fresh insights and best practices. Register now to secure your spot at the forefront of healthcare innovation. 

Ready to talk?