As new federal priorities unfold鈥攑articularly for Medicare, Medicaid, and the Affordable Care Act (ACA) Marketplace鈥攈ealthcare stakeholders must anticipate and adapt to dramatic changes in funding, regulatory requirements, and technological advancements.
In light of these shifting tides, you won鈥檛 want to miss 明升88 (HMA), 8th National Conference, , October 14-16, 2025, in New Orleans, LA. The HMA event will feature timely topics with insightful speakers who are at the center of decision making in government, healthcare service delivery, philanthropy, and industry.
The conference will inspire thought-provoking conversations that will prepare you to navigate the rapidly changing healthcare landscape. The sessions will provide context for big ideas and workshops that will delve deeper into policy, strategy, and operations. Examples include:
The Policy and Politics of Making America Healthy聽
When the Ground Shifts: Publicly Financed Health Coverage and Policy in Motion聽聽
Where Is Disruption Poised to Make Improvements in Healthcare?聽
Red, Blue, or Purple:鈥疊uilding Resilient Healthcare Systems to Improve Population Health鈥�
The HMA conference welcomes all healthcare stakeholders. Each year we bring together federal and state policymakers, healthcare providers, insurers, philanthropists, and C-suite industry leaders to explore and discuss cross-cutting healthcare policy and operational issues.
Networking Opportunities
In addition to insightful sessions, the conference will offer numerous networking opportunities and . Attendees will have the chance to connect with peers, industry leaders, and policymakers during dedicated networking breaks, receptions, and informal gatherings in the vibrant city of New Orleans. These interactions will provide valuable opportunities to share experiences, discuss challenges, and explore potential collaborations.
Learn more about the agenda, registration, and sponsorship on the conference site, . For sponsorship information contact Andrea Maresca, HMAIS Managing Director.
During the month of May, HMA is featuring thought leadership and insights around Behavioral Health (BH) and changes within the BH delivery system in the U.S. Along with several presentations happening at NatCon25 in Philadelphia, May 5-7, we want to highlight some of the work done by HMA experts. Starting us off, Josh Rubin, HMA Vice President, Client Solutions, has spent his career working with BH, intellectual and developmental disabilities, and child welfare service providers. In this post, he discusses the changing BH delivery system, and the issues surrounding the treatment of co-occurring mental health conditions.
Ever since the 19th century when Dorothea Dix crusaded up and down the east coast encouraging state legislatures to fund state psychiatric hospitals, we have had separate systems for medical and mental health care. I mean Ms. Dix no disrespect, far from it; before her work we simply had no system of care for people with mental illnesses. Her contribution was immeasurable. But in 1963 when President Kennedy signed the Community Mental Health Act, it was an acknowledgement that the 鈥渙ut of sight, out of mind鈥� warehousing of people with mental illnesses in large state psychiatric hospitals was inappropriate and had to end.
Those of us who remember the heady days of the 1960s rightly celebrate the advance this represented in acknowledging the rights of people with mental illness to live in the community, and the opportunity it created for people with behavioral health conditions to build lives of dignity, productivity, and inclusion. And while we ought to celebrate that important advancement, we must nonetheless acknowledge that it maintained a separation between the underfunded mental health system, and a significantly better funded medical system. And thus, the community mental health system in America was built. It was designed to provide mental health care to the roughly 5% of the population that has a serious mental illness (SMI). In the nearly 60 years since, much has been done of which community mental health providers should be proud. We have transformed countless millions of people鈥檚 lives (and those of their families), built new program models, identified and implemented new practices, and built a service delivery system that offers a comprehensive continuum of care for people with SMI.
Unfortunately, that system was not built to address the needs of people with co-occurring mental health and substance use disorders (SUD), which is problematic because nearly half of people with a substance use disorder have a mental illness and nearly half of people with a serious mental illness have a substance use disorder. This is no surprise; the conditions are related. Some people with mental illnesses use drugs to manage their symptoms. Sometimes drug use can cause or exacerbate mental illnesses. In most cases, it is impossible to figure out where a mental illness ends, and a substance use disorder begins, or vice versa.
Yet in the U.S. we have always had separate service systems for these two conditions. Our systems grew up this way because although the stigma of mental illness is bad, the stigma of substance use is worse. While we have frequently been willing to address mental illnesses as health problems, we have long treated substance use disorders as criminal justice problems. We created community mental health centers. We launched a war on drugs.
The federal government provides two separate funding streams for states, one for mental health, the other for substance use disorder services. In many states there are separate agencies overseeing the two conditions, separate funding streams, and separate regulatory structures. Many providers respond to the funding and offer separate programs for one condition or the other.
This systemic failure leads every day to the death of Americans who have co-occurring mental health and substance use disorders but cannot access treatment for the two conditions together. Treatment works, and recovery is possible, but treatment works best when you are able to get treatment for your entire problem.
And just as the mental health and SUD systems were separated, they were both also segregated from the general healthcare delivery system. The stigma of our clients鈥� illnesses attached to us and our service system, so we were largely ignored by the healthcare delivery system and the people who funded and oversaw it.
While we have, as I said, much to be proud of, we cannot ignore the impact of our segregation. Our clients continue to die much younger than their peers. BH-related hospitalizations continue to increase. Overdose deaths and completed suicides, the worst possible outcomes, keep climbing, leaving incalculable suffering in their wake. And the financial costs of BH conditions continue to escalate, falling hardest on the historically underserved and marginalized communities that can least afford them. When America establishes a separate system, it isn鈥檛 equal; being ignored has consequences.
The good news? BH is not being ignored any longer. The bad news? BH is not being ignored any longer.
Healthcare policymakers have finally awakened to the reality that they will not be able to achieve their goals of better outcomes, lower costs, and improved customer service unless they address the BH needs of their populations. They are figuring out that everyone needs behavioral healthcare, and that a dichotomy that focuses BH care only on those with the most significant BH issues is ill serving. They are coming to understand that the skills, capabilities, and expertise of community BH providers have extraordinary value. It鈥檚 nice to be acknowledged and invited to help.
But it鈥檚 not all good news, because while being ignored left us underfunded and disrespected, it also protected us. Now that hospitals (which have been buying up outpatient practices at a remarkable pace) have started opening up BH services, we must compete with their deep pockets. And private equity (with even deeper pockets) has increased the pace at which they are acquiring BH providers, forcing additional competition on us. We are not even safe from our own phones. 10,000 mental health apps in the app store offer our clients a totally different paradigm for care, much of it lacking any evidence-based foundation. This makes it more dangerous for our clients, not less competitive for BH providers.
This environment requires fundamental changes in the way BH providers operate. We need new models of care that better meet the needs of the people we serve. Certified Community Behavioral Health Clinics (CCBHCs) are a step in the right direction, but they鈥檙e not a significant change in the service delivery model. If you look at the history of the BH system in America, from Dorothea Dix through today, you will see that the movement has been consistently in the same direction 鈥� inward. We have moved out of the hospitals in the countryside into clinics in the neighborhood. We have slowly chiseled away at the barriers dividing mental health from substance use disorder services. We have patiently worked to integrate with our health care colleagues. Now things are accelerating, and the pace of change is scary, but we should embrace the opportunity. We have a once in a lifetime chance to build something new, better, more effective.
HMA consultants are participating on four panel sessions at NatCon25 in Philadelphia, May 5-7. In this blog, HMA Principal Suzanne Daub offers a peek at her session topic and explains how improvisation is being used in behavioral health.
In the fast-paced, high-stakes world of behavioral health, case and care managers are often the steady bridge between crisis and stability, support and recovery. Yet the complexity of their roles鈥攏avigating systems, engaging clients with diverse needs, adapting to change in real-time鈥攔equires more than clinical knowledge. It calls for presence, empathy, adaptability, and clear communication. These are exactly the skills honed through applied improvisation.
Several years ago, I attended a national healthcare conference and found myself in a session on applied improvisation for medical professionals. I expected a few communication tips. What I experienced instead was a transformative, embodied approach to learning that blended empathy, collaboration, and spontaneity in a way that felt deeply relevant to behavioral health. I knew immediately: this belongs in our field.
That session sparked my own journey. I began formal improv training, developed a personal improv practice that I鈥檝e now sustained for over five years, and eventually became a certified trainer in applied improvisation for healthcare professionals. Since then, I鈥檝e been focused on bridging this work into behavioral health鈥攅specially to support case and care managers, who often work at the emotional and logistical front lines of client care.
What Is applied improv? Applied improvisation takes the tools and principles of theatrical improv鈥攍ike active listening, collaboration, spontaneity, and 鈥測es, and鈥� thinking鈥攁nd uses them in professional, non-performance contexts to strengthen human interaction. It鈥檚 grounded in neuroscience, play theory, and experiential learning.
In medical training, applied improv is used to support communication, teamwork, leadership, and emotional resilience. It helps providers stay grounded in the face of uncertainty, build trust with patients and teams, and respond rather than react. Academic medical centers, residency programs, and interprofessional training teams are increasingly turning to improv to improve quality of care and reduce burnout.
Applied improv is still emerging in behavioral health, but momentum is growing. Innovative programs are using improv to support:
Engagement in developmental disability services where play-based, nonverbal, and responsive communication is vital.
Reducing isolation among older adults and dementia caregivers through shared storytelling, and connection-building.
Substance use disorder recovery by helping individuals rediscover joy, flexibility, and authentic connection in group work.
Supervision and team development where role-play and real-time scenarios help staff practice challenging conversations and build peer support.
For case and care managers in behavioral health, applied improv can help:
Enhance engagement, improve presence, listening, and rapport-building with clients across cultures and abilities.
Build comfort with unpredictability and navigating uncertainty 鈥攅ssential when managing client crises or changing systems.
Foster collaboration and trust in interdisciplinary teams.
Bring joy, presence, and creative reset鈥攖ools we all need to stay grounded, prevent burnout and foster resilience.
If you’re attending NatCon25, I invite you to join our interactive workshop: 鈥淚mprov in Behavioral Health: Strengthening Empathy, Collaboration and Adaptability,鈥� where you鈥檒l gain hands-on tools, and leave with a new lens on what it means to connect. There are two sessions available, Monday, May 5, 4:30 PM 鈥� 5:30 PM ET or Tuesday, May 6, 11:15 AM 鈥� 12:15 PM ET, both located in room 204C.
Don鈥檛 miss these other HMA presentations at NatCon25:
Monday, May 5, 10:15 AM 鈥� 11:15 AM ET session A3 in room 103B Harnessing Your Superpowers in Times of Disaster Breakout Presenter: Monica Johnson, MA, LPC 鈥� 明升88
Monday, May 5 10:15 AM 鈥� 11:15 AM ET session A13 in room 115BC Building Sustainable Pathways for Behavioral Health Careers Breakout Presenter: Allie Franklin, MSSW, LICSW 鈥� 明升88
This week, in our In Focus section, 明升88鈥� Medicare experts review the changes to the Center for Medicare and Medicaid Innovation鈥檚 (CMMI) proposed in the Fiscal Year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Proposed Rule (). The IPPS proposed rule, released April 11, 2025, maintains the model with no changes to the timeline, participants, accountable care organization overlap policies, or required episodes.
While most changes are technical in nature, involve minor methodological tweaks, or seek to align with the Trump Administration鈥檚 policy priorities, stakeholders should continue to assess their readiness and prepare to implement the TEAM model. This is a critical time for healthcare stakeholders to stay on top of this specific proposed rule, the TEAM model, and other federal and state-level developments that are affecting the healthcare system.
This article reviews key aspects of the IPPS proposed rule policies related to TEAM with strategic steps for stakeholders as they continue to prepare for the model鈥檚 implementation.
Background on TEAM
is a value-based care initiative that requires participating hospitals to manage costs for a range of surgical procedures, including both inpatient and outpatient services. The program involves bundled payments covering all aspects of care from the surgical procedure itself to most post-acute care occurring within a 30-day window following discharge from the hospital. Payments will be calculated based on regional benchmarks, and hospitals will assume financial responsibility for the quality and cost of care provided.
TEAM is scheduled to begin in 2026 with 741 hospitals required to enter into value-based arrangements. The program will affect how hospitals manage five types of surgical episodes in both the inpatient and outpatient hospital setting by shifting more risk to the hospitals themselves. This risk includes not only the cost of the surgery but also post-acute care, including readmissions, complications, and downstream provider services. The goal is to incentivize hospitals to improve care coordination, reduce costs, and enhance patient outcomes.
Proposed Changes to the Model
According to the proposed changes, CMS is moving forward with the five-year mandatory model largely as planned, with minor updates focusing on technical details rather than a significant overhaul. Some of the proposed changes were expected based on the administration鈥檚 policy priorities, including removal of:
The Decarbonization and Resilience Initiative
Health equity plans
Health-related social needs data reporting
Other technical changes address flexibility for newly opened hospitals within TEAM鈥檚 required the impact of the possible of the Medicare Dependent Hospital (MDH) program, and modified episode attribution to be based on discharge date, rather than start date. CMS is also still seeking comment on how to finalize the low-volume threshold policy, where hospitals under a certain number of procedures would only have Track 1 (upside only) applied.
Overall, CMS expects that its proposed changes to TEAM 鈥渟hould not result in dramatic shifts to the Medicare savings estimate鈥� of $481 million in savings to CMS across the model鈥檚 five performance years.
Stakeholder Considerations for the Future
Keeping this model largely intact and maintaining the mandatory nature signals that the Trump Administration intends to continue with value-based arrangements and is looking for ways to achieve program savings. A mandatory model will generally achieve a higher level of savings than a voluntary one.
As they prepare for implementation, stakeholders will need to take action, including:
Thoroughly reviewing the proposed changes to the TEAM model to understand the changes and their implications to model of care policies and operations, financing, and collaborations with clinicians and care teams outside of the facility. Consider submitting comments to CMS on the proposed changes. Review the聽聽in TEAM.
Contextualizing their work to implement this model alongside other pending federal and state policy changes. Stakeholders will benefit from staying on top of developments in this dynamic policy landscape since many pending proposals have financial and structural implications for healthcare providers.
Preparing for the mandatory model by developing strategies to manage the financial risk associated with the bundled payments and improving care coordination. This may include modeling hospital payment policies and assessing the implications of the proposed changes.
Assessing the system and technology changes and collaborations that will be required to effectively manage risk in the model.
Connect With Us
明升88鈥� (HMA鈥檚) Medicare Practice Group 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 current Medicare fee-for-service and Medicare Advantage claims data. We also support clients with Diagnosis Related Group (DRG) reassignment requests, new technology add-on payments (NTAP) applications, and analyses of Innovation Center alternative payment models.
For more information about the proposed policies, contact our featured experts聽below.
April is always a busy month for Medicare. It is the month when (MA) policies get finalized and the bid season moves into the final stretch. It is also the starting month for annual rule making for the next cycle of Medicare payment rules. These provide important signals about the Center for Medicare & Medicaid Services (CMS) plans for modernizing Medicare鈥檚 quality programs and commitment to value-based care.
This month, we鈥檝e highlighted the work that do to support organizations鈥� Medicare projects. We鈥檝e discussed our experts’ ability to support organizations with the transition to digital quality measures. Our experts were on top of policies that made it into final MA rate notices and policy rules. We also flagged what wasn鈥檛 included and what this may mean for the future of Medicare policy. We examined the notable policy proposals in Medicare payment rules for inpatient hospitals and how these are a 鈥渃anary in the coal mine鈥� for other upcoming rules, especially related to making quality reporting and measurement more efficient and actionable. And we asked whether Medicare is ready for the next era of innovation?
We are at the start of a new season of priority setting for CMS. Early signals of what will be important to policy officials include alignment with the Make America Healthy Again (MAHA) initiative, digital health, transparency, and addressing fraud.
Impact of Recent Policy Changes
Recent policy changes have impacted the Medicare landscape in various ways. Changes announced in recent Medicare Advantage and Part D rate notices and policy include updates to payment models, quality reporting requirements, and measures to enhance transparency and accountability. The focus on digital health and the integration of digital tools into clinical models are reshaping how care is delivered and measured. Additionally, the emergent emphasis on chronic disease and program integrity is driving organizations to take a fresh look at their data, models of care, and strategies for collaborating with partners to improve patient care. Staying informed and adapting to these policy changes is crucial for organizations to remain competitive and deliver high-quality care to Medicare beneficiaries.
The Future of Medicare
Medicare will continue to play a vital role in providing healthcare to the in the program, as it is poised for significant transformation through the integration of digital tools, increased focus on quality care, and the need for cost efficiency in both Medicare Advantage and in Fee-for-Service Medicare. Organizations that stay ahead of these changes and align with policy priorities will be well-positioned to drive meaningful improvements and ensure the sustainability of the program.
As we look ahead, the commitment to innovation, transparency, and quality will be key to shaping the future of Medicare. HMA is helping clients navigate this dynamic landscape in , integrated care programs for dual eligibles, Medicare Advantage Stars and Medicare value-based care programs, PACE, and rural-focused health by providing actuarial support, long term strategic plans for data and quality initiatives, modeling of payment policies, and analyses of alternative payment models.
Multi-sector consensus-based alliances, rooted in collaboration, are a critical tool for cutting through the divisive partisanship of our national discourse, providing a pathway to sustainable progress. Through the Leavitt Center for Alliances, an initiative of 明升88, we have helped diverse stakeholders鈥攑ublic and private, government and industry, nonprofit and corporate鈥攕olve dozens of the most entrenched challenges in health care.
Consensus-based alliances can solve complex challenges faster and more creatively than any one organization alone. With the recent publication of several case studies on website, the tools for collaboration are now more accessible than ever. The site offers a window into the Center鈥檚 proven alliance framework and showcases a range of successful collaborations that exemplify how shared purpose, a commitment to consensus, and structured governance can drive real-world impact.
The case studies bring this to life, illustrating the diversity of issues that alliances can address when built on trust, structure, and shared purpose:
Empowering a Community Against Gang Violence聽鈥� A multi-sector coalition came together to reduce gang violence, demonstrating how community-based alliances can rebuild safety and trust.聽
The Long-Term Power of Alliances: Supply Chain Collaboration for Patient Safety 鈥撀�Leaders from across the health care supply chain collaborated to improve patient safety through aligned practices and shared goals.聽
Creating Value in Business: Alliance Building at the One Intermountain Breast Care Center 鈥�聽A regional alliance centered around a breast care center demonstrated how aligned incentives and coordinated care can improve outcomes and reduce waste.聽
Unifying the Smart Home:听How Matter Brought the Industry Together 鈥撀�Competitors in the tech industry joined forces to create a universal smart home standard, proving that alliances can drive industry-wide innovation.聽
Bringing Government and the Private Sector Together to Modernize Health Care Data Exchange 鈥撀�Public and private stakeholders worked together to enhance interoperability and improve access to health data.聽
In our own ranging from behavioral health integration to payment reform and data interoperability, we see firsthand how alliances are helping translate federal policy shifts into systems change. These examples reveal what鈥檚 possible when stakeholders move beyond silos and toward collective action
Hospitals that use specially designated new technologies in the inpatient setting may receive additional reimbursement through a program offered by the Centers for Medicare & Medicaid Services (CMS) known as the new technology add-on payment (NTAP) program. CMS offers a separate NTAP payment in addition to the regular Medicare Severity-Diagnosis Related Group (MS-DRG) payment, for use of specially designated new technologies that qualify. This payment is meant to remove some of the disincentives faced by hospitals under the bundled inpatient payment system, when the costs of new technologies are not incorporated into the payment rates until two to three years after market entry. At a recent webinar, HMA Principal Clare Mamerow discussed the NTAP program, what manufacturers must do to apply for and receive NTAP designation for their new technologies, and some of the changes coming in 2025. This blog shares some of the key issues raised.
While NTAP designation can offer manufacturers of new technologies a significant advantage, the NTAP application process can be intense, arcane, and difficult to navigate without proper guidance. Most products applying for NTAP need to meet three criteria: newness, cost, and substantial clinical improvement. Certain other products 鈥� breakthrough devices and certain antibiotic and antimicrobial drugs 鈥� are deemed to have already met the newness and substantial clinical improvement criteria and therefore, only need to show that the cost criterion is met. This alternative application pathway is significantly streamlined and makes gaining NTAP designation much easier for these special products because the majority of products that fail to meet the three criteria miss substantial clinical improvement.
The newness criterion has two facets. First, the product must be newly on the market (received FDA approval recently, but prior to May 1, 2026) and must not be 鈥渟ubstantially similar鈥� to other available products. CMS looks to whether the product has a different mechanism of action or whether the product treats a new or different disease or patient population in making a substantially similar determination.
The cost criterion involves an analysis of Medicare claims data, where claims from two years ago are identified as cases where the new product could have been used had it been available and then repriced to account for the cost of the new technology. The average charges on those claims are compared to a DRG specific thresholds that CMS calculates. If the claim charges exceed the threshold, the cost criterion is met.
Finally, the substantial clinical improvement criterion requires that applicants show that patient outcomes are better with treatment with the new technology. Outcomes such as reduced mortality, reduced complications, and reduced health care utilization are all examples of clinical improvement. CMS takes a totality of the circumstances view of substantial clinical improvement, so applicants are encouraged to provide as much data as possible to support their application.
While NTAP can provide supplemental payments in some circumstances, it鈥檚 important to understand the program鈥檚 limits. The NTAP payment that hospitals receive is calculated on a claim-by-claim basis, with the payment at the lesser of 65% of the cost of the product, or 65% of the cost above the regular DRG payment. This means that hospitals are only made aware of the payment amount after the claim has been submitted, and that the hospital can never be made whole for the use of the new technology. In addition, the payment can be any amount less than 65% of the cost of the product鈥攊t鈥檚 even possible that the hospital will receive no payment if the cost of the case isn鈥檛 high enough to trigger the payment. Certain antibiotics and gene therapies that treat sickle cell disease receive a high payment, up to 75% of the cost of the product. Additionally, the payments are only applicable to Medicare fee-for-service claims in IPPS hospitals. Medicare Advantage, Medicaid, and commercial hospital claims are not eligible for payments. Finally, NTAP eligibility only extends for 2-3 years after market entry.
Although the NTAP application deadline for FY 2027 has not yet been announced, manufacturers of new technologies with an interest in NTAP should begin preparing their applications soon.
HMA experts in Medicare and Life Sciences can partner with your organization navigate the challenges in the NTAP program. If you are interested in learning more, contact us.
This week, our second In Focus article addresses the transition to end the Medicare Advantage Value-Based Insurance Design (VBID) model, which launched in 2017 and subsequently has been expanded with bipartisan support. This model was designed to promote flexible benefit design, reduce cost barriers, and enhance care for targeted populations, especially dual eligibles and individuals with chronic conditions. In December 2024, however, the that the model would be terminated by the end of 2025, citing unmitigable costs to the Medicare Trust Funds, totaling more than $4.5 billion across 2021 and 2022 alone鈥�.
Despite its popularity and effectiveness in improving medication adherence and addressing social determinants of health, CMS concluded that the cost trajectory was unsustainable within the parameters of the Innovation Center鈥檚 mandate.
The end of the VBID model is not the end of innovation in Medicare Advantage (MA); rather, it is a strategic inflection point. Plans that approach this transition with a proactive, data-driven lens will be best positioned to maintain competitive advantage, compliance, and member trust. This article reviews critical steps VBID plans should be taking and how Medicare Advantage Organizations (MAOs) and their partners can best prepare for future opportunities.
Pain Points and Key Strategic Decisions for MAOs
As plans prepare for a post-VBID world, they face a series of complex trade-offs鈥攅specially those with Dual Eligible Special Needs Plans (D-SNPs) that had $0 drug cost sharing under VBID. With the end of CMS鈥檚 drug cost offset in the initial coverage phase, MAOs will need to determine whether and how to absorb those costs through alternative mechanisms. In addition, plans will need to make important decisions regarding their other VBID benefits, namely, whether to discontinue or transition them to the special supplemental benefits for the chronically ill (SSBCI) program. MAOs should consider the following key strategic decisions:
Offer an Enhanced Alternative (EA) or Basic Alternative (BA) Part D Plan:聽To replicate $0 cost sharing, MAOs would need to use EA or BA plan designs with $0 deductibles and $0 copays across all tiers鈥攁n expensive move and potentially untenable investment for many.
Tier-Specific Buy-Downs (T1/T2):聽Some plans may consider buying down T1 and T2 copays to $0, a much less costly approach. Others may consider moving key T2 drugs to T1, while keeping T1 copays at $0 to protect access and using non-zero dollar T2 copays to limit costs.
Competitive Alignment Considerations:聽MAOs offering broader cost-sharing reductions (e.g., $0 copays on both T1 and T2 drugs) may experience undesirable shifts in enrollment patterns depending on how competitors structure their formularies and benefit designs. MAOs should consider competitive parity and attempt to maintain a balanced benefit structure that aligns with market norms.
Transferring VBID Benefits to SSBCI:聽Some benefits鈥攍ike non-health-related transportation, healthy foods, and general supports for living鈥攃ould migrate to the SSBCI program. But SSBCI has strict eligibility, documentation, and operational requirements, calling for nuanced workflows and cross-departmental coordination.
Action Plan: What MAOs Should Be Doing Now
To navigate this transition successfully, teams of experts at Wakely, a 明升88, Inc. (HMA) Company, are already working with VBID stakeholders to evaluate multiple transition scenarios. Our experts recommend that MAOs take the following actions:
What to Watch: Future Innovation in Medicare Advantage
Though VBID is ending, the innovation landscape is far from static. With the new Trump Administration and the return of Abe Sutton鈥攁 VBID expansion advocate鈥攁ppointed as Director of the CMS Innovation Center, our experts are closely monitoring the potential for a revised version of VBID or similar models. Stakeholder advocacy could influence how CMS prioritizes the next wave of innovation. Plans should consider engaging in dialogue now to shape what happens next.
Connect with Us
Wakely is embedded in MA strategy and policy. Wakely and HMA teams are working with clients to evaluate multiple transition scenarios, helping them optimize value, protect Star Ratings, and preserve member satisfaction during this pivotal shift, while also supporting targeted policy engagement efforts to ensure their perspectives are reflected in future CMS and Innovation Center decision making.
Our joint capabilities bring together:
Actuarial modeling expertise聽to quantify cost and risk impacts of design alternatives
Regulatory insight聽to ensure compliance with CMS requirements
Operational support聽to help you implement SSBCI programs efficiently
Market strategy consulting聽to align your plan offerings with local competition and enrollment goals
Policy advocacy聽to help clients engage in the conversation around what comes next after VBID
To connect on additional questions contact our featured experts聽below.
This week, our In Focus section reviews the policy changes that the Centers for Medicare & Medicaid Services (CMS) proposes to make in the Fiscal Year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Proposed Rule (). The IPPS proposed rule, released April 11, 2025, includes several important policy changes that will alter hospital margins and change administrative procedures, beginning as soon as October 1, 2025.
Key Provisions of the FY 2026 Hospital IPPS and LTCH Proposed Rule
For FY 2026, CMS proposes to modify several hospital inpatient payment policies. We highlight and interpret six of these proposed policies that may be among the most impactful for Medicare beneficiaries, hospitals and health systems, payers, and manufacturers, as follows:
Annual inpatient market basket update
Labor share reduction
Medicare Advantage (MA) data integration in measuring hospital readmissions
New Technology Add-on Payment (NTAP) program growth
Transforming Episode Accountability Model (TEAM) modifications
Uncompensated care payment increase for disproportionate share hospitals (DSHs)
Annual Inpatient Market Basket Update
Proposed Rule: CMS鈥檚 FY 2026 Medicare IPPS Proposed Rule will increase payments to acute care hospitals overall by 2.4 percent from FY 2025, amounting to an estimated $4 billion increase in reimbursement. This update is based on a hospital market basket increase of 3.2 percent and a 0.8 percent reduction for total factor productivity.
HMA Analysis: CMS鈥檚 2.4 percent increase results from the estimated rate of increase in the cost of a standard basket of hospital goods鈥攖he hospital market basket. For beneficiaries, this payment increase will lead to a slightly higher standard Medicare inpatient deductible and an increase in out-of-pocket costs. For hospitals and health systems, payers, and manufacturers, the proposed payment increase (2.4 percent) is consistent with economy-wide inflation over the past year (2.4 percent) and below the amount that MA plans will receive for 2026 (5 percent).[1], [2]Although the published payment update for FY 2026 is 2.4 percent, other policy changes result in the average change in inpatient payments totaling slightly more than 3 percent. We anticipate the proposed 2.4 percent increase will increase somewhat by the time CMS finalizes these rates later in the year.
Labor Share Reduction
Proposed Rule: CMS proposes to modify the hospital labor share used to reimburse hospitals for inpatient services. Using 2023 hospital cost report data CMS proposed a national labor鈥憆elated share of 66.0 percent, a decrease from the labor share of 67.6 percent.
HMA Analysis: Every five years, CMS recalculates the hospital market basket and the hospital labor share using updated cost data from the hospital cost reports. For FY 2026, CMS conducted its routine rebasing calculation using 2023 cost report data, replacing the 2018 cost data currently used. As a result, CMS calculated that the cost of labor accounts for a slightly smaller share of total hospital costs in 2023 than in 2018. The labor share is used within the IPPS to identify the proportion of payments that are affected by the hospital wage index in an effort to adjust payments for geographic variation in labor costs. The consequence of a lower hospital labor share is that a slightly smaller share of hospital inpatient payments will be adjusted by the hospital wage index. The subtle impact of this change is that hospitals with higher wage index values may experience reductions in payment. Further, this downward revision of the labor share signals that hospital wages, salaries, and employee benefits account for a smaller share of total costs in the post-pandemic environment. This change may come to a surprise to some, as hospital labor costs have been a subject of concern since the COVID-19 public health emergency.
Medicare Advantage Data Integration in Measuring Hospital Readmissions
Proposed Rule: CMS proposed to make several modifications to the Hospital Readmissions Reduction Program (HRRP), including:
Refining all six readmission measures to add MA patient data
Removing the COVID-19 patient denominator exclusion from measures
Reducing the applicable period from three years to two
Modifying the DRG payment ratios in the payment adjustment formula to include MA beneficiaries
Clarifying that CMS has the discretion to grant an extension to hospitals under the extraordinary circumstances exception (ECE)
CMS also proposed to include MA data in other measures included in the Hospital Value-Based Purchasing (VBP) program and the Inpatient Quality Reporting (IQR) program.
HMA Analysis: The inclusion of MA data in the HRRP may have significant payment implications for many hospitals because it will alter their readmission rates in unanticipated ways, particularly if hospitals鈥� MA patients differ substantially from traditional Medicare beneficiaries. Importantly, the inclusion of MA data in the HRRP measures, and also within the VBP program and the IQR program, signals that CMS is moving toward broader integration of MA data into Medicare fee-for-service reimbursement systems.
New Technology Add-on Payment Program Growth
Proposed Rule: CMS proposed to continue NTAP status for 26 products because they continue to meet the newness criteria required under this program. In addition, within the proposed rule CMS discusses new NTAP applications for 43 additional products. Among these applications, 29 were submitted under the alternative pathways for breakthrough devices and qualified infectious disease products (QIDP).
HMA Analysis: The overall number of products with NTAPs is on par with other recent years, but the number of NTAP applications has blossomed in FY 2026 as the result of the alternative breakthrough application pathway. This alternative pathway allows breakthrough devices and certain antibiotic and antimicrobial drugs to apply for NTAP using an abbreviated application process.
Transforming Episode Accountability Model Modifications
Proposed Rule: CMS proposed several modifications to the forthcoming CMS Innovation Center TEAM framework. Among the various methodological modifications proposed to this mandatory payment model beginning January 1, 2026, CMS proposed to take the following actions:
Limit the deferment period for certain hospitals
Replace the Area Deprivation Index (ADI) with the Community Deprivation Index (CDI)
Use a 180-day lookback period and Hierarchical Condition Categories (HCC) for risk adjustment
Remove health equity and health-related social needs data reporting
Expand use of the Skilled Nursing Facility (SNF) three-day rule waiver
HMA Analysis: The critical aspect of CMS鈥檚 TEAM provision is that the agency proposes to follow through with this Innovation Center model while cancelling other Innovation Center payment models in recent months. It also is noteworthy that the agency has proposed to remove the health equity data reporting requirements for TEAM in line with actions taken with many other CMS programs. Another proposal of note is the plan to expand the use of the waiver to circumvent the SNF three-day inpatient stay rule, which will allow hospitals to discharge patients more quickly to SNFs.
Uncompensated Care Payment Increase for Disproportionate Share Hospitals
Proposed Rule: CMS proposes to increase uncompensated care payments to DSHs by $1.5 billion in FY 2026.
HMA Analysis: CMS鈥檚 proposal will increase uncompensated care payments to hospitals by 26 percent. This increase is driven by CMS鈥檚 assumption that the rate of uninsured people will increase to 8.7 percent of the population in 2026 from 7.7 percent in 2025.
Stakeholder comments on the IPPS proposed rule are due no later than June 10, 2025.
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The 明升88, Inc. (HMA), Medicare Practice Group 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 current Medicare fee-for-service and Medicare Advantage (100%) claims data. We also support clients with DRG reassignment requests, NTAP applications, and analyses of Innovation Center alternative payment models.
For more information about the proposed policies, please contact our expert below.
[1] U.S. Bureau of Labor Statistics. Table 1. Consumer Price Index for All Urban Consumers (CPI-U): U.S. City Average, by Expenditure Category. Modified April 10, 2025. Available at: .
[2] Centers for Medicare & Medicaid Services. 2026 Medicare Advantage and Part D Rate Announcement. April 7, 2025. Available at: .
Digital quality measures (dQM) are quickly emerging as a cornerstone of healthcare operations, propelled by federal efforts to enhance efficiency, interoperability, transparency, and real-time data sharing. New bipartisan proposals like the Healthcare Efficiency Through Flexibility Act (H.R. 483) highlight just how quickly the legislative landscape can change.
Healthcare organizations face mounting pressure to do more with less. As legislation continues to evolve at both federal and state levels, digital innovation remains a critical, key strategy for driving efficiency and reducing administrative burden.
National mandates, emerging legislative proposals, and regulations continue to set the 鈥渞ules of the road鈥� for healthcare, including digital quality transformation. New bills can significantly reshape reporting requirements, data standards, and reimbursement models, often on accelerated timelines. Organizations that proactively adapt to these shifting mandates will be better positioned to improve patient outcomes, streamline operations, and remain leaders in this evolving market.
Foundational Legislation
21st Century Cures Act (2016): Enacted by the U.S. Congress, this laid the groundwork for modernizing the healthcare data ecosystem using application programming interfaces (APIs). Healthcare related provisions focused on interoperability & usability of electronic health data by preventing information blocking (unreasonable interference with access/ exchange of electronic health information); required certified electronic health records (EHRs) to utilize Fast Healthcare Interoperability Resources (FHIR)-based APIs to promote patient access to their health data.
The Centers for Medicare & Medicaid Services (CMS) Interoperability & Patient Access Final Rule(CMS-9115-F) (2020): Required CMS-regulated payers (Medicare Advantage, Medicaid, Children鈥檚 Health Insurance Program (CHIP), Qualified Health Plan (QHP), and Federally-facilitated Exchanges (FFEs) beginning on or after January 1, 2022, to offer FHIR-based APIs for Patient Access and Provider Directories.
Mandated Payer to Payer Data Exchange for patients to take their data with them if they change payers.
Promoted data exchange by requiring hospital participation in sending patient event notifications through an ADT (Admissions, Discharge and Transfer) feed.
Publicly reporting providers who do not list their digital contact information in the National Plan and Provider Enumeration System (NPPES).
Further curtailed information blocking by publicly reporting eligible clinicians and hospitals who may be blocking information.
Subsequent federal communication in December 2021 formalized CMS鈥檚 decision not to enforce certain provisions of this rule to give payers additional time to comply.
Health Data, Technology, and Interoperability (HTI-1): Certification Program Updates, Algorithm Transparency, and Information Sharing-Final Rule (2024): This rule, which was issued by the Office of the National Coordinator (ASTP/ONC)[1] introduces significant changes to software supporting care. It implements the Cures Act鈥檚 EHR Reporting Program, requiring transparent reporting on certified health IT metrics. It also updated information blocking regulations to make data easier to share. In addition, it established a new standard data model for all 鈥渃ertified鈥� Health IT products: the United States Core Data for Interoperability (USCDI) version 3, starting January 1, 2026. In addition, the voluntary certification program (which has been adopted by 96% of all EHRs) has updated its standards, criteria, and requirements, including standardized FHIR APIs, electronic case reporting using Health Level Seven International Clinical Document Architecture (HL7 CDA) and FHIR-based specifications, revised decision support intervention criteria, and new functionality for patient Electronic Health Information (EHI) restriction requests.
CMS Interoperability & Prior Authorization Final Rule (CMS-0057-F) (2024): Builds on previous CMS efforts and the 2020 CMS Interoperability & Patient Access Final Rule to improve access to and exchange of health records among patients, providers, and payers. It also focuses on simplifying and modernizing prior authorization processes while expanding data-sharing requirements to reduce administrative burdens. Impacted payers must begin implementing certain measures by January 1, 2026, while most API-related requirements are extended until January 1, 2027, based on stakeholder feedback provided to CMS.
Beyond federal legislation, other influential entities like CMS, National Committee for Quality Assurance (NCQA), and ASTP/ONC, are adopting new frameworks that accelerate the shift to digital quality measurement.
Rapidly Evolving National Healthcare Frameworks & Healthcare Quality Landscape Changes
CMS National Quality Strategy/Meaningful Measures 2.0 and CMS Digital Quality Measurement Strategic Roadmap (Published in 2022)
These frameworks map out a future in which interoperability and digital measures play a pivotal role in improving care quality and outcomes.
NCQA鈥檚 Shift to Digital Healthcare Effectiveness Data and Information Set (HEDIS)庐 Measures: NCQA has taken a significant step in its quality measurement strategy for health plans. Specifically, HEDIS measures are moving to fully digital by 2030, signaling an industry-wide move toward automated data capture and reporting (published in 2024). In addition, they have also launched their Digital Content Services (DCS) product which allows organizations to submit their quality measures digitally for the 2024 measure year.
Digital Quality Implementers Community: In 2024, a collaborative consensus-based effort was initiated to develop, advance, and standardize tools and platforms that make digital quality measurement possible using open standards instead of proprietary tools. This group is actively working to advance a quality enablement layer including tools, guidance, and standards changes. Leavitt Partners, an HMA company, facilitates this community.
Signals from the Trump Administration Related to Digital Quality
There is ongoing speculation about how the Trump Administration and Congress will approach digital healthcare transformation鈥攑articularly in areas like digital quality measurement. Yet multiple indicators suggest they will stay on this course, and perhaps even accelerate the adoption of digital quality measures.
One key signal is that Ryan Howells, a Principal with Leavitt Partners, an HMA Company, is reportedly one of two finalists under consideration for the position of Assistant Secretary for Technology Policy (ASTP). Known as a champion for digital healthcare data, Howells leads the CARIN Alliance, a national group focused on improving health data access. The ASTP/ONC has significant influence in shaping federal regulations for electronic health records and broader data, technology, and artificial intelligence strategies within the Department of Health and Human Services (HHS).
Additionally, recent bipartisan legislation introduced in January 2025 further underscores a commitment to pursuing digital quality transformation as a linchpin for success in a 鈥渄igital-first鈥� environment, one that prioritizes efficiency and enhanced patient outcomes.
H.R. 483: Healthcare Efficiency Through Flexibility Act
Proposes delaying electronic clinical quality measures (eCQM) adoption until 2030, citing the need to reduce provider burden and pilot more advanced, interoperable reporting tools, including digital quality measurement.
Meanwhile, the national shift toward dQM continues to gain momentum. With eCQM mandates set to begin in reporting year 2025 for Medicare Shared Savings Program Accountable Care Organizations (MSSP ACOs), many organizations view these requirements as redundant and burdensome, given the industry鈥檚 rapid move toward fully digital quality. Unlike eCQMs, dQMs leverage more robust structure and standardization, especially through FHIR-based APIs, to enable broader, more timely, and more efficient data capture. The result is a faster path toward high-impact quality measurement and improvement in our increasingly digital healthcare environment.
Major Implications for Healthcare Organizations
Compliance Deadlines: Evolving Administration rules can quickly shift timelines, significantly impacting prior authorizations, data exchange, and quality measurement.
Financial & Legal Risks: Non-compliance may lead to financial penalties, legal actions, or even program exclusion.
[1] ONC was renamed to the 鈥淎ssistant Secretary for Technology Policy/Office of the National Coordinator (ASTP/ONC) in 2024, but in the current administration, may be folded back into CMS.
Our second In Focus section reviews the most recent Medicaid enrollment trends in capitated risk-based managed care programs in 29 states.[1] 明升88 Information Services (HMAIS) collected and analyzed monthly Medicaid enrollment data from the fourth quarter (Q4) of 2024.
The data offer a timely overview of trends in Medicaid managed care enrollment and valuable insights into state-level and managed care organization (MCO)-specific enrollment patterns. This information allows state governments, their partners, and other organizations interested in Medicaid to track enrollment shifts. Understanding the underlying drivers of enrollment shifts is critical for shaping future Medicaid policies and adjusting program strategies amid a dynamic healthcare landscape.
Overview of the Data
The 29 states included in our review have released monthly Medicaid managed care enrollment data via a public website or in response to a public records request from 明升88 (HMA). This report reflects the most recent data posted or obtained. HMA has made the following observations related to the enrollment data (see Table 1):
As of December 2024, across the 29 states tracked in this report, Medicaid managed care enrollment was 61.7 million, down by 3.6 million (-5.5%) year-over-year.
Though most states experienced declines in enrollment, six states saw enrollment increases as of December 2024鈥攄ouble the number of states from the previous year.
Figure 1. Year-Over-Year Medicaid Managed Care Enrollment Percent Change in Select States, 2020鈭�24
Among the 22 expansion states included in this report, net Medicaid managed care enrollment has decreased by 2.1 million (-4%) to 49.5 million members at the end of Q4 2024, compared with the same period in 2023.[2]
Among the seven states included in this report that had not expanded Medicaid as of December 2024, net Medicaid managed care enrollment decreased by 1.5 million, or 1 percent, to 12.3 million members at the end of Q4 2024 compared with to the same period in 2023.
Table 1. Monthly MCO Enrollment by State鈥擮ctober through December 2024
Note: In Table 1 above, 鈥�+/- m/m鈥� refers to the enrollment change from the previous month. 鈥�% y/y鈥� refers to the percentage change in enrollment from the same month in the previous year.
It is important to note the limitations of the data presented. First, not all states report the data at the same time during the month. Some of these figures reflect beginning of the month totals, whereas others reflect an end of the month snapshot. Second, in some cases the data are comprehensive in that they cover all state-sponsored health programs that offer managed care options; in other cases, the data reflect only a subset of the broader managed Medicaid population. This limitation complicates comparison of the data described above with figures reported by publicly traded Medicaid MCOs. Hence, the data in Table 1 should be viewed as a sampling of enrollment trends across these states rather than as a comprehensive comparison, which cannot be established based solely on publicly available monthly enrollment data.
HMAIS also compiles a more detailed quarterly Medicaid managed care enrollment report representing nearly 300 health plans in 41 states. The report provides by plan enrollment plus corporate ownership, program inclusion, and for-profit vs. not-for-profit status, with breakout tabs for publicly traded plans. Table 2 shows a sampling of plans and their national market share of Medicaid managed care beneficiaries based on a total of 66.3 million enrollees. These data too should be viewed as a broader representation of enrollment trends rather than as a comprehensive comparison.
Table 2. National Medicaid Managed Care Market Share by Number of Beneficiaries for Sample of Publicly Traded Plans, 2024
What to Watch
Enrollment in Medicaid MCOs has experienced significant fluctuations recently, influenced both by policy changes and economic factors. Since April 2023, Medicaid enrollment has been on a downward trajectory as states complete eligibility redeterminations after the end of the COVID-19 public health emergency. This trend, coupled with financial and political challenges, necessitates strategic planning for stakeholders to navigate the evolving Medicaid landscape effectively.鈥�
Potential changes that may affect enrollment and require scenario and readiness planning include:
Federal requirement, or a new state option, to implement Medicaid work requirements for at least some categories of enrollees
Changes to the federal financial match policy, which may cause some states to make different decisions about their Affordable Care Act expansion program for adults
Modifications in requirements and expectations for more efficient eligibility processes to improve the accuracy of determinations and assignment to eligibility categories
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HMA is home to experts who know the Medicaid managed care landscape at the federal and state levels. The HMAIS subscription provides point-in-time and longitudinal Medicaid enrollment data, health plan financials, and additional actionable information about eligibility expansions, demonstration and waiver initiatives, as well as population- and service-specific information. HMAIS also includes a comprehensive public documents library containing Medicaid requests for proposals and responses, model contracts, scoring sheets, and protests.
For detail about the HMAIS enrollment report and subscription service, contact聽our experts below.
[1] Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin.
CMS approves average increase of 5.06 percent for MA plans while deferring major policy changes in MA and Part D programs
The Centers for Medicare & Medicaid Services (CMS) released the聽聽on April 7, 2025, finalizing payment updates for calendar year (CY) 2026. This announcement came shortly after the release of the聽on April 4, 2025.聽Together, these updates mark the conclusion of CMS鈥檚 annual rulemaking cycle for Medicare Advantage, ahead of the June 2, 2025, deadline for 2026 MA plan bids.
Notably, because of the timing of the draft notices and proposed rule, Trump Administration officials ultimately had more input into policies omitted from the rate notice and final policy rule than on policies that were finalized. For example, the final rule is exclusive of proposals to expand coverage for anti-obesity medications, guardrails for artificial intelligence (AI), and new requirements related to utilization management and prior authorization procedures.
In his confirmation , CMS Administrator Mehmet Oz, MD, cited Medicare Advantage prior authorization practices and health risk assessments that lead to upcoding as areas that deserve further consideration and scrutiny, raising the potential for future regulatory shifts and even legislative reform. With the possibility of Medicare, including MA, facing cuts as part of broader budget negotiations in Congress, the rate notice and policy rule offer program stability counterbalancing the political and fiscal pressures that may emerge this year.
CMS has sought to stabilize MA and Part D programs into 2026, and stakeholders can benefit from understanding the impact in markets for 2026 and the signals of potential regulatory changes to come. For more in-depth analysis and insights on the rate notice, look for our policy and actuarial experts鈥� brief due out next week.
The remainder of this In Focus article reviews CMS鈥檚 decisions on major payment and policy proposals in the Rate Announcement and Final Rule and examines key considerations for healthcare stakeholders.
Payment Impact on Medicare Advantage Organizations
In the CY 2026 Rate Announcement, CMS projects that federal payments to MA plans will increase by 5.06 percent from 2025 to 2026, which represents a $25 billion increase in expected payments to MA plans next year. According to CMS, this represents an increase of 2.83 percentage points compared with the CY 2026 Advance Notice that is largely attributable to an increase in the effective growth rate. The increase in the effective growth rate鈥攊ncreasing to 9.04 percent in the Rate Announcement from 5.93 percent in the Advance Notice鈥攊s primarily the result of the inclusion of additional data on Medicare fee-for-service (FFS) expenditures, including payment data through the fourth quarter of 2024.
The Rate Announcement estimates represent the average increase in payments to MA plans and actual payments will vary from plan to plan. Below, Table 1 provides CMS estimates of the impact of finalized payment changes on net MA plan payments.
MA Risk Adjustment Changes
As expected, CMS finalized the last year of the three-year phase-in of the MA risk adjustment model, which requires calculating 100 percent of the risk scores using only the 2024 CMS-HCC (Hierarchical Condition Category) model in 2026. CMS also addressed stakeholder concerns with the planned transition toward a risk adjustment model based on MA encounter data, as previewed in the CMS CY 2026 Advance Notice. CMS pledged to engage stakeholders in this model development process while continuing to evaluate the feasibility, transparency, and timing of a future transition to an encounter-based risk adjustment model.
CMS also finalized the MA coding pattern adjustment factor of 5.9 percent for CY 2026, which is the statutory minimum adjustment factor to account for differences in coding patterns between MA plans and providers under Medicare FFS Parts A and B.
Part D Risk Adjustment
For CY 2026, CMS finalized the revised 2026 RxHCC model with adjustments for maximum fair price drugs. Importantly, CMS also finalized using separate FFS normalization factors for MA-Prescription Drug (MA-PD) plans and Prescription Drug Plans (PDPs), making 2026 the second year CMS will vary normalization for these two markets. The calculation of the factors for CY 2026 is different, however, and will have substantially greater impact than the method used previously. It also will reduce Part D risk scores significantly for MA-PD plans while increasing scores for PDPs.
MA Star Ratings
CMS continues to solicit feedback from stakeholders on ways to simplify and refocus MA Star Ratings measures to focus more on clinical care, outcomes, and patient experience of care measures. Also included in the CY 2026 Rate Announcement are non-substantive measure specification updates and a list of measures included in the Part C and Part D improvement measures and categorical adjustment index for the 2026 Star Ratings.
Separately, in the policy and technical changes rule, CMS finalized new regulatory requirements designed to enhance MA beneficiary protections in an inpatient setting, provisions related to allowable special supplemental benefits for the chronically ill (SSBCI), and the care experience for dually eligible beneficiaries enrolled in MA special needs plans.
Enhancing MA Beneficiary Appeal Rights and Notification Requirements
CMS is finalizing provisions that limit the ability of MA plans to reopen and modify a previously approved inpatient hospital decision on the basis of information gathered after the approval. Under the final rule, MA plans will be able to reopen an approved hospital admission only due to error or fraud. In addition, CMS finalized several provisions to enhance beneficiary appeal rights and new reporting and notice requirements, including:
Ensuring that MA appeals rules apply to adverse plan decisions, regardless of whether the decision was made before, during, or after the receipt of such services
Codifying existing guidance that requires plans to give a provider notice of a coverage decision
Ensuring enrollees have a right to appeal MA plan coverage denials that affect their ongoing source of treatment
Non-Allowable Special Supplemental Benefits for the Chronically Ill
The final rule establishes guardrails for SSBCI benefits by codifying a list of non-allowable examples (e.g., unhealthy food, alcohol, tobacco, life insurance). CMS did not finalize proposals that were designed to improve administration of supplemental benefits and enhance transparency of the availability of such benefits.
Improving Care Experience for Dual Eligibles
CMS finalized new requirements for dual eligible special needs plans (D-SNPS) that are applicable integrated plans (AIPs) as follows:
D-SNPs will be required to have integrated member ID cards for their Medicare and Medicaid plans
D-SNPs will be required to conduct an integrated health risk assessment for Medicare and Medicaid, rather than separate ones for each program.
These provisions affecting certain D-SNPS plans will be effective for the 2027 plan year.
Provisions Pertaining to the Medicare Part D Inflation Reduction Act
CMS is finalizing proposals to codify existing requirements related to key provisions of the Inflation Reduction Act, including no cost sharing for adult vaccines and capping monthly copayments for insulin at $35. In addition, CMS is codifying existing guidance related to the implementation of the Medicare Prescription Payment Plan, which is also part of the Inflation Reduction Act.
Key Proposals CMS Has Yet to Finalize
As noted earlier, CMS finalized a streamlined rule that excluded several regulatory changes identified in the November 2024 proposed rule. In addition to provisions related to coverage of anti-obesity medications, guardrails for AI, and mandatory analysis of the health equity impact of MA plans utilization management practices, the following proposals were not finalized. CMS notes that these proposals might be finalized in future rulemaking.
Expanding Medicare Part D Medication Therapy Management (MTM) eligibility criteria
Ensuring equitable access to behavioral health services by applying MA cost-sharing limits
Enhancing the Medicare Plan Finder to include information on plan provider directories
Promoting informed choice by enhancing CMS review of MA marketing and communication materials
Enhancing rules on MA plans鈥� use of internal coverage criteria
Key Considerations
The policies finalized in the CY 2026 Rate Announcement are projected to increase average Part C payments to MA plans by 5.06 percent in CY 2026鈥攁 significant uptick from the payment updates originally proposed in the CY 2026 Advance Notice. Nonetheless, the final rate increase will have varying effects across MA plans, with some experiencing larger or smaller impacts in CY 2026. MA plans should assess these outcomes as they prepare their bid submissions for 2026.
According to the CY 2026 Rate Announcement, CMS expects that the 5.06 percent increase will provide continued stability for the MA program and its beneficiaries while ensuring accurate and appropriate payments to Medicare Advantage organizations.
In the CY 2026 MA and Part D Final Rule, CMS adopted a significantly scaled-back final rule, which omitted some of the more far-reaching proposals for MA and Part D that were originally proposed in November 2024. CMS, however, could potentially revisit and finalize some of these proposals in future rulemaking. Moreover, new regulatory requirements that enhance enrollee protections in inpatient care settings and improving the care experience for dual eligibles signal CMS鈥檚 continued interest in improving program oversight and enhancing consumer protections for MA beneficiaries.
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MA stakeholders need to undertake scenario planning and be prepared to adapt to a rapidly evolving federal policy environment. From modeling and impact assessments of specific policy changes to strategy development and implementation, HMA is home to experts with diverse skill sets. Our team can help stakeholders assess and prepare for potential changes to prior authorization, looking holistically at their organization鈥檚 operations, patient care models, and reimbursement strategies. Our team also provides detailed modeling and assessments to ensure health plans are prepared for changes in risk adjustment and coding policies, supplemental benefits, and other key issues affecting capitation payment, bids, and care delivery models.
For details about the finalized payment and policy rules contact our featured experts below.
