🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Today’s Upward Growth newsletter is sponsored by Kbrax

Kbrax: Integrated Care Platform for Health Plans

25 years of experience deploying care coordination at scale for the nation’s largest payers. Kbrax helps health plans reduce readmissions, close care gaps, and drive measurable cost savings by integrating physical and behavioral health into one platform. From risk stratification to automated care journeys to member engagement via mobile app, it’s the care navigation infrastructure your clinical teams actually need. Serving Medicaid, Medicare Advantage, and commercial plans.

Schedule a Demo

Interested in sponsoring Upward Growth? Contact Us

Some updates from me before we get into this week’s newsletter:

First, I'll be speaking next month at UiPath Fusion (October 20-23) in Las Vegas. Fusion is UiPath's flagship annual event, and its programming includes a dedicated healthcare and payer track, including a full session just for Blues plans. If you're planning on being there, come say hello!

Also, this week we hit 6,500 weekly subscribers, and I don't take a single one of you for granted. One easy way to help the newsletter keep growing: forward this piece to a colleague, or share it on LinkedIn with a note about what landed. That kind of word-of-mouth is how this thing keeps building.

Provider-Sponsored Plans (PSPs) are deciding line by line whether owning the delivery system alongside the health plan is a revenue asset or a cost center. That principle explains many of the moves these plans have made over the last 18 months, whether that meant doubling down on Medicare Advantage (MA) and direct-to-employer, walking away from Individual Marketplace and Medicaid managed care, or experimenting with cross-system partnerships and Risant-style aggregation.

You can trace the pattern through the last 18 months of announcements. SelectHealth extended its MA product into Colorado through a partnership with UCHealth. BSWHP is exiting Medicaid managed care and the Individual Marketplace, while PacificSource is pulling out of the ACA market across Oregon, Idaho, Washington, and Montana, and fully leaving Montana across every line of business. Kaiser's Risant Health continues to hold Geisinger and Cone Health, with plans to add more systems. Each of these plans is asking itself: given how our plan actually operates, is this line of business worth keeping?

The market shock producing these decisions is the compound pressure hitting the ACA and MA payment environment right now: Enhanced Premium Tax Credits (EPTCs) expired at the end of 2025, Cost Sharing Reduction payment mechanics have been in and out of court through the summer, and the MA payment reset has forced every carrier to reprice against tighter margins. Last week's newsletter walked through how health plans priced 2027 ACA rates against a CSR rule the court has since paused, and how Q2 earnings made the bet harder to defend. PSPs are running against that same pressure. But when the provider system owns the plan, the repricing environment forces a second decision beyond how to price the line: whether the line is worth keeping at all, given what integration is actually worth there.

The article works through why the pattern is happening, what the selection logic predicts about the next round of moves, and where your own market read has to sharpen to match how these plans are actually deciding.

If you're watching PSP moves in your pipeline, your portfolio, or your competitive market, this frame lets you read them before the next filing hits. It also changes how you read the members those exiting plans are leaving behind, because the plans that inherit them are working through a different calculation than the national payers are.

Subscribe now

Why the Same Market Shock Reads Differently Across Provider-Sponsored Plans

The intro sketched three directions: doubling down, walking away, and experimenting. Each one runs against the same selection logic inside a specific set of lines, and working through them one direction at a time makes that logic visible and the pattern predictive.

The most visible direction right now is the doubling down, because it is happening in MA at the same time that the biggest national payers are contracting in the same markets. SelectHealth’s partnership with UCHealth launched its Colorado MA product for 2024, and got sharper this plan year when UCHealth chose to leave Cigna and Devoted MA networks and stay with SelectHealth. That narrowed the market’s MA access to UCHealth providers into the SelectHealth partnership. BSWHP is holding its MA and employer group business as the two lines where the integrated model earns its keep, while pulling back everywhere else. Multiple regional PSPs are expanding MA into adjacent counties within their existing provider footprint, while UnitedHealthcare, Humana, and Aetna are exiting them.

The walking away trend is showing up in the lines where that same integrated model runs at a loss. BSWHP is exiting Medicaid managed care and the Individual Marketplace; PacificSource is leaving Montana entirely and pulling out of the ACA market across three more states; and Providence Health Plan is shuttering most of its insurance business beginning in 2027, affecting 440,000 members predominantly in Oregon. These are largely line-of-business selection decisions, not failures. Each plan looked at which lines its operating model actually gets paid for and made the call accordingly. The mechanism that separates the lines that pay from the lines that do not is what the next section works through.

The experimenting direction is a smaller number of plans working on structural approaches to a constraint that doubling down eventually runs into: how to scale MA beyond the geography of a single provider network. Two structural approaches are showing up right now: cross-system partnerships between PSPs and peer systems, and holding-company aggregation of multiple integrated systems under a shared parent.

The through-line across all three directions is the same selection principle, and it predicts more than the moves that have already happened, because it also predicts which plans move next.

The clearest way to see why the current MA payment environment is producing this pattern is to compare what is happening at the national payers in the same market. UnitedHealthcare, Humana, and Aetna are collectively exiting more than 580 counties for 2026, while Kaiser now ranks as the fourth-largest MA parent at roughly 6% of national enrollment and was one of only two large insurers to grow MA enrollment year-over-year. In the same market where the biggest national payers are contracting, PSPs are pushing further into MA. That contrast shows the current payment environment is rewarding the two operating models differently. The doubling down is playing out in the lines where PSPs’ operating model actually earns its keep.

What Owning the Delivery System Is Worth in MA and Direct-to-Employer

PSPs have several operational levers they do not have to build from scratch to compete in MA, because those levers already run inside the delivery system. The clinical workflows that drive Star Ratings performance are already staffed and running, and so is the chronic care infrastructure that keeps Medical Loss Ratio (MLR) manageable. Care coordination follows from how the plan and the system already operate together, rather than being a program the plan has to fund on top. So when a PSP invests a dollar in coordination for its MA members, the delivery system captures much of that value back through its own P&L. Whether any given PSP fully realizes those levers is a separate question, but the cost of pulling them is structurally lower than at a plan that carries risk without the delivery system.

Direct-to-employer rewards the same operating model, for reasons that overlap with MA. Network depth is a differentiator that costs a PSP nothing to demonstrate, because the network is the delivery system the plan already owns. Care navigation is a joint product of the plan and the system rather than a bolted-on utilization management gate. When the plan wants to influence utilization, it can route decisions through the clinical relationships the delivery system already carries rather than through a prior authorization process that antagonizes the network and the member at once. And employer buyers evaluating a PSP are seeking an operating model that trades administrative friction for clinical alignment, which is exactly the trade self-insured employers with disability and productivity costs are looking to make right now.

For plans doubling down on MA, this is not theoretical. SelectHealth CEO Rob Hitchcock named the mechanism plainly: “To be successful in Medicare Advantage, you’ve got to have a strong clinical partner. For us at Select Health, we have a strong clinical partner in Intermountain Health, and I think that’s critical. Without a strong clinical partner, Medicare Advantage is only going to get harder.” Hitchcock was talking about Intermountain, which owns SelectHealth outright and gives it that alignment by construction. The UCHealth partnership in Colorado is the same mechanism, extended into a market where SelectHealth had to build the partnership rather than inherit it. A PSP's MA viability lives or dies on clinical alignment, whether that alignment comes through corporate structure or through a deliberately built partnership.

Benefit design tells the same story from another angle. PSPs run a different playbook than nationals or Blues, varying more from plan to plan on core benefits and including them at slightly lower rates in individual plans. Inside SNPs, they carry lower overall benefit inclusion, while nationals and Blues more consistently offer OTC allowance, health-related meals, and transportation. That pattern makes sense once you see that PSPs often already capture the value of care coordination through their delivery system, so their benefit design does not have to substitute for utilization management or member engagement the way it has to at plans without that alignment.

Finally, a PSP entering an MA market is competing on a different unit of value than a national payer entering the same market. The cost to acquire a member is lower because the delivery system is already there. Retention runs off different levers because the tools that keep a member healthy sit inside the same organization that carries the risk. And the growth constraint runs into provider network geography rather than into acquisition economics, which is why the current MA payment environment is rewarding the integrated operating model right now, while the plans that carry MA risk without the delivery infrastructure to earn back on it are the ones contracting.

Subscribe now

Why Integration Turns Into a Cost Center in Marketplace and Medicaid

The lines of business PSPs are exiting share a feature that flips the value of integration. The two lines driving most of the exits are Individual Marketplace and Medicaid managed care, and each one fails to reward integration for its own reason. The same operating model that gets rewarded in MA and employer group runs at a loss in both.

Individual Marketplace is the clearer of the two. Coordination investments in identifying rising-risk members, closing chronic care gaps, and building relationships between members and the delivery system take multiple years of member continuity to earn back. ACA marketplace churn does not give the plan that long. Members shop across plans annually, switch during Special Enrollment Periods (SEPs), and cycle in and out of Medicaid based on redetermination timing. A PSP that invests in coordination for a Marketplace member often funds someone whose next annual enrollment lands them at a competitor.

Medicaid produces the same result through a different mechanism. State Medicaid procurement selects on criteria that reward administrative capacity, MCO scale, IT infrastructure, and network breadth across the specific geographies the state defines. Those criteria do not select for provider-plan integration in the markets where the state has the most Medicaid members to place. A PSP whose delivery system runs in Dallas and Central Texas cannot win a procurement where the state's scoring rubric prioritizes coverage in West Texas markets the plan does not serve. That is exactly what happened to BSWHP: when Texas concluded its latest Medicaid procurement, BSWHP was awarded only a limited contract in Lubbock, a market where the health system does not operate hospitals. CEO Pete McCanna reinforced the point in a separate interview, describing how high turnover in marketplace and Medicaid populations makes those lines structurally harder for BSWHP than MA and employer group. The procurement did not reward what BSWHP does best where it does it, and the members it would have served would have churned out before the coordination investment paid back.

The exits following the same logic are already stacking up. PacificSource is pulling out of the ACA market across all four of its states and leaving Montana entirely, and had anchored the Oregon marketplace alongside Providence until both left it within the last two years. Every one of these exits is a plan reading the same math on the same two lines and reaching the same conclusion.

The pattern of PSP moves in the last 18 months keeps coming back to one question: does integration itself pay? Once a plan has decided which lines it wants to keep, the next problem is what happens when its growth ambitions run into the geographic limits of its own provider network.

How PSPs Are Scaling MA Beyond Their Own Provider Network

For PSPs doubling down, scale is the next problem to solve. A PSP's MA growth ambitions eventually exceed the geography its own provider network covers. The plan can price, design benefits, and file for expansion into new counties, but if the delivery system does not operate hospitals there, none of the operating advantages that made MA work in the home market come with it.

The SelectHealth-UCHealth partnership is one approach. It launched SelectHealth’s MA and individual products in Colorado for 2024, into markets where SelectHealth’s parent Intermountain Health does not operate hospitals but UCHealth does. Neither party gave up corporate independence. The two organizations share clinical operations without sharing a corporate structure, which is the specific alignment PSPs depend on to make MA work. And once the partnership was in place, the clinical partner had room to concentrate its MA network exposure into it, which is what happened this plan year when UCHealth exited Cigna and Devoted while staying with SelectHealth.

Kaiser’s Risant Health takes a broader approach to the same constraint. Risant holds Geisinger, added in March 2024, and Cone Health, added in December 2024, under a shared parent that preserves each system’s local operating identity while pooling infrastructure, capital, and operating discipline across them. The parent gives them scale advantages no single-system PSP can build alone, from technology platforms to capital access to shared clinical operations. Risant’s stated intent is to add four or five more systems over the coming years. The model is trying to prove that a group of integrated systems can share back-office scale without giving up the local clinical alignment that makes each one profitable.

Both approaches start from the same premise: the integrated operating model is worth preserving, and the way to scale it is not to give up what makes it work locally. A cross-system partnership solves the geography problem for one line in one market; an aggregation holding company solves it across multiple systems and multiple lines at once. Both are betting that integration wins against the national payer operating model when you extend it, and that the problem worth solving is how to extend it further.

This kind of scaling can look a lot like the health plan consolidation happening elsewhere in the market, but it is a different move entirely. Blues plans have been consolidating from within under financial pressure, and other regional plans are being absorbed into larger national footprints. Both of those consolidations are driven by losses and infrastructure gaps a bigger parent can close. Cross-system partnerships and Risant-style aggregation are the reverse: line-of-business scaling driven by the growth ambitions of an operating model that is already profitable where it operates. A PSP that reads its cross-system move as consolidation, or lets it be read that way from outside, will misjudge how far and how fast the integrated model can be extended.

And getting that read right is where the selection logic starts to matter for anyone building their own view of the PSP market.

Subscribe now

How to Read PSP Moves Before They Land

The selection logic changes how any read on a PSP has to work. Take an MA expansion into an adjacent county: a national payer prices that move against per-life economics, but at a PSP it is a bet that integration will pay off in that specific market. The same double read applies on the exit side. A Medicaid exit that looks like a plan giving up on a population is more often a procurement read against a state that scored on criteria the PSP couldn't fully address. And when you get to cross-system partnerships, what would trigger M&A speculation at a national plan is more likely just scale infrastructure for a line the PSP already earns on. Read any of these against the wrong framework, and you miss what the move is actually saying.

The clearest test of this is putting two PSPs that look similar side by side. BSWHP and PacificSource show up as roughly comparable accounts on any of the usual sorts of size, geography, membership category. But BSWHP is walking away from Medicaid managed care while PacificSource is holding it, because each plan's calculation on where its delivery system pays back is running against its own local conditions. That difference doesn't show up in any standard segmentation, but it predicts everything about how each plan will move next.

When BSWHP CEO Pete McCanna talks about turnover in marketplace and Medicaid populations, he is naming why lines fail his plan's operating model. And when SelectHealth CEO Rob Hitchcock names a strong clinical partner as inseparable from MA success, he is naming why lines succeed. Both are describing the mechanism their plan runs each line against, and both are doing it out loud six to twelve months ahead of the filings, exits, and expansions it will show up in.

Not every PSP has moved publicly yet, but the ones that haven't are running the same math their peers already ran. Watch for it in three places specifically: MA product filings that extend into new geographies, Medicaid contract non-renewals inside the next twelve months, and joint venture announcements without acquisition language. It also shows up in CFO commentary on earnings calls, where the internal read on each line's economics tends to surface first.

Read every PSP announcement as a plan telling you where integration pays in its book, and the pattern stops looking like scattered news.

Final Thought

Medicare Advantage AEP opens October 15. Q3 earnings from ACA-exposed payors and hospitals will grade what year one without Enhanced Premium Tax Credits (EPTCs) actually cost. Any PSP corporate restructuring, MA product filing, or Medicaid contract non-renewal that lands inside that window is running against the same selection logic, and it should be read that way.

This frame does not go away with the next payment update. It gets sharper as MA payment reforms mature and state Medicaid procurement keeps selecting for MCO scale over provider-plan integration.

If any of what’s above touches how you’re reading provider-sponsored plan moves in your pipeline, your portfolio, or your strategy, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies to build strategy around how health plans actually buy, operate, and make decisions. Contact us here.

Thanks for reading.

Here’s to upward growth,

Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health plans, health tech vendors, investors, provider organizations, and consultancies understand the health plan market as it continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Today’s Upward Growth newsletter is sponsored by HOMELINK

Employee ownership changes everything, and members notice that.

As an employee-owned organization, HOMELINK brings a level of accountability that’s hard to find in healthcare. Because every associate is personally invested, our team treats every member and every claim as their own. With a directly contracted national network and a 9.8/10 Member Satisfaction Score, we help health plans deliver the kind of experience members remember for the right reasons.

Learn more about HOMELINK

Interested in sponsoring Upward Growth? Contact Us

A quick note before we get into it: I’m currently booking Q4 speaking sessions and on-site trainings for health plans, health tech vendors, investors, and consultancies. A few great engagements are already on the calendar for October and November, and we’ll announce those soon. Q4 is filling in fast.

The speaking sessions are keynote and panel spots at industry events, board and investor days, and executive offsites where the room needs a sharp outside read on where the payer market is actually heading in 2027 and what that means for their book. Recent talks have covered ACA repricing, the MA reset, and how CFO-driven procurement is reshaping vendor selection.

The on-site trainings (in-person or virtual) are half-day and full-day sessions for leadership teams navigating a shifting payer market: commercial and growth teams selling into health plans, product and strategy teams building for them, and investment teams sizing exposure across payer-adjacent portfolios. We cover how plans actually make buying decisions, what the market is signaling for 2027 and beyond, and how leadership should be repositioning strategy, roadmap, and go-to-market against what’s happening at the plan CFO level right now.

If you’re thinking about Q4 or Q1 2027, the fastest way to start the convo is the Upward Growth contact form, and we can scope what would land best for your team.

Separately, I’ll be at RISE West in San Diego next week. I’m especially interested to hear what the Office of the Inspector General (OIG) has to say this year, given everything moving in the payer market right now. If you’re going to be there, come say hello and let’s catch up. 👋

In May, I wrote a piece called Five Health Plan Postures to Understand During the 2026 ACA Shakeout. The argument was that plans in the Affordable Care Act (ACA) individual market would take different postures on their 2027 rates depending on how they read the risk pool without the Enhanced Premium Tax Credits (EPTCs). That article was pre-filing, so most of what I laid out was speculative.

What’s on the table now is different. Plans filed their 2027 rates, a federal judge paused most of the rule they filed under six weeks later, and Q2 earnings from ACA-exposed public payors and hospitals showed what year one without EPTCs is actually costing the market. That combination has put plan CFOs with an ACA book in the position of defending 2027 pricing decisions against conditions that have already changed underneath them.

The 15% median premium increase across 276 insurers is going to get most of the headlines, but really the number plan leadership is actually managing to is messier. And that’s because some 2027 payment rule provisions may or may not apply by Open Enrollment Period (OEP). Further, provider economics are already visibly cracking on Q2 earnings calls, and the appellate ruling most likely won't come down before the Medicare Advantage (MA) Annual Enrollment Period (AEP) opens October 15 or the ACA OEP opens November 1.

Six months ago, how plans would behave in year one without EPTCs was a forward-looking read. What we have now is evidence, and plan CFOs with an ACA book are running it against their filed 2027 posture right now, before Q3 earnings force them to say publicly whether the posture still holds.

Subscribe now

What Health Plans Priced Into Their 2027 ACA Rate Filings

Every state’s 2027 filings are in, and the story they tell is not the median.

Peterson-KFF’s national tracker puts the median proposed increase at 15% across 276 insurers. The number tells you the market repriced. Where plans landed inside the range tells you what they think happens next. Filings inside the same OEP window include 22% state averages, 52% individual carrier requests, book-wide repricings, and outright market exits. Plans clearly do not agree on what the retained risk pool looks like.

The actuarial memos supporting the filings cite five drivers consistently:

• Morbidity of the retained risk pool after EPTC expiration

• Expected further enrollment decline through 2027

• The EPTC expiration itself and its downstream effect on take-up rates

• Tariff-driven pharmaceutical and durable medical equipment (DME) cost pressure

• Uncertainty about which provisions of the 2027 Notice of Benefit and Payment Parameters (NBPP) would actually apply

To me, that last one matters most as plans were telling regulators, in writing, that they were pricing 2027 rates against a rule they weren’t sure would even hold. Actuarial memos are not opinion pieces, and that caveat is on file in dozens of state Departments of Insurance right now as the plans’ own record of what they believed about the regulatory environment.

At the state level, the split gets sharp. UnitedHealthcare of New York filed a 52.1% requested increase, the highest single filing in the country, inside a state where the individual market request averaged around 21% overall. Washington’s preliminary rate request averaged 22.4% statewide. In Oregon, both Providence Health Plan and PacificSource exited the individual marketplace entirely, leaving Oregon consumers to shop across four plans rather than six. Further, PacificSource is also exiting the individual market in Idaho, Montana, and Washington, and leaving Montana entirely across every line of business. Two plans filing rates 20 percentage points apart on the same population made two different bets on the retained risk pool. But both actuaries can't be right.

At the plan level, the divergence tells the same story. Molina Healthcare walked, announcing a $1B reduction in marketplace premium exposure for 2027 alongside consolidation to roughly six core states. Centene held ground and repriced. UnitedHealthcare tested the ceiling with the New York filing. Providence and PacificSource concluded that no rate could stabilize their books and exited. What’s clear now is that a market filing inside a 15% median but including 52% requests, book-wide repricings, and multi-state exits is not a market operating with shared assumptions.

The CFO is the one making all of these calls. As I wrote in The CFO Filter last fall, CFOs became the actual decision-makers on vendor spend at most plans over the past two years. They're now the ones defending the 2027 ACA rate posture too, and both decisions are landing on the same desk against the same conditions. And all of this got priced before the rule got paused.

The Rule Plans Priced Against Got Paused

The rule plans wrote their 2027 rates against aren’t fully in force anymore. A federal district court in Maryland paused eight of its provisions in mid-July, four days before the effective date. HHS is expected to appeal to the Fourth Circuit Court of Appeals, with a September 14 deadline to file. Separately, 22 states led by New York filed their own challenge to the NBPP two weeks after the ruling. None of it resolves before OEP opens November 1.

The paused provisions touch enrollment verification, higher out-of-pocket limits for bronze plans, catastrophic plan eligibility, network adequacy, standardized plan requirements, and tax reconciliation. Katie Keith at Georgetown has been running a multi-part series on the 2027 payment rule and the Columbus II litigation for Health Affairs Forefront, and I’d recommend her coverage if you want the substance. What matters for plan-side decisions over the next three months is that whichever way the appellate ruling lands, the rules plans priced 2027 against will not be the rules that govern the market they wrote their posture for.

Plans are already inside the OEP marketing window. Consumer-facing materials, plan design communications, and network disclosures are being drafted or are already live, built on 2027 regulatory assumptions that no longer fully hold. If the paused provisions come back, some of that content has to be reconciled with rules that were not in force when it was finalized. If they stay paused, plans that wrote pricing memos against the full rule are running a book against a floor they never stood on.

The downstream effects of what plans priced against are already visible in Q2 earnings from both hospitals and payors.

Subscribe now

Q2 Earnings Calls Show What Year One Without EPTCs Costs

Projections about what EPTC expiration would cost the healthcare economy have been in the market for a year, but Q2 was really when the projections stopped being models and started being receipts.

In September 2025, the Urban Institute and Robert Wood Johnson Foundation (RWJF) modeled what EPTC expiration would cost the market. Their numbers landed at $32.1 billion in lost provider revenue and $7.7 billion in uncompensated care in 2026, with 7.3 million people losing subsidized coverage and 4.8 million becoming uninsured. The assumption underneath the RWJF numbers was that members losing coverage would stop using care. Q2 said the opposite. The newly uninsured are still showing up, and they are just not paying for it. That makes uncompensated care the line item where EPTC expiration is landing hardest, and it’s landing faster than any 2026 model priced in.

HCA Healthcare made the point most plainly. On the July 24 Q2 call, CFO Mike Marks told investors HCA’s original 80-85% assumption for exchange-to-uninsured conversion was “closer to one-for-one”, and the company cut 2026 EBITDA guidance from $15.6B-$16.5B to $15.4B-$16.1B. That single assumption change roughly doubled HCA’s modeled full-year exchange headwind to $1.0-$1.2B. Marks and CEO Sam Hazen laid out the mechanism on the same call. Exchange volumes fell about 15% year over year. Uninsured volumes rose about 15%. The migration is almost dollar-for-dollar, and the utilization decline HCA and its peers assumed would soften the hit did not materialize.

The rest of the sector confirmed the pattern with their own numbers. Community Health Systems (CHS) raised its ACA-related EBITDA loss projection from $20-$30M to $50-$75M in Q2, with uncompensated care running about 20% higher year over year. Universal Health Services (UHS) downgraded 2026 guidance citing the same dynamic. Tenet Healthcare raised guidance and outperformed, on cost containment and a higher-acuity mix that outran the ACA headwind. Even at Tenet, exchange revenue fell 17% year over year. Tenet being the exception doesn’t weaken the pattern. It tells you which operators have enough non-ACA levers to absorb the drag without cutting guidance, and which don’t.

The mechanism connecting rate filings to hospital P&Ls sits in the CMS effectuated enrollment data. Plan sign-ups for 2026 fell by roughly one million versus 2025. Effectuated enrollment, which counts the people who actually paid their premiums, fell by nearly three million, from 22.1 million in February 2025 to 19.2 million in February 2026. That is the largest single-year drop since the ACA marketplaces launched in 2014. The gap between click-through enrollment and paid coverage is the channel through which EPTC expiration is landing on provider P&Ls, and the size of the gap makes HCA’s one-for-one revision look conservative rather than aggressive.

On the payor side, Q2 produced the first real look at how plan management teams are absorbing the same dynamic. Two of the most ACA-exposed publicly traded payors reported within days of each other, and they used the same underlying market data to tell opposite stories.

Molina told the market it had mispriced the acuity of the retained pool and was shrinking to a book it believes it can price. Q2 marketplace membership fell to 283,000 from 655,000 at the end of 2025 and 690,000 a year earlier, and marketplace medical loss ratio (MLR) ran 88.9% against the 85.5% originally guided. CEO Joseph Zubretsky told investors, “we did include an element in pricing to account for the potential for an acuity shift. We underestimated the stickiness of high-cost members,” and announced the $1 billion reduction in marketplace exposure and consolidation to six states for 2027. The plain read: Molina’s current footprint can’t be priced to margin, and the smaller, geographically concentrated version it’s shrinking to is the one it believes can.

Centene told the market it can price the book…with an asterisk. MLR improved to 89.6% from 93% year over year, and Q2 profit rebounded to $1.1B from a $253M loss in Q2 2025. But CFO Drew Asher told investors approximately $0.50 of Q2 earnings came from settlements of 2025 items that would not recur in 2027, including $180 million in Marketplace risk adjustment favorability. Marketplace membership itself fell from roughly 5.9 million to 3.5 million year over year. The asterisk is about the 2027 earnings bridge, as management is telling analysts the pricing model works and asking them to remember the $0.50 when Q2 2027 comes around.

Same market and same members, but two different calls on how to price them for 2027. Q3 tells us which call the rest of the industry is closer to, and I walked through the broader payor picture in What the Q2 Health Plan Earnings Calls Locked In for CY 2027 last week.

Subscribe now

What Plan CFOs Are Deciding Between Now and Open Enrollment

Plan CFOs with material ACA exposure are trying to make one decision under three simultaneous pressures: the 2027 rates they already filed, the rule those rates were priced against that isn't fully in force, and what Q2 said about the retained pool. Q3 is where the pressure becomes public. Boards, state regulators, and everyone who buys from them or sells to them will be listening to how leadership talks about all three at once.

The six weeks between the September 14 HHS notice-of-appeal deadline and ACA Open Enrollment on November 1 are where those simultaneous pressures collide. MA AEP opens October 15 in the middle of that stretch. Appellate hearings on the NBPP are likely to run in late October. Q3 earnings from public payors and ACA-exposed hospitals land in the same window. Every decision gets made against all of it at the same time.

These postures matter because boards, regulators, and everyone across the table will grade plan leadership on the call they made and how it held up. Q3 is where Molina's shrinkage, Centene's discipline-with-an-asterisk, UnitedHealthcare's 52.1% ceiling test in New York, and Providence and PacificSource walking away become public commitments leadership has to defend for the rest of 2026 and into 2027.

Q3 earnings calls will get the coverage, but they're a lagging read. What plans are doing right now, between the appellate uncertainty and the OEP marketing deadlines, is where the real decisions get made. Plans are drafting rate-filing amendments against multiple appellate-outcome scenarios, sequencing network-narrowing communications for pre-OEP versus post-OEP release depending on how the appellate hearings look, and writing consumer marketing that has to hold up whether the paused provisions come back or don't. The sharpest plans are running competitors through the same lens, watching for amendments and footprint changes that move faster than any earnings release. By the time all of this surfaces on an earnings call, the operating decisions behind it are already six weeks old.

One piece of this hasn't shown up on any Q2 call yet, but it will soon. When Providence, PacificSource, Molina, and the other exiting plans left their markets, their members didn't disappear. They land on the plans that stayed, and the receiving plans priced 2027 based on their own historical book. Those members aren't a random cross-section. Some will fit the health status assumptions built into 2027 rates. Some will be exactly the kind of high-cost members Molina told the market it mispriced. Receiving plans will see it in their MLR before they've done the math on it. That conversation happens on Q2 2027 calls next summer, and by then the 2028 posture is already set.

The pattern I’ve written about before, of plans absorbing simultaneous pressure across every line of business, applies here. ACA is not the only book a plan CFO is reading Q3 signals from. What each plan says about ACA in Q3 also carries information about how the rest of the book is being read, and tracking compound shocks absorbing into plans over multiple quarters is how each earnings call becomes a read instead of just a data point.

None of this stops at health plans either. Hospital finance teams will use Q3 payor commentary to model Q4 rate negotiations, and the uncompensated care trajectory Q2 established walks into provider board meetings as the payor conversation heats up. Vendors selling into ACA-heavy plans are watching which buyers priced with conviction, because those are the ones who commit in Q4 and the rest can't move until Q3 resolves. And Q3 gives investors the first market-wide read on which management teams priced discipline versus optimism, which reprices ACA-exposed payor comps and ACA-adjacent hospital comps before Q4 closes.

Final Thought

Between now and mid-November, the market grades a set of bets plan leadership made this spring about the rules, the risk pool, and how far the retained members would stretch. Q3 earnings are the first grade. 2027 OEP results close the book on it.

Inside that window, listen for whether plan CFOs’ Q3 commentary matches their 2027 filed posture, what Q3 hospital calls say about the trajectory Q2 established, and whether the appellate court signals reinstatement during oral arguments. Read together, those signals tell you which management teams treated the ACA repricing, the NBPP pause, and the Q2 provider evidence as one connected story, and which ones treated them as separate news cycles. The first group is going to look considerably better in Q4 than the second.

If any of what's above touches your 2027 planning, Upward Growth is a health plan market advisory firm built for exactly this kind of moment. We work with health tech vendors, investors, provider organizations, and management consultancies on strategy that starts from how health plans actually buy, operate, and make decisions. Contact us here.

Thanks for reading.

Here’s to upward growth,

Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health tech vendors, investors, provider organizations, and consultancies work the health plan market as it shifts.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Today’s Upward Growth newsletter is sponsored by HOMELINK

A high-performing network doesn’t have to mean high costs.

Too many ancillary care networks add complexity and cost. HOMELINK was built to reduce both. We bring together a directly contracted national network, Medicare compliance, and 100% of claims reviewed for accuracy and alignment before they reach your desk. As an employee-owned partner, we’re built to take accountability at every step, helping health plans manage spend by keeping care responsible, coordinated, and member-centered.

Learn More About HOMELINK

Interested in sponsoring Upward Growth? Learn more

🎁 Unlocked: This post includes the full deep dive. Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

Almost a year ago to the day, I published an article titled Medicare Advantage’s Reset: What Vendors Need to Get Right. The argument was that what looked like an MA collapse was a (more) familiar reset cycle. Plans pruning unprofitable contracts. Pricing and risk models realigning. Plans re-entering stronger once the math worked again. That framework mostly held up.

What twelve months of new evidence clarified is that the reset is reshaping the market into something bigger than the 2015-16 cycle I was matching against. I have watched it play out across the year and have published articles of my findings such as: Q1 2026 Payor Earnings Just Decided What CY 2027 Will Look Like and Early 2026 Hit Medicare Advantage, Medicaid, ACA, and Employer Coverage. Health Plans Are Absorbing It All at Once. Today's article pulls those threads together, and what is emerging is different enough from the 2015-16 pattern that the 2027 vendor and buyer questions need a different answer than enterprise financial analysis is producing.

Meanwhile, sell-side analysts have coalesced around a stabilization read on Medicare Advantage (MA) over the past two quarters. Articles such as Bank of America’s “When, Not If” framing on managed care margin recovery provide analysts with fair-value revisions on Humana and CVS, with commentary anticipating margin normalization by 2027 to 2028. That work answers the enterprise margin question credibly, and investors making stock decisions off those reports get a defensible read.

However, selling into these plans, investing in vendors that do, or partnering with them as a provider requires a different analysis. That analysis needs to dig into what MA product lines health plans are funding in 2027, which counties look like exit risk, and which supplemental benefit categories are being cut. It also needs to know what Star tier a specific buyer sits in and whether that shapes their appetite for new vendor spend inside the CY 2027 bid window. Rarely does that level of detail make its way into the enterprise margin analysis, and it cannot be extracted from it either.

Subscribe now

What the Stabilization Story Misses

Three shifts have compounded on your buyer’s decisions over the past twelve months.

One is the SNP rotation. Chronic Condition SNPs (C-SNPs) are driving more of the growth than Dual-Eligible SNPs (D-SNPs), which changes how vendors and investors should read the 85 percent number KFF published. Two is Star Ratings as the plan-side operational trigger for 2027 exits, with the rating methodology itself now being rewritten by four plans in federal court, extending a pattern that started with prior-cycle lawsuits. Three is a hard January 2027 Centers for Medicare & Medicaid Services (CMS) deadline on supplemental benefit verification that gives plans a regulatory pretext to accelerate the vendor cuts they were already planning, funneling the remaining spend onto the small set of vendors who can meet the standard.

Each of those shifts changes what a plan actually buys, cuts, or defends heading into 2027. Enterprise financial analysis captures none of them, because none of them show up in a margin walk. They show up in enrollment files, in courtrooms, and in verification requirements.

Shift One: The SNP Growth Story Is a C-SNP Story

The 2026 MA growth headline was flat to modestly positive. Underneath it, plans executed a specific rotation that reshapes buying priorities across every major buyer heading into 2027.

KFF's latest enrollment analysis found Special Needs Plans (SNPs) accounted for 85 percent of net Medicare Advantage enrollment growth in 2026. General MA (the individually available bucket, not group and not SNP) posted slower growth in 2026 than in any year between 2007 and 2025. Both numbers came straight out of the CMS enrollment file, so they are hard data points, not analyst reads.

The composition inside that 85 percent is where the buying decisions get made. C-SNPs are the actual growth engine, not D-SNPs, even though D-SNPs make up 78 percent of the SNP enrollment base. C-SNPs added roughly 500,000 net new members in 2025 to 2026, compared with D-SNPs adding roughly 344,000. C-SNPs grew 45 percent year over year while D-SNPs grew 5.7 percent, an 8x gap in growth rate despite C-SNPs starting from a much smaller base. The 2024 to 2025 flow ran the same way (C-SNPs added 476,000, D-SNPs added 159,000). Chronic-condition plans are the fastest-growing product in Medicare Advantage right now, and it is not close.

For a vendor who thought they were pursuing “the duals market,” that composition gap matters. The addressable population is not the one you sized against, and the plan-side buyer for chronic-condition programs is a different account than the buyer for state Medicaid integration.

The reason sits on the CMS side. New D-SNP integration requirements around state Medicaid coordination take hold in 2027, and plans spent 2025 and 2026 on operational readiness. That work slowed D-SNP enrollment throughput in the exact window it should have surged. C-SNPs do not carry the same integration requirement, so growth routed there instead. D-SNP throughput will recover once integration is in production; C-SNP will keep growing on its own economics.

Plan by plan, C-SNP enrollment numbers show where growth landed inside SNPs, and the pattern is coordinated across the peer set. Humana grew C-SNP enrollment 53 percent year over year, UnitedHealthcare grew 38 percent, Elevance grew 12 percent, Aetna grew 26x off a small starting base, and Devoted grew 17x. Compare that to what the same plans are saying on earnings calls. Centene has told the market 2027 will focus on "dual-eligible populations." Humana's Q1 2026 language framed D-SNP intake as the higher-value pipeline. The public commentary sits with duals; the enrollment file is loading up on C-SNPs. But it’s important to dig into the enrollment data, and not only rely on the press release.

You can argue that the “MA plan” buyer category is disaggregating into three product lines. A general MA book (shrinking pool with tighter vendor spend). A D-SNP book (growing pool, budget flowing into state Medicaid integration and duals-specific care management). And a C-SNP book (fastest-growing pool, budget flowing into condition-specific care programs, chronic care management infrastructure, and disease-state specialty vendors). And most major plans have all three, with different budgets and priorities within each. A vendor pitch that treats MA as monolithic, or that treats the SNP piece as a single duals story, will forecast 2027 pipeline off aggregate trend lines no plan is operating against, so take the time to segment your book by which of the three lines you actually serve.

The second shift is how plans decided which contracts to cut and hold, and what is now happening to the tool they used to make those calls.

Subscribe now

Shift Two: The Star Ratings Program Is Breaking Down

The Star Ratings program has settled into an annual pattern over the past two rating cycles. Plans invest tens of millions in Star improvement programs, CMS publishes the ratings each October, some downgraded plans sue, courts partially agree, and CMS ends up partially recalculating for some contracts while appealing for others. What ends up funding Quality Bonus Payments (QBPs) diverges from what CMS originally published. The 2027 cycle is the largest version of that sequence to date. The QBP program, which ties billions of dollars to those ratings, is showing signs of a systemic problem unlikely to survive to 2028 as it stands today.

Prior rating cycles have already produced this exact pattern. In 2024, Elevance and SCAN Health Plan won Stars lawsuits that prompted CMS to recalculate ratings for 60 plans and issue roughly $1.4 billion in additional Quality Bonus Payments. UnitedHealthcare followed with its own suit in October 2024 and won a court-ordered recalculation the following month. I wrote about the initial Clover v. HHS filing in June 2026 and discussed it on the Upward Growth podcast, framing it as a signal for broader pressure on the QBP program. If you want week-by-week detail on how each ruling and CMS response is playing out, Jenn Kerfoot at DUOS has been publishing a fantastic and thorough deep-dive series on the Clover ruling and CMS’s shifting positions. What matters here is not each individual case but the pattern. Plans have figured out that litigating a Star Rating downgrade is often cheaper than absorbing the QBP hit, and CMS is now spending significant resources defending a methodology whose flaws multiple federal courts have already ruled on.

Meanwhile, Johns Hopkins Bloomberg School of Public Health researchers, publishing in JAMA in February 2026, found that 2.9 million Medicare Advantage enrollees were forced to change plans in 2026, roughly 10 percent of MA enrollees in a single year. Plans rated below four stars were disproportionately affected. Only about 67 percent of MA enrollees now sit in 4+ star plans, down from roughly 80 percent earlier in the decade. Humana said on Q2 2026 earnings that 2027 exit decisions skewed to contracts rated 3.5 stars or lower. Plans are using Star Ratings to make consequential exit decisions, and then some of the same plans are suing over the same Star Ratings after the fact.

The last time the market saw this pattern was 2014-15, when Stars similarly triggered a wave of contract exits. What is different now is the scale. Roughly 10 percent of MA enrollees getting forced out in a single cycle is triple the ~3 percent hit that landed in 2014-15, and it is happening to plans that have already absorbed two consecutive rate cycles of pressure while absorbing compounding pressure across every other line of business at the same time.

For the current cycle, briefly: Clover filed in November 2025 and won a partial ruling from a Georgia federal court in May 2026 that adjusted its largest contract from 3.5 to 4.5 stars. In June, CMS agreed to voluntarily recalculate 2027 QBPs for certain contracts but retained 10 of 20 contested measures for others. In July, SCAN Health Plan, Alignment Healthcare, and Elevance filed their own suits, each arguing CMS violated the Administrative Procedure Act (APA) by treating similarly situated plans differently. Combined disputed QBP dollars are $290 million (Elevance $115M, SCAN $125M, Alignment $50M). On July 21, CMS filed a notice of appeal on the Clover ruling to the 11th Circuit Court of Appeals.

For the plan-side buyer, that means Stars is a moving number, and CMS's hold-harmless approach to the current recalculations means it moves in only one direction. Clover won and its 2026 rating moved from 3.5 to 4.5. CMS then voluntarily recalculated for other plans using a reduced measure set, though per analyst commentary the effect on average ratings for non-plaintiff plans was modest.

SCAN, Elevance, and Alignment are now in court arguing CMS should have applied the Clover methodology to their contracts too. If any of them wins, or CMS concedes further ground while defending the Clover appeal, additional plans could see ratings move up. The competitive picture shifts even without downgrades: plans that gain QBP dollars have more to redeploy into benefit design and member acquisition, while their competitors, whose ratings did not move, face a widening gap on the same lines. Any account risk model that treated a plan's Star tier as a fixed input six months ago is working from an out-of-date snapshot.

Where all of this lands is a QBP program that will not look the same in 2028 as it does today. Stars as a measurement system is not stable enough right now to run the operational and financial decisions that CMS has built on top of it, and every additional lawsuit strengthens the case for a rewrite. Whether the 2028 version is a modest methodology revision or a wholesale overhaul depends on the 11th Circuit ruling and how CMS responds.

That takes us to the third shift, on supplemental benefits, where a hard January 2027 regulatory deadline will consolidate a whole vendor category onto a handful of compliant platforms.

Shift Three: Supplemental Benefits Are Now a Member Selection Tool

Supplemental benefits used to be the growth lever. Plans loaded flex cards, Over-The-Counter (OTC) allowances, and food and grocery cards to win Annual Enrollment Period share. Plans are not trying to grow membership the same way anymore, so the benefit stacking has slowed too.

What plans are doing with benefit design heading into CY 2027 is doing two things at once. The obvious one is saving money. Reduced benefit spending protects margin under tight rate assumptions. The less-obvious one shows up in the county-level filings but not on the earnings calls: plans are shaping which members they attract and which they don’t. Cut general-population supplemental benefits and keep SNP-specific care management benefits, and you become less attractive to a marginal general MA shopper and more attractive to the D-SNP and C-SNP populations you actually want to grow into. Benefit cuts are member-shaping decisions, not just cost decisions.

The category-level pullback data already shows it. KFF’s 2026 MA spotlight found OTC benefits available in 66 percent of 2026 MA plans, down from 73 percent in 2025. Meal benefits, transportation, and fitness all posted declines, while dental has held steady. The trend has been building for two years, and it is accelerating into CY 2027.

Effective January 1, 2027, supplemental benefit spending routed through flex cards, OTC allowances, and food and grocery cards has to be verified in real time at point-of-sale, per the CY 2027 Final Rule we unpacked when it dropped, with each transaction tied to an eligible plan-covered item. Vendors serving these categories have to prove SOC 2 data-security compliance, CMS-grade verification infrastructure, and real-time integration with plan claims systems. Plans that were already trimming will use the deadline as the reason to consolidate remaining spend onto the smaller set of platform vendors that meet the standard. Everyone else gets squeezed out of accounts they have held for years.

For a vendor in the supplemental benefit category, that creates three legitimate paths and one bad option:

1. Platform-winner status: gaining accounts as competitors fail the verification standard and get dropped.

2. Partner-under-a-platform-winner: your product runs as an underlying feature inside a compliant platform (revenue continuity, less brand equity).

3. Category exit: harvest cash on the current book and redeploy capital elsewhere ahead of the CY 2027 bid submissions.

The wrong move is waiting to see how the market sorts out. The plan-side decision on who they consolidate onto is being modeled right now alongside CY 2027 bid economics.

And frankly, even if you do not sell into supplemental benefits, this still changes how you sell. Plans are using benefit design as a member-shaping tool now, not just a cost lever, and every product they buy from you gets evaluated on the same lens: does this help attract the members we want (SNP populations, high-risk-adjustment members, targeted geographies) or does it help retain members we are not trying to keep? Your framing on new products and renewals has to speak to that lens too.

That's why the sell-side stabilization story from the financial press keeps getting stretched past what it was built to answer.

Subscribe now

Enterprise Stabilization Is Not Market Shape Analysis

Two distinct analytical questions get conflated in the MA market right now, and separating them matters for what you do next.

The enterprise margin question. Whether plans hit their 2028 margin targets, and whether the stock is defensible at current valuations. Sell-side analysts answer this credibly. Historical MA cycles do recover, discipline returns, and target margins come back. The 2014-15 reset is the base case, and enterprise analysts are right to reference it. The Johns Hopkins researcher who ran the disenrollment analysis framed the 2026 pullbacks in a follow-up AJMC interview as “necessary market corrections intended to address historical government overpayments,” which is directionally consistent with the sell-side stabilization view. Both reads are compatible and largely correct.

The market-shape question. What plans will actually be buying in 2027, in what categories, at what Star tiers, in what geographies? That is a different analytical problem, and the 2014-15 comparison as the base case does not carry over cleanly.

Five structural differences make the market-shape analysis distinct. Forced disenrollment in 2026 runs roughly three times the scale of the 2014-15 cycle. The Inflation Reduction Act (IRA) rewrote Part D economics after 2022. Chart review exclusion under the tighter 2027 rate parameters reshaped risk adjustment revenue across every plan for CY 2027. Coordinated cross-plan rotation into SNPs (heavier on C-SNPs than public commentary implies) is a 2025-2026 phenomenon with no real parallel in the earlier reset. And the supplemental benefit platform consolidation runs on a hard January 2027 deadline that no prior cycle had to accommodate either. Plans crystallized their responses to those forces during the Q1 2026 earnings cycle. All five of these differences are material to current health plan buying decisions, and none were really present the last time this market ran a reset cycle.

Enterprise stabilization and market re-shaping are both true; they just answer different questions. Planning your market strategy off enterprise stabilization alone, though, is like planning a real estate purchase off a stock analyst’s read on the housing market. Right domain, but wrong analysis.

What the Three Shifts Add Up To

The three shifts are hitting the same buyer at the same time, and plans are having to allocate against all three inside the same CY 2027 bid cycle. Reading them in isolation is where the market-shape analysis breaks down, because on the plan-side P&L they do not sit in isolation. They compound.

A plan’s Star tier shapes its C-SNP appetite, since plaintiff plans with QBP upside will fund the C-SNP push harder than bystanders who are still absorbing the recalculation exposure. That same Star position drives the pace of supplemental benefit consolidation, because plans under the tightest budget pressure will lean hardest on the January 2027 verification deadline as the reason to cut vendors they were already trimming. And the C-SNP push itself determines what actually stays in the supplemental benefit portfolio, since SNP-specific care benefits will get protected inside the cuts while general-population benefits are the first to go. Each shift is a variable in the other two, and none of them can be understood cleanly without the other two in view.

The work between now and end of Q3 is to build a read on where each plan in your book, portfolio, or advisory relationships sits across all three shifts together, holding the product-line mix, the Star-plus-litigation posture, and the supplemental benefit standard as one connected picture rather than three separate reads. That is the market-shape analysis argued for earlier in this piece, and it is what turns the three shifts from three data points into an actionable answer to what plans will be buying in 2027.

Final Thought

Late in September, the CMS Landscape file drops. That is the next real data point that either confirms or complicates the three shifts.

Three signals to watch for inside the file. How much of the announced exits and county-level contractions translate to actual plan withdrawals, or whether plans held more footprint than earnings-call commentary implied. Whether the D-SNP and C-SNP plan-count expansion matches the growth commentary, which is the real test of whether the SNP rotation is landing at the filing level or is being oversold. And which supplemental benefit categories move which direction, and how the cuts distribute across plans.

Whichever way the file lands, the underlying point really doesn’t change. Enterprise stabilization and market-shape analysis are answering different problems, and anyone planning CY 2027 exposure off enterprise financial analysis alone will forecast against a market that does not exist. So read the shifts, segment against MA product line and Star-plus-litigation exposure, and settle your supplemental benefit position before the CY 2027 bid window closes. Everything else follows from that.

Finally, ff any of the three shifts touch your CY 2027 planning (repositioning a product for the C-SNP rotation, resetting account risk models against Star litigation exposure, making a stay-or-exit call in supplemental benefits), Upward Growth is a health plan market advisory firm built for exactly this kind of question. We work with health tech vendors, investors, provider organizations, and management consultancies on strategy that starts from how health plans actually buy, operate, and make decisions. Get in touch.

Thanks for reading.

Here’s to upward growth,

Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Today’s Upward Growth newsletter is sponsored by RAAPID

RAAPID‘s KLAS Emerging Company Spotlight is out — and every customer interviewed said they’d buy again.

KLAS interviewed RAAPID’s health plan customers for its May 2026 Emerging Company Spotlight.

The results: A+ score for “would buy again*,” an A score for “likelihood to recommend,” and standout marks for “audit defensibility and partnership responsiveness.”

Independent validation from health plans that actually use the platform.

(*Emerging Data, n=5)

Click the button to see the full ratings and customer commentary in the KLAS report:

Request the KLAS Report

Interested in sponsoring Upward Growth? Learn more

A quick update on the podcast side of Upward Growth. We’ve locked in several guests to record over the next few weeks, and honestly, these are convos we’ve been wanting to have for a while. The format continues to be candid reads on where the health plan market actually is, what’s shifting, and what the operators and investors close to it are seeing right now.

If you have ideas for guests worth chasing, share them with us here. We’re most interested in candid perspectives from people inside health plans, leaders navigating major market shifts (whether that's plan strategy, regulatory response, or M&A), and contrarian takes on where the market is headed. The good ideas stand out fast, and we want to hear them.

Six of the largest publicly traded health plans reported Q2 2026 earnings over the last three weeks, and taken together, the story is "plans finally got healthy." All six raised full-year 2026 guidance, most beat estimates, and while medical loss ratio (MLR) movement was uneven across the six, the numbers looked strong across the board.

And sure, that's a clear theme. But the more useful read is what the six plans committed to on those calls, because Q2 is the quarter where the language from the Q1 earnings calls turned into public commitments plans now have to live with. Disciplined pricing became raised guidance tied to a specific membership trajectory. Portfolio management became a scheduled rollout timeline at Cigna and a set of exit dates for everybody else. Medicaid margin pressure became a coordinated message to state actuaries. Each of those commitments closes down some options and opens others, and the ones that matter for CY 2027 procurement, Medicaid rate advocacy, Star Ratings positioning, and the vendor deals in your pipeline right now are the ones worth pulling out.

This is the Upward Growth quarterly read on publicly traded health plan earnings, following the Q1 edition. What follows walks from the industry-wide moves (guidance and exits) to the plan-specific ones (Cigna under a new CEO, two Medicaid MCOs pointing their language at state actuaries, three plans putting prior auth metrics on the record) to what's happening operationally inside every plan while all this is going on, and finally to the downstream effects of the exits themselves.

The Guidance Raises Locked in Continued Shrinking Through CY 2027

The first thing the plans committed themselves to in Q2 was continued membership loss through 2027. All six raised guidance, and every raise was defended in terms of margin discipline (fewer, more profitable members), not enrollment recovery. That framing is only defensible if the market exits continue.

Let’s discuss what each plan actually put on the record. UnitedHealth raised full-year 2026 guidance while guiding to a 500,000 individual exchange life loss and a 1.1 million Medicare Advantage life loss for the year. Centene raised full-year adjusted diluted earnings per share from greater than $3.40 to greater than $4.80 on a Medicaid membership base already down 8 to 9% year over year. Humana raised while announcing another 600,000 Medicare Advantage life exit for CY 2027. Molina raised while telling investors that 2026 marketplace guidance had swung from a $0.75 per share gain to a $0.75 per share loss and previewing a $1 billion reduction in marketplace exposure for 2027. Elevance raised while keeping Medicaid at a negative 1.75% operating margin outlook and exiting D.C. Medicaid entirely. The Blues aren’t publicly traded, but they’ve been running their own version through affiliation and consolidation for the last two years, so the shrink isn’t just a public-plan story.

Each of those raises was defensible on its own, but taken together they lock the industry into the same posture for the next eighteen months: continued exits produce margin, continued margin protects guidance, and reversing course on the exits gives back the story that justified the raise guidance. No CFO who committed to a full-year 2026 number in July can walk it back inside twelve months without material damage to the plan’s equity story.

For vendors, this industry posture cuts two ways. First, on the shrinking book, per-member-per-month (PMPM) contracts signed against the pre-shrink member count were priced for a book that no longer exists. Any pitch built on retaining marginal members is now targeting the exact population the plan already decided to exit. The plan’s finance team is running that math, and the vendor economics assumed against the old book are not going to get defended by anyone inside the plan.

Conversely, the story runs the other direction for the growing book. Molina is expanding in Illinois Medicaid and was awarded Florida’s statewide Children’s Medical Services Health Plan in November 2025, expected to serve roughly 120,000 medically complex children. Humana’s Illinois Medicaid contract goes live in January 2027, and CenterWell added 130,900 senior primary care patients year to date. Cigna Healthcare’s specialty and care services line grew pre-tax adjusted earnings 22% in Q2. Vendors that can position against those specific growing segments have a live 2026 and 2027 conversation. Vendors that can only pitch across the whole book are working against the direction of travel.

And finally, the retained book itself changes the ROI story on solutions built around high-utilizer economics. The remaining membership skews healthier, more geographically concentrated, and less high-utilizer-heavy than the pre-shrink book. A pitch built on high-cost member intervention is now aimed at a population the plan has already thinned out.

Subscribe now

Cigna’s Q2 Was Its New CEO’s First Full Move on the Portfolio

Cigna’s Q2 turned the framework Brian Evanko sketched in April into scheduled operating commitments. The call was his first as CEO of The Cigna Group (he took over from David Cordani on July 1), and he used it to convert the four-variable test he laid out on the April 30 Q1 call while still incoming CEO into a set of dated moves.

The financial headline was $30.45 in adjusted earnings per share on raised guidance, a Cigna Healthcare medical care ratio of 84.5% (the best of any diversified national plan), Cigna Healthcare pre-tax adjusted earnings growth of 17%, and Evernorth Specialty and Care Services pre-tax adjusted earnings growth of 22%.

Evanko used the quarter to reinforce three portfolio decisions and preview a fourth. The Affordable Care Act (ACA) exit is running out through the rest of 2026, and Evanko treated it as settled. The eviCore strategic review is still open, and when analysts pressed on the July 30 call, Evanko kept the door closed with the same portfolio language he used in April. Signature, the rebate-free pharmacy model, is now scheduled to roll out to Cigna Healthcare’s fully insured plans in 2027 and become the standard offering across Express Scripts clients in 2028. And the Specialty and Care Services growth engine got a clearer name. Accredo, Verity, CarePath, and Shields are now running the segment, with hospital and health system solutions doing more of the growth than the pure specialty pharmacy line did a year ago.

The four-variable test (management focus, relative size and scale, standardization, automation) is showing up in each of those moves. Specialty and Care Services passes on all four variables and gets more capital and management attention. Signature is the enterprise bet on standardization and automation, and its being on schedule for the 2027 fully insured rollout is more important than the specific margin trajectory (Evanko told analysts to expect Signature margins in the 4% range, similar to legacy pharmacy benefit solutions margins). Pharmacy Benefit Services (PBS) is being reshaped underneath the Signature build: 2026 client retention above 97%, 2027 retention tracking mid-90s or higher, and new PBS business already secured for 2027 exceeding the prior two selling seasons combined. PBS is being repositioned around the Signature model while the transition costs work through the P&L.

For vendors, the Cigna procurement conversation for the rest of the year runs through two questions. First, does your solution align with the Signature architecture, or does it depend on the rebate flows Signature eliminates? And second, does it map to Cigna’s specialty and care services growth, meaning Accredo, Evernorth clinical platforms, or the hospital and health system channel? A yes on either question could mean a live conversation at Cigna, while a no on both means a longer road, because the segments that would have been buyers a year ago are the ones Evanko is either exiting or repositioning.

For investors and advisors, the eviCore review is the piece to watch. Whoever ends up with eviCore (a strategic acquirer with adjacent utilization management assets, a private equity sponsor, a recapitalized standalone) resets the comparable set for every utilization management and prior authorization asset in the market. That comp will move multiples across the category, and it will happen while CY 2027 vendor decisions at the plans running on eviCore are being finalized.

Elevance and Molina Pointed the Same Language at State Actuaries

Elevance and Molina used almost identical language on their Q2 calls to describe where they think 2026 sits in the Medicaid margin cycle. On Elevance’s July 15 call, CFO Mark Kaye stated that “we continue to see 2026 as the trough year for our Medicaid margin, with improvement over time supported by better rate alignment.” A week later, on Molina’s July 22 call, CEO Joe Zubretsky stated that “we continue to believe that 2026 represents a trough year for Medicaid margins, and we remain optimistic about the 2027 rate-setting process as state actuaries take account of more recent periods of observed medical cost trend.” Two plans, in the same window, same construction, same state rate cycle. And Zubretsky named the intended audience directly.

The audience is state actuarial teams, and they are building CY 2027 Medicaid rates right now. Every state actuarial office and every consulting firm supporting one is listening to those earnings calls. Once the framing is on the record from Elevance and Molina, they both have to defend it. If Medicaid margins do not visibly improve in 2027, both CFOs are going to be answering for it on the Q2 2027 calls, and the rate-setters will remember the public framing when they build the 2028 rate deck.

The One Big Beautiful Bill Act (OBBBA) sits behind all of this. State-directed payment restrictions phase in through 2028, provider tax caps limit state financing, and Congressional Budget Office estimates put federal Medicaid outlay reductions around $1 trillion over the next decade, which I walked through last month. Plans are not waiting only on rate updates; rather, they’re waiting on state financing certainty, which runs on a longer clock than any single rate cycle.

For vendors, that changes the timing on every Medicaid deal in flight. Procurement decisions being teed up in Q3 or Q4 at Elevance, Molina, or an aligned plan are more likely to slip until state rate signals resolve, and those signals will come in state by state through late Q3 into Q4 as state fiscal years close. The plans are stalling not because they lack budget, but because their finance teams need to see what the CY 2027 rate deck looks like before they lock a vendor commitment that would show up as a cost increase inside the very trend line the plan is asking the state to reprice.

The Medicaid vendors most likely to get funded through the rest of this year are the ones showing up with a pitch about how they will reduce a plan’s administrative or care management cost per member. Vendors pitching how they will grow the plan’s revenue are aiming at a budget that is not the priority right now. That is temporary (my guess is it will shift once the CY 2027 rate signals resolve), and vendors that adjust for it will hold their footing.

Subscribe now

Three Plans Put Specific Prior Auth Metrics on the Record in Q2

Prior authorization is where the internal build narrative showed up most visibly in Q2. Three of the six plans used their earnings calls to share specific Prior Auth metrics on the record.

UnitedHealth committed to eliminating 30% of prior auth volume by year-end. Aetna committed to deciding 95% of eligible prior auths within 24 hours and 80% in real time. Elevance’s Health OS targets 80% real-time decisions on eligible cases. Cigna made no new commitment (which reads correctly given their disclosed denial rate is already below 2%). And Centene made no commitment either, which reads a little differently because their published numbers had the most room to move. Those are the same commitments the guidance raises were, just measured against a specific denial-rate number the plans have to hit.

For vendors selling into any prior auth-adjacent category (utilization management, clinical decision support, provider workflow, member appeals), the negotiation is now against a stated deliverable, not an abstract build. That changes what a Q3 or Q4 pitch has to include: a credible read on whether the plan’s commitment holds on time, and a positioning of the vendor’s solution as either accelerating that commitment or filling the gap when it slips. Both positions can win a deal, but what loses is a message that ignores the commitment and assumes the plan is still in exploratory mode.

Remember, even those prior auth commitments have to run through the same Procurement, Finance, and Compliance review as every other vendor decision inside the plan right now, and that review is where the shape of Q3 and Q4 buying actually gets decided.

Why Your Vendor Deal Isn’t Moving Even When the Buyer Wants It

The commitments above are what the plans put on the record during their calls. What none of those calls really covered is the operational reality inside the plans while those commitments were being made, and that reality is the answer to why vendor deals across the market are stuck right now regardless of solution quality.

Every health tech CRO I am talking to is worried about their 2027 pipeline. The shift from 2025 to 2026 is real and specific. Through 2024 and most of 2025, plans facing a vendor decision they did not want to make or could not get through their internal process had a familiar way out. They extended the incumbent contract for one more year or deferred the decision. That decision-making (or lack thereof) worked because the internal review requirements had not yet reached the level they are at now. Vendors sat renewed with declining strategic conviction, prospective vendors sat waiting for the freeze to break, and the slow pace bought everybody another quarter.

The punt-to-next-year "strategy" is largely gone in 2026, driven by three specific pressures on plans right now: Office of Inspector General (OIG) and CMS audit defensibility, Star Ratings legal exposure, and artificial intelligence (AI) and data governance. Procurement, Finance, and Compliance are dealing with all of them at once, and every new vendor decision now runs through all three functions before it can move, regardless of what department originated it or what the solution actually does.

The first pressure is OIG and CMS audit defensibility. Elevance’s Q1 risk adjustment matter set the frame. The plan initially accrued $935 million against potential CMS liability, then ultimately paid CMS $342 million on May 27 to resolve the immediate sanctions threat. The gap between the accrual and the payment is less interesting than the reaction inside every other plan. When the Elevance matter went public in February and March, every payer compliance team pulled a defensive audit on their own historical risk adjustment submissions, and that work is still running through the industry in Q2 and Q3. Payment Year (PY) 2019 Risk Adjustment Data Validation (RADV) findings are expected in early 2027, and Kaiser Permanente’s $556 million settlement earlier this year set the ceiling for what these can look like at scale. Every procurement decision touching risk adjustment, quality, or member-level data now runs through internal review that assumes an OIG or CMS auditor will look at it later.

The second pressure is Star Ratings legal exposure, which just moved from a Clover Health matter to an industry-wide one. The May 27 ruling in Clover Insurance Company v. HHS threw out 20 measures CMS used to calculate the 2026 Star Ratings, finding them legally or procedurally improper. I wrote about why the Clover ruling was going to matter well beyond Clover itself when it came down, and Q2 confirmed it. CMS recalculated Clover’s rating using the court’s methodology, then issued a June memo saying it would voluntarily recalculate other plans’ ratings but only drop 10 of the 20 measures. Within weeks, Elevance sued CMS on July 1 claiming $115 million in lost bonus payments, SCAN Health Plan sued on July 7 claiming $125 million, and Alignment Healthcare sued on July 10 claiming $50 million. Three plans, three lawsuits, all citing the same Clover precedent. What was a settled operational discipline a year ago is now an active legal domain where Compliance and Legal have to weigh in on decisions the Stars operating team used to make on its own. The 2028 measurement year is running right now, and every vendor decision touching Stars-relevant workflows is being reviewed against the possibility that specific measures could be re-litigated between now and the 2028 ratings publication.

The third pressure is AI and data governance. Every plan is investing in AI, and the same investments powering the internal build also create governance obligations that did not exist eighteen months ago. Vendors selling AI-enabled solutions are being asked questions about training data provenance, model documentation, bias auditing, and third-party risk assessment. Data platform vendors face the same questions. Non-AI vendors are being pulled into the same conversation if their solution touches data that could feed a model somewhere else in the plan’s stack. I walked through how health plans are actually evaluating AI-enabled vendors in 2026 earlier this year, and the review requirements have only tightened since. The formal governance framework has not caught up with the review requirement, so internal teams are making case-by-case judgments, and case-by-case is always slower than a settled rule.

A vendor pitching a member engagement platform in Q3 is going to have Procurement pulling in Legal because the solution touches member data, Compliance because AI features could touch Star Ratings measurement, and Finance because the CFO who committed to guidance in July is watching every net-new spend against a shrinking book. What used to be a decision inside a single department is now a cross-functional review, and every function is understaffed for the volume of reviews landing on their desk.

Both the health plans and vendors I’m talking to are telling me deals are stalling more frequently. The buyer wants the product, but the plan can’t process the volume of new contracts moving through the system, regardless of the value and quality of the solution.

The pitches more likely to get through are the ones that arrive with the Compliance, Finance, and Legal answers already baked in, so the internal sponsor at the plan does not have to build that case themselves. Solution quality still matters, but the differentiator right now is whether the vendor has done the internal review work on the plan’s behalf.

Where the Displaced Members Land, and What That Means for Receiving Plans and MA Stars in 2028

The 5 to 7 million members losing coverage across Individual Exchange, Medicare Advantage, Medicaid, and MAPD exits are going to show up on receiving plans’ MLR before anybody is modeling them. And the Medicare Advantage share is going to show up on 2028 Star Ratings on top of it.

In urban ACA markets and metro Medicare Advantage counties, most of those transitions will have real alternatives. In the geographies and populations already most vulnerable to plan disruption, they will not. Rural Medicare Advantage counties where an exiting carrier’s plan was one of two options in market. Individual Exchange markets where the exiting carrier was the low-cost or the only preferred provider organization (PPO) option. Medicaid members caught in a plan exit who get force-assigned to a replacement without visibility into whether their specialist or their behavioral health provider is in the new network. And dual-eligible special needs plan (D-SNP) members built around a care team that no longer participates in the receiving plan. Many of the receiving plans are also cutting providers from their networks as they reprice for 2027, which makes the network-continuity story for displaced members even harder.

Two consequences fall directly on the plans that stayed in market and the vendors selling to them.

The first is adverse selection into the receiving plans. When a competitor exits, the plan absorbing the displaced membership does not get a random sample. It gets the members whose usage or geography made them uneconomical for the exiting carrier, which is the reason those members got dropped in the first place. The receiving plan now has to underwrite them at CY 2027 rates and manage them clinically against a book that was priced for a different member profile. That shows up in the receiving plan’s MLR in the second half of 2027 and gets debated on earnings calls in 2028. The plans absorbing displaced books have not yet discussed the adverse selection risk publicly, and they will not have to until those 2028 calls.

The second is the member experience data being collected right now, in Q3 and Q4 2026, for the 2028 Star Ratings measurement year, which applies specifically to Medicare Advantage plans. MA members going through a disruptive plan transition do not rate their next plan the way they rate a plan they picked in a stable market. Confusion, network mismatches, medication continuity gaps, and prior authorization disruptions all land in Consumer Assessment of Healthcare Providers and Systems (CAHPS) scores at exactly the moment the tripled CAHPS weight is redefining the Stars leaderboard. Any MA plan absorbing displaced MA members from Humana’s, UnitedHealth’s, or Cigna’s exits is going to see that land on the 2028 rating, and no CFO named it on their July call.

There is a political layer to this too. State attorneys general, CMS, and Congress are all watching the exits. If the 2027 open enrollment cycle produces public backlash over rural access, Medicaid churn, or Part D affordability, the regulatory response into 2028 gets harder for every plan that used the shrink to hit its 2026 numbers.

For MA plans absorbing displaced MA members, the pitch is direct: the 2028 Star Rating is being written in CAHPS data right now, and the tools deployed in Q3 and Q4 will show up on the rating. For plans absorbing displaced ACA or Medicaid members, the same argument works on adverse selection alone since Star Ratings doesn't apply to those books. Receiving plans in either case already know the risk is real.

Subscribe now

How Q3 and Q4 Play Out Given What Q2 Committed To

Pulling the threads together, Q3 and Q4 look different from what the Q2 earnings coverage suggests.

Health plans have earnings tailwinds, and their bandwidth to close new deals is the tightest it has been in two years. The plans that overperformed against April guidance will push harder on 2027 procurement than the ones that only met it. That harder push cuts two ways: it either accelerates internal builds, which shrinks the vendor category, or accelerates vendor consolidation, which is good for the category winner and bad for the rest. Either way, shortlists that ran through five vendors a year ago are running through two or three now, and each of those has to survive the same three-function review as everything else.

Q2 also surfaced four unresolved variables that will shape CY 2027 procurement and set the 2028 outlook:

1. The CY 2028 Advance Notice from CMS lands in January or February 2027, and the temporary risk-model freeze that made CY 2027 workable does not extend into it.

2. The Medicaid recovery language Elevance and Molina committed to has to actually show up in 2027 numbers, or those CFOs will have to defend the framing on the Q2 2027 calls.

3. The 2028 Star Ratings measurement year is running right now, and the 2027 Stars release in early October will preview what the tripled CAHPS weight actually does to the leaderboard.

4. The enhanced premium tax credit (PTC) question stays open through the CY 2027 rate cycle. Restoration slows the narrowing of ACA absorption capacity that carried the 2026 shakeout. Continued absence accelerates it.

None of the four are predictable, and each one will shape the CY 2027 buying environment more than the Q2 numbers themselves did.

Final Thought

The Q1 public health plan earnings calls were the language quarter. Q2 was the commitment quarter. The six plans that reported over the last three weeks locked in specific numbers, timelines, and portfolio moves they now have to defend for the rest of this year and into next. Reading Q2 as a commitment quarter, rather than a recovery, is where the useful work of Q3 starts.

If you are working through what any of this means for your positioning, your messaging, or your go-to-market strategy, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies to build strategy around how health plans actually buy, operate, and make decisions. Contact us here.

Thanks for reading.

Here’s to upward growth,

Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Today’s Upward Growth newsletter is sponsored by RAAPID

RAAPID‘s KLAS Emerging Company Spotlight is out — and every customer interviewed said they’d buy again.

KLAS interviewed RAAPID’s health plan customers for its May 2026 Emerging Company Spotlight.

The results: A+ score for “would buy again*,” an A score for likelihood to recommend, and standout marks for audit defensibility and partnership responsiveness.

Independent validation from health plans that actually use the platform.

(*Emerging Data, n=5)

Click the button to see the full ratings and customer commentary in the KLAS report:

Request the KLAS Report

Interested in sponsoring Upward Growth? Learn more

I snuck up to Big Bear recently for a couple of days. Most SoCal folks know it as the local ski spot, but in summer it turns into a different playground: hiking trails, mountain biking, and a few lakes to poke around on. Getting away and immersing in something different is how I stay fresh, open, and curious, and that’s the same mindset I try to bring back to the work.

And that mindset is what this week’s article calls for. On the surface, it looks like a piece about GLP-1s, but the real work is trying to read the tea leaves on what CMS is thinking, and where the next round of programs aimed at curtailing federal cost while improving clinical outcomes is heading. GLP-1 through the Bridge Program this week. ACCESS the other week, and its companion podcast episode too. Every one of these programs is a data point in the same larger picture.

And to be direct, a few readers and a client have been pinging me about Bridge since the ACCESS piece ran, asking whether I’d walk through it the same way. Most of the folks I talk to are having a harder time than usual keeping all these new CMS specialty coverage programs straight (I do not blame them...). Such Center for Medicare and Medicaid Innovation (CMMI) models like ACCESS, The Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (BALANCE) Model, and the standalone CMS demonstrations like Bridge that sit alongside them. So this week we'll discuss Bridge, why its ripple effects show up across every line of business you sell into, and what its design signals about how CMS structures the next high-cost specialty category.

The Medicare Glucagon-Like Peptide-1 (GLP-1) Bridge Program launched July 1. Its design is the reference architecture for how the federal government will structure coverage for the next high-cost specialty drug category. If you sell to health plans in any category, that design is now inside your 2027 pipeline.

Two key things to know as we get started.

First, GLP-1 coverage has been talked about as one story for two years, but really, that story is splitting. Five lines of business are each making a different 2027 coverage call on GLP-1, on different timelines, and the medical trend impact is a line item in nearly all plans’ 2027 pricing this cycle. That shapes what plans are willing to fund across the rest of your product categories, obesity-adjacent or not.

Second, Bridge's design will not stay inside GLP-1. The demonstration runs on a short runway, prior auth is retrospective, a central processor operates outside plan risk, and BALANCE, the permanent structure that was supposed to replace it, sits indefinitely delayed for Part D. That's CMS's template for how to structure federal coverage for a high-cost specialty category when the permanent framework isn't ready. Cell and gene therapy access is next. Cardiovascular specialty drugs after that. How Bridge plays out through Q4 tells you how CMS will structure the coverage decision on your buyer's next category.

But first, let’s dive into what Bridge actually is.

Subscribe now

What the Medicare GLP-1 Bridge Program Actually Is and What It Signals

Bridge is a temporary demonstration that gives eligible Medicare Part D beneficiaries access to weight-management GLP-1s at a flat $50 monthly copay. It runs July 1, 2026 through December 31, 2027, and it covers Wegovy (all formulations), Zepbound (KwikPen formulation only), and Foundayo (Eli Lilly’s oral orforglipron, FDA-approved April 1, 2026).

Bridge operates outside standard Part D coverage and payment flow, which means Part D plan sponsors do not carry risk for weight-management GLP-1s dispensed under Bridge. CMS uses a single central processor to handle prior authorization, claims adjudication, and pharmacy reimbursement. Providers submit retrospective prior auth requests after prescribing, and beneficiaries do not opt in. The CMS guidance also commits CMS to sharing utilization data with Part D sponsors ahead of the permanent implementation, whenever that lands.

Bridge was originally announced in December 2025 as a six-month bridge to the BALANCE Model. In May 2026, CMS indefinitely delayed the Part D portion of BALANCE and tripled the Bridge runway to eighteen months. The Medicaid portion of BALANCE remains active, with states able to opt in from May 2026 onward. What CMS is buying with the extended runway is utilization and cost data on real beneficiaries before committing to BALANCE in Part D.

Eli Lilly’s executive team has projected roughly 20 million Medicare beneficiaries could meet the Bridge clinical criteria of a Body Mass Index (BMI) of 35 or greater, or 30 or greater with a qualifying comorbidity. AJMC modeling puts the real-world reach far below that. Three things create the gap: the retrospective prior auth design, the requirement to document BMI at the time of therapy initiation (a paperwork burden for beneficiaries who started GLP-1 therapy years ago for a different indication), and the exclusion of Private Fee-for-Service (PFFS) plans, PACE, and several other niche MA plan types from participation."

Bridge and the ACCESS Model are both CMS efforts to reshape coverage for chronic and specialty conditions, but they operate at very different scopes and time horizons. ACCESS is a CMMI model, a durable framework built inside traditional Medicare fee-for-service, aimed at aligning outcome-based accountability across chronic conditions over the next decade. Bridge is a CMS payment demonstration outside the CMMI model structure, aimed at one drug class for one indication, on an eighteen-month runway. ACCESS points to where CMMI wants chronic care payment to go long-term. Bridge is the interim tactical solution while BALANCE sits indefinitely delayed for Part D. The deeper read on ACCESS and the outcome-based framework is in the ACCESS article and on the podcast episode.

Bridge's design is CMS's template for structuring federal coverage of a high-cost specialty drug category when the permanent framework isn't ready. GLP-1 is just where CMS is running it first. Cell and gene therapy access is the next category CMS applies this to. Cardiovascular specialty drugs after that. If your product or your portfolio touches either of those categories, how the Bridge rollout plays out through Q4 2026 is the leading indicator for how CMS will structure the coverage decision that lands on your buyer’s desk next.

That covers what CMS did. The rest of the market did something too, and it's different in every line of business. Let’s take a look.

What 2027 Coverage Looks Like Across the Five Lines of Business

Something worth naming before the walkthrough. Bridge itself is a Medicare-only program. But the pressure that produced Bridge (rising GLP-1 spend, coverage decisions plans and employers can’t sustain at current utilization) is showing up in every line of business, and each buyer segment is responding on its own timeline against its own math.

On the Medicare side, Bridge itself just changed the equation. MA plans had one indication lifted off their Part D risk sheet, and standalone PDPs got a new central-processing pipe with no relief on the member navigation problem it creates. Outside of Medicare, the pressure is showing up in different forms. State Medicaid programs closed their budgets against a spend line that was doubling year over year, and the elimination cycle isn’t over. Self-insured employers are locking their 2027 plan designs mid-August, working from consulting firm guidance that has pulled back over the last twelve months. ACA health plans filed rate increases in mid-summer that averaged 14%, with GLP-1s named as one of the drivers.

That’s why the aggregate story from the last two years no longer works. There are five different 2027 GLP-1 answers depending on who your buyer is, and where each of them nets out also tells you something about what they’ll fund from vendors across your other product categories this cycle.

Medicare Advantage

Bridge changes the MA bid math for 2027 by taking one indication off the plan’s Part D risk sheet. MA plans that include prescription drug coverage no longer have to price the weight-management indication into their 2027 bids. They still price GLP-1s for the approved non-weight indications like diabetes and cardiovascular risk reduction, but the weight-management piece shifted to CMS on July 1. The first implication is that member education about Bridge eligibility becomes a benefit differentiator. A plan that helps members navigate intake looks better on member experience than one that doesn’t. The second is that Q2 2026 earnings language on specialty pharmacy trend is mixed across the largest MA health plans. UnitedHealth’s Q2 call cited GLP-1s as part of a continued elevated commercial pharmacy trend. Humana’s Q2 call described pharmacy medical cost trends as “very elevated” without isolating GLP-1s. If you sell to MA plans in any category (care management, risk adjustment, quality measurement, member engagement, PBM tech), what those plans say about pharmacy trend across the next two earnings cycles is what your buyer will point to when justifying or cutting vendor budgets.

Standalone Prescription Drug Plans

PDPs don't hold the medical relationship, which shapes the Bridge angle here. Standalone PDPs serving dual-eligible populations need workflow for identifying who qualifies for Bridge versus who's covered through their existing Part D plan for other indications, because dual-eligibles enrolled in eligible plan types can participate but the qualifying rules are more complex than for the average MA-PD beneficiary. Vendors with PBM technology, member engagement platforms, or Part D workflow tools have a new addressable use case that did not exist before July 1, regardless of whether their product touches obesity at all.

Medicaid

Twelve state Medicaid programs cover GLP-1s for obesity treatment under fee-for-service as of August 2026, down from thirteen at the start of the year and sixteen the year before, and the elimination list is not one-off. Four states dropped coverage effective January 1, 2026 (California, New Hampshire, Pennsylvania, South Carolina), Massachusetts followed with a cut effective July 1, 2026, and Michigan and Virginia tightened eligibility to morbid-obesity thresholds. Pennsylvania Medicaid's GLP-1 spending grew from $233 million in 2022 to $1.3 billion in 2025, and the state projected $836 million in savings from elimination. The cost pressure driving that decision does not reverse in twelve months. For vendors selling to state Medicaid MCOs, the read-through is direct. States cutting GLP-1 spend are running the tightest 2027 rate cycles for their MCO contracts, which squeezes what those MCOs will fund from vendors across care management, risk adjustment, quality measurement, and behavioral health.

Commercial Plans and Self-Insured Employers

Fully insured commercial plans have already made their coverage calls (Blue Cross Blue Shield of Massachusetts, BCBS Michigan, and Harvard Pilgrim all discontinued weight-loss GLP-1 coverage effective 2026). Self-insured employers are still locking their 2027 designs, with mid-August the pressure point. The Business Group on Health 2026 survey of 105 large employers found 67% currently cover GLP-1s for weight management, but only 72% of covering employers intend to maintain in 2027 and 10% expect to drop. A Willis Towers Watson June 2026 pulse survey confirmed the direction (66% cover, 12% likely to discontinue for 2027). The Pharmaceutical Strategies Group 2026 Trends in Drug Benefit Design report, covering 237 benefits leaders, found 49% of payors not currently covering GLP-1s for obesity would not cover at any price, driven in part by discontinuation rates (nearly two-thirds of non-diabetes users discontinue within twelve months). Cigna’s Q2 call meanwhile cited decelerating GLP-1 prescription growth in the employer book. Three independent surveys and a payor earnings call are telling the same story: employers and commercial plans are rebalancing what specialty pharmacy categories they will fund. For vendors selling anything into self-funded employers, how the account handled GLP-1 coverage for 2027 tells you where the rest of their 2027 specialty spend is going.

Affordable Care Act Individual Market

ACA health plans are pricing GLP-1 exposure into 2027 rate filings alongside broader medical trend running double digits in most states. Peterson-KFF Health System Tracker analysis of 77 insurers across 16 states plus DC found a median 2027 rate increase of 14%, with a range of 1% to 52%. GLP-1s are named in most filings as one of the drivers, alongside utilization, coding intensity, and Independent Dispute Resolution costs. Employee Benefit Research Institute analysis published by the Blue Cross Blue Shield Association puts the GLP-1 add-on to employer premiums at up to 14%, even with tight clinical eligibility. That premium pressure is compressing what ACA plans can fund in 2027 across their product categories, not just obesity-adjacent.

What that means for your pipeline is the harder question, and it doesn’t sort by product category.

The GLP-1 Split Reveals Four Buyer Patterns That Repeat Across Specialty Categories

The pitch that worked at the start of the year is losing meetings now. Plans, employers, and state Medicaid programs have made their 2027 coverage calls on GLP-1, and they didn’t all land in the same place.

The decision patterns are worth naming, because they will repeat for the next high-cost specialty category. Any vendor selling into plans should recognize them.

Pattern one: the plan dropped coverage. Blue Cross Blue Shield of Massachusetts. Pennsylvania Medicaid. The employers on the discontinuation list. Once a plan or employer publicly ends coverage in a high-cost category, the political and budget cost of reversing that decision is prohibitive for at least two cycles. Track the plans that dropped GLP-1 coverage in 2026, because the ones cutting now are the ones that will cut on the next high-cost category you pitch them three years from now.

Pattern two: the account covers but is drowning in management overhead. Most plans that still cover GLP-1s are managing them with prior auth, biometric eligibility validation, weight-management program requirements, and dollar caps around $3,000 per member per year. It’s also the largest cohort by members. The buyer at these accounts measures vendor pitches against prior auth reduction, medical loss ratio impact, cost-per-member outcomes, and discontinuation catch rates. The pitch that works here reduces management overhead per member covered. The pitch that stalls promises to help serve more members. Care management vendors selling into oncology and specialty pharmacy vendors selling into rare disease run into the same buyer pattern.

Pattern three: the account is defending its coverage internally. Some regional plans and a shrinking cohort of employers are holding GLP-1 coverage against internal pressure to cut. The buyer at these accounts has moved past clinical merit and is building the internal ROI case to defend the coverage decision to a CFO looking at the same 14% premium math the Employee Benefit Research Institute cited. What sells here is real outcomes evidence: adherence data, weight-regain prevention, long-term ROI. Enrollment and engagement metrics won’t get the CFO to renew.

Pattern four: the workflow layer just changed. Bridge central processing means pharmacies and providers now handle GLP-1 workflow through a different pipe than standard Part D. That’s a workflow enablement sale for vendors with Part D infrastructure, prior auth support tools, medication therapy management platforms, or provider workflow tooling. Each time CMS introduces a new demonstration structure (Bridge now, cell and gene therapy access next), the operational workflow changes before the coverage rules settle. Infrastructure vendors get a real opening while the demonstration is running, and it closes fast once CMS finalizes the permanent structure.

These patterns show up in oncology, rare disease, and cell and gene therapy, not just obesity-adjacent categories. GLP-1 is the clearest example of all four hitting at once, which is what makes it useful for reading how your own category might be affected.

We've covered what Bridge actually is and why its design is the reference architecture for the next high-cost specialty category, how GLP-1 coverage splits across the five lines of business above, and the buyer decision patterns visible in the split. Below is the tactical layer underneath all of it: the discovery questions that tell you which pattern each account is in, the disqualification signals worth acting on early, the messaging shifts by pattern, and the fall enrollment watchlist that tells you whether Bridge's design becomes the template for the next high-cost category or stays a one-off.

Paid subscribers get this, plus 50+ frameworks, scripts, and deep dives built for health tech teams selling to health plans. One qualified conversation from these frameworks is worth more than a decade of subscriptions.

🔓 Upgrade to a paid subscription to keep reading.

Read more

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Before we get into it: this month marks five years of Upward Growth. When I founded the firm in 2021, the bet was that the health plan market needed an advisory practice that actually explains how it works, in language health tech vendors, provider organizations, investors, and consultancies could act on. Five years in, that bet still feels right. What has not changed is that plans still have to buy carefully, and the companies selling to them still have to earn their way in. Upward Growth will keep advising clients through that reality, and this newsletter will keep sharing what we see in the market. Thanks for reading, whether you've been here since the beginning or you subscribed last week.

For a year now, I have been tracking a pattern of market resets rolling across the four biggest lines of health plan business. It started with Medicare Advantage’s reset last August. In May, I wrote about the five plan postures forming during the 2026 ACA shakeout. In June, I wrote about MA, Medicaid, ACA, and employer coverage all taking pressure at once. Medicaid, on the one-year mark of the One Big Beautiful Bill Act (OBBBA), is the sharpest example of the pattern yet.

OBBBA didn’t create one new Medicaid market. It created three.

Medicaid has always varied state by state. What is different this time is that OBBBA has already repriced the Medicaid market in three ways at once. Repricing should not be mistaken for shrinking. Repricing means the same MCO book of business, the same vendor contracts, and the same member panels are now worth different amounts than they were a year ago. Nothing about the underlying business changed on July 4, 2025. What changed is what buyers will pay for it, what contracts they will write, and what management will guide toward, because OBBBA changed what those pieces are worth in the field. Molina and Centene have marked down their own Medicaid books in earnings guidance. States are marking supplemental payment mechanisms down through the provider tax phase-down. Vendors are being pushed to reprice contracts under new terms. Members and providers in some states have already absorbed the marks. Others are about to.

The Medicare Advantage reset has been a rolling eighteen-month wave of federal pressure, including rate compression, risk adjustment overhauls, Star Ratings reweighting, and benefits scrutiny. Every MA plan is absorbing that wave at its own pace, but because MA is a fully federal program, all plans are absorbing it against the same regulatory backdrop. Medicaid is different. It took one federal shock, OBBBA, and its repricing is being absorbed three different ways because the program is a federal-state partnership. The feds set the terms. Each state chooses how, when, and how much to absorb them.

Even if you do not sell into it, the pattern is worth understanding. This is where federal-to-state fragmentation shows up most clearly. As Washington keeps pulling levers, reading how federal action travels through state execution into plan operations, and then into member and provider experience, is going to matter more, not less. OBBBA year one is the clearest example of that translation chain.

The rest of this piece walks through where the repricing is already visible in the data, how it is landing state by state, what MCO leadership is doing about it below the surface, and why the repricing is going to hold through 2028.

Subscribe now

The Repricing Is Already Visible

The OBBBA repricing already happened. Two market patterns from 2026 show me why: publicly traded MCO parents have marked down their Medicaid books in earnings guidance, and CMS spent 2026 telling states they are on their own.

The first is that MCO parents have already marked down their Medicaid books based on their own earnings guidance. The Big Five publicly-traded Medicaid MCOs are down 1.4 million members, or 3.8 percent, since OBBBA passed, but the raw number understates what management is actually pricing in. Molina and Centene both took their 2026 Medicaid membership assumptions to negative 6 percent year-over-year in Q1, worse than the negative 2 percent range both were carrying at the start of the year. Molina reaffirmed guidance rather than raising it as UnitedHealth and Elevance did, citing an ongoing challenging cost environment. Neither is trying to grow through the disenrollment wave; both are defending margin through cost discipline. RAND projects semi-annual redetermination alone will produce administrative attrition of roughly 923,000 people, not because they are ineligible, but because of paperwork failures. Molina and Centene are already running their books to that reality, and every other MCO parent is doing the same math. The marks are showing up in the FY 2027 planning documents plans are handing their vendors this quarter.

The second is that CMS spent 2026 telling states they are on their own. In January, CMS negotiated $600 million (M) in Medicaid technology vendor discounts through a narrow pledge with 10 state Medicaid systems incumbents. On April 28, CMS rolled out a state Medicaid IT modernization roadmap at its All-State Webinar, outlining what state Medicaid Enterprise Systems must build, in what sequence, without a matching federal build to help states get there. On June 1, CMS released the interim final rule on work requirements, giving states three months of usable procurement runway before the August 31 outreach deadline, down from six. And last week, CMS proposed the rule that codifies OBBBA’s provider tax pullback, accelerating $246 billion (B) in additional federal savings, discontinuing the 75/75 Test loophole, and bringing taxed health insurers under CMS oversight for the first time. Read together, those four moves say that the cuts are landing on schedule, that federal implementation support is narrow and uneven, and that every state has to fund its own price adjustment.

Both patterns say the same thing: the repricing is priced in at the parent-company level and endorsed at the federal level. Below is what it looks like state by state.

How the Three Markets Are Absorbing It

The 44 states required to implement OBBBA work requirements by January 1, 2027 are making three different strategic choices about how to absorb the repricing. The choices matter more than the timing. Four states are running live tests ahead of the deadline. Roughly thirty are building to the January 1, 2027 hard start on the standard federal timeline. And roughly ten are seeking the good-faith extension that pushes the compliance deadline to December 31, 2028, though CMS’s own June interim final rule assumes only two of those ten will be approved.

I have been calling these three postures Early Implementers, Deadline Builders, and Extension Seekers, and each is producing a different piece of the repricing for the members, providers, plans, and vendors inside those states.

Early Implementer states

This is where the coverage side of the repricing lands in real time. Members are cycling off, providers are absorbing revenue losses, and plans are running monthly marks against an actual disenrollment wave rather than a forecast. Nebraska hard-launched May 1 through a state plan amendment, betting on speed and becoming the template the rest of the country will read against. Montana followed July 1 through a state plan amendment and a Section 1115 waiver, seeking additional state-level exemptions and testing how much state-level customization the federal framework will actually allow. Iowa is scheduled for December 1 as the cautious version of an early move, giving itself runway to correct anything Nebraska surfaces before it goes live. And Arkansas launched a soft-launch version July 1 that notifies enrollees but disenrolls no one until January 2027, structured that way because Arkansas is the one state in the country that has lived through a full-fledged work requirement program before. Arkansas 2018 ran for less than a year and cost 17,000 people their coverage, overwhelmingly due to paperwork issues. That memory is why Arkansas 2026 looks structurally different from Nebraska 2026, even though both went early.

Nebraska is the loudest of the four because it went first and it went hardest. State estimates put 20,000 to 40,000 Nebraskans on track to lose Medicaid coverage, and Arkansas 2018 suggests that most of this will stem from administrative failures rather than actual ineligibility. Nebraska did not increase staffing to handle the new verification workload, which is why the same failure pattern is baked in. The provider-side impact is landing this quarter, not next year: Bluestem Health, a Federally Qualified Health Center (FQHC) serving 8,400 Medicaid patients, has estimated that 10 to 15 percent of its caseload could be disenrolled, resulting in a $400,000 to $600,000 annual hit to the clinic. Multiply that across the FQHC and rural hospital network in any Early Implementer state, and the provider-side repricing is a large amount of money leaving safety-net balance sheets right now.

Within the plans for these four states, work-requirements infrastructure is an operational build in Q3 2026. Outreach, member communication, eligibility integration, and retention vendors are in active procurement conversations that will close before the end of the calendar year. Chief Operating Officers are watching the ratio of members who lose coverage due to paperwork issues versus those who are actually ineligible, because that ratio determines whether each state’s enforcement model holds up politically and legally. For vendors calling into those conversations, the winning category is the one that can operate at the pace of a live workflow. The losing category is the one running enterprise sales motions into a workflow that will not wait.

Deadline Builder states

This is where the forecast side of the repricing is getting marked most aggressively. The disenrollment wave has not hit yet, but the CFO is pricing FY 2027 as if it has, and every rate negotiation, budget compression, and vendor renewal is happening around the expected mark rather than the actual one. Roughly thirty are choosing this path: they funded FY 2027 eligibility modernization, aligned their Medicaid director statements with the January 1, 2027 deadline, and posted procurement notices for community engagement infrastructure between April and July. The KFF survey of state implementation plans shows most of these states are adopting less restrictive verification policies than the law technically allows, which is a bet on avoiding the paperwork-driven disenrollment Nebraska is walking into now.

The first practical shock for enrollees in these states arrives August 31 with the beneficiary notification letters. The harder part comes on January 1, 2027, when compliance verification begins with no test period in place. Providers in these states are already sitting inside FY 2027 rate negotiations run against a member base projected to shrink meaningfully in the first half of 2027, and Pew’s analysis of the compounding state budget pressure is worth sitting with, because the fiscal squeeze on the state and the fiscal squeeze on the provider are the same squeeze approaching from different angles.

Inside the plans in these states, the crunch is tightest of the three. Building to a January 1, 2027 hard start with no test period means these plans cannot afford implementation error and cannot afford to overspend on categories that will not survive the next reprocurement scorecard. (Reprocurement is the state Medicaid managed care rebid cycle: MCOs have to compete every few years to keep or win the contract to serve a state’s Medicaid book, and losing it means losing the entire book of business in that state, not one contract line.) CFOs are running two parallel exercises: modeling the FY 2027 member-loss curve and cutting whatever vendor spend does not align with state reprocurement measures. Relationship equity is not saving incumbents in this bucket, because the CFO is not asking whether the vendor delivers value in the abstract. They are asking whether the vendor’s outcomes appear on the score their contract will be judged on. The reprocurement lens does not just decide net-new vendor spend anymore. It decides renewals, and that shift is where the sharpest repricing pressure inside the whole market is being applied.

Extension Seeker states

This is where the fiscal side of the repricing lands, independent of enrollment. Coverage looks stable today, but the provider tax phase-down is starting to eat state financing before the good-faith extension window closes, and the plan operating environment is being reshaped by state-level fiscal drag rather than by member churn. The extension technically pushes full compliance to December 31, 2028, but CMS is granting initial extensions only in six-month increments, and states must demonstrate continued good-faith effort each quarter to keep them. Extension Seeker is a rolling quarter-by-quarter negotiation with CMS rather than a two-year deferral anyone can bank on. The signals on the state side are consistent: no eligibility system rebuild funded in the FY 2027 budget; public statements from state Medicaid directors about needing more time; delayed or absent procurement notices for community engagement work; and open questions in state fiscal notes about whether the work can be funded within existing revenue.

Enrollees see coverage that looks stable, but Extension Seeker states are, on average, the ones with the least fiscal room to soften the impact when it does land. Whenever implementation finally arrives, the state will have less capacity to fund soft-landing infrastructure than a Deadline Builder state has today, resulting in a steeper coverage cliff on the back end. The provider picture is worse yet. OBBBA phases down the provider tax rate cap from 6 percent to 3.5 percent starting in late 2027, cutting roughly half of the base by 2031, and caps state-directed payments at lower rates. Both mechanisms are used by states to fund supplemental payments to providers, which constitute a meaningful share of rural hospital and safety-net revenue in expansion states. Extension Seeker states are the ones with the least cushion to backfill any of it.

The operating environment inside the plans in these states is doubled. MCOs are running two forecasts simultaneously: one that assumes the state’s extension request is approved, and one that assumes it is not. Given CMS’s own estimate that only two of ten will be approved, the second forecast is doing more of the work. Some plans are enforcing preemptively because they read the good-faith exception as narrow. Others are rebuilding FY 2028 assumptions and treating January 2027 as a target rather than a hard deadline. Neither posture is safe, and both are expensive.

For vendors, deals in these states have relationship value but not near-term revenue, and the repricing here looks like extended timelines and reduced deal sizes rather than lower unit prices. Paralysis inside these plans traces to the state Medicaid agency rather than to MCO leadership, and it is a version of the dynamic I wrote about earlier this year when I said vendors are not losing health plan deals to other vendors, they are losing them to forces inside the plans. What the February piece did not fully anticipate was that the largest source of that internal paralysis would trace all the way back through the plan to the state Medicaid agency itself.

Subscribe now

Four Behavior Changes Inside Health Plans

If the two market patterns in the free section are the marks visible from outside the plan, then the four behavior changes in this section confirm that the repricing is real inside the plan. Vendor rationalization has climbed to CEO level, the reprocurement calendar has become the filter that runs first on every material decision, incumbents are getting cut in categories where they used to be automatic, and the entire Medicaid story on Q1 earnings was cost discipline. Four behavior changes worth naming, in that order.

1. Vendor decision-making continues to climb the org chart. I wrote about this last year in the CFO Filter piece, when the pattern was first showing up: vendor decisions that used to sit at the VP level were being pulled up to the plan president or CFO for review because the CFO wanted the analytical case against the state scorecard before the incumbent was waved through. One year later, that pattern has not just held, it has accelerated. You can hear it in Q1 2026 earnings commentary. Centene CEO Sarah London described her Medicaid margin improvement as coming from “targeted and increasingly scaled initiatives to modernize and standardize processes to better manage medical cost trend.” That is enterprise-level language for a set of decisions that used to sit two or three layers down inside a Medicaid segment. When the CEO is on the earnings call describing process standardization and vendor rationalization as the Medicaid strategy, the org chart has already moved, and it moved because the assets underneath were being marked down and the CFO needed direct line of sight to defend the marks.

That was one of four behavior changes in this section, kept above the paywall so you get a feel for what the paid tier looks like. The other three, plus the forward read-through 2028 and what the Big Five parents’ state-mix exposure is going to surface across the Q2 and Q3 earnings cycle, are also in the paid section below.

Paid subscribers get all of it, plus 50+ frameworks, scripts, and deep dives built for health tech teams selling to health plans. One qualified conversation from these frameworks is worth more than a decade of subscription.

🔓 Upgrade to a paid subscription to keep reading.

Read more

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

A note from the authors: This is the first in a series called Inflection Points. Healthcare in 2026 is as fragmented and confusing as it’s ever been, and it got that way one messy decision at a time, with butterfly effects nobody saw until years later. This series goes back to those decisions, looks at what everyone in the room thought they were deciding, and reads them against the record they produced.

These pieces aren’t critiques of the people or the organizations. The decisions were made by serious people, under real pressure, with incomplete information, which is the only way decisions ever get made. We’re not here to tell anyone they were wrong. We’re here because the record is in now, and the record is more interesting than the verdict.

The Elevance-Louisiana Blue deal is the first entry because it’s where the for-profit Blues conversion path, which had run through 14 states since 1996, came to an end. What’s replaced it, a wave of nonprofit affiliations, is where Blues consolidation actually happens now.

Ryan writes Upward Growth, a newsletter on how health plans buy, operate, and make decisions. Andrew Tsang writes long-form narrative pieces on healthcare’s structural moments. We started talking after Andrew read the Upward Growth piece on Blues consolidation, and kept landing on the same thing: the moments that shape a market decide more than the people in them realize at the time.

If reading these makes the market you’re operating in a little more legible, we’ll have done what we set out to do.

Ryan and Andrew

Mardi Gras Night

Mardi Gras night in Louisiana belongs to the krewes - the private clubs that spend all year building floats so they can ride them masked through the city, throwing beads to strangers, on a single night. On February 13, 2024, while their floats were still rolling through New Orleans, eleven people who were nowhere near a parade dialed into a conference call to decide a $2.5 billion question: whether to sell the state’s largest health insurer.

From the street a parade looks like chaos. It is one of the most organized things Louisiana does - routes permitted, rolling order scheduled months ahead, every float built and owned by a club whose members paid for it. On Fat Tuesday the krewes hold the city until midnight, when carnival ends and Lent begins.

They had dialed in from wherever the holiday found them — home offices, parked cars, conference rooms borrowed from other firms. The board of Blue Cross Blue Shield of Louisiana was running a club of its own: 95,000 policyholders who technically own BCBSLA and pay their dues on the first of the month. The single agenda item was whether to walk away from a deal that would have sent 91% of its proceeds to a foundation and 9% to those 95,000 owners.

The buyer was Elevance Health — the country’s second-largest insurer, and the company behind Anthem, the name on insurance cards in fourteen states. The template it was running was older than the company itself: the 1996 Blue Cross of California conversion playbook, used state after state since and never once reversed. The CEO of BCBSLA was a physician named Steven Udvarhelyi, who for thirteen months had been the public face of the deal - in front of legislators, hospital lobbyists, two attorneys general, two insurance commissioners, and the new governor’s advisory council. Thirteen months is a long time to run that gauntlet.

By Mardi Gras night the deal was already in trouble. On the table was a senate report with thirty distinct findings - what Sen. Patrick McMath would publicly characterize as “blatant vote steering and monetary enticement.” Eight days earlier, board member Tim Barfield had testified under oath that the policyholder proxy vote was running against the deal “by a couple of percentage points” - a hearing someone close to the deal would later describe as “not your typical legislative hearing” but “an organized action.” The proxy consultant read the latest count. Still running against. The lawyers stayed on mute. For an hour, the board listened to itself.

That language - vote steering, intimidation, enticement - is the language of elections, not corporate proxies. Which is, on paper, exactly what a mutual policyholder vote is supposed to be.

The vote, when it came, was a formality — eleven voices in turn, none objecting. They notified the Department of Insurance at 10:30 that night, which canceled the next morning’s hearing before the next morning came. Whether the eleven then poured a drink or went to bed to avoid one, the record does not say.

Outside, the krewes were still rolling.

Twelve hours separated that board call from the hearing where the buy-side lawyers expected to close. In the 28-year history of Blue Cross conversions, no deal had come this close to the wire and walked. They die in court, months in advance. The $37B Aetna/Humana and $54B Anthem/Cigna deals were each killed by a federal judge in early 2017, and each walked the morning its ruling landed. They do not die on a Tuesday night, ten and a half hours before opening arguments.

The deal didn’t just fail - the template did. A playbook the entire insurance-M&A world had followed since 1996 ended on a conference call no one outside the room heard. The deal itself had lived exactly one parade season: first heard by the Department of Insurance on February 14, 2023; the hearing it died avoiding was set for the same year The morning after was Ash Wednesday — fittingly, Valentine’s Day that year. Louisiana had jilted its suitor and walked into Lent on the same morning, and some of its people were out celebrating. It takes the inside of this deal - and the outside - to understand why it failed.

Subscribe now

Why Udvarhelyi Wanted to Sell a Plan That Wasn't Failing

By every conventional market read, this should have been a closing.

To understand why, you have to start with the structural problem that defined every Blues conversion attempt of the 1990s. Mutual insurance companies are technically owned by their policyholders, which is what makes converting one to for-profit politically radioactive. You are, in a literal sense, taking something that belonged to millions of members and selling it to shareholders. Every Blues conversion attempt in the 1990s ran into the same wall: who gets the money, and on what authority. California found the answer in 1996, and the answer was the foundation. Capitalize an independent charitable entity with the conversion proceeds, give it a health mission tied to the state, and the expropriation argument loses its teeth. Policyholders don’t get cash, but the value they’re presumed to have collectively built is ring-fenced in something that still serves them.

Once that answer existed, the whole question of conversion changed. Blue Cross of California’s 1996 conversion to WellPoint Health Networks capitalized two charitable foundations with roughly three billion dollars in stock. The California Endowment grew into the largest health-focused private foundation in the state, and the California HealthCare Foundation became one of the most influential health policy grantmakers in the country. The deal closed in eighteen months. Once that proof point existed, every subsequent conversion ran on a version of the same playbook. Anthem (Indiana, converted) acquired Trigon (Virginia, converted) in 2002. Empire BCBS in New York converted in 2002, with 90% of proceeds redirected to the HCRA fund of George Pataki, New York’s combative former governor, and only 10% to a foundation, a wrinkle that revealed how thoroughly state politics had absorbed the model. WellPoint and Anthem merged in 2004. WellChoice was absorbed in 2005. Georgia, Missouri, Wisconsin, Maine, Colorado, Connecticut, and Kentucky followed in some form. What looked like M&A momentum was actually a working political answer to the one question that had killed every prior attempt, and the answer kept finding new states to apply it in.

When individual deals did die, they did so on procedural grounds within the same framework. For example, Maryland Insurance Commissioner Steven Larsen rejected the CareFirst conversion in March 2003 in a scathing decision finding the price unfair, the board’s process compromised, and the executive bonuses excessive. So while he rejected the deal in front of him, he did not reject the model. By 2004, conversion activity resumed.

Louisiana 2024 fit the rubric exactly: a $2.5 billion price, a multibillion-dollar foundation as the political release valve, a mutual-to-stock conversion mechanism, and an established acquirer with fourteen Blues state licenses already on its balance sheet. File early, propose a generously capitalized foundation, accept rate-review concessions, run the regulatory gauntlet, close. The structure was twenty-eight years of precedent compressed into a single transaction.

The deal had every market signal a 2010s playbook would have wanted. What it didn’t have was 2020s politics.

What Changed in 28 Years

The buyer in 2024 was running a playbook that traced back to 1996 and had shaped Blues consolidation ever since. The playbook had carried every prior conversion to a close, and for its first decade it kept working: the foundation absorbed the proceeds, the newly for-profit Blue kept its familiar brands, and members’ premiums didn’t visibly diverge. The model didn’t just hold — it grew, proving itself in market after market.

For 28 years, the WellPoint, then Anthem, now Elevance playbook shaped Blues consolidation. The conversion wave itself was clustered in the first decade: California in 1996, Virginia and New York in 2002, Georgia, Missouri, Wisconsin, Maine in the years after. After the CareFirst rejection in 2003, no acquirer attempted another nonprofit-to-for-profit conversion until Elevance came for Louisiana twenty years later. And not one of the fourteen prior conversions had ever been reversed.

The providers had the receipts. Doctors and hospitals spend their working lives on the receiving end of an insurer’s claims decisions, and Louisiana’s had a quarter-century of Elevance’s to look at. When the Louisiana State Medical Society (LSMS) voted against the deal, it didn’t do it in the way professional societies usually do - with a position paper and a sigh. The LSMS voted no as a policyholder, exercising its equity claim in BCBSLA that appears to be unprecedented. The Louisiana Hospital Association sent the Department of Insurance a letter cataloging $26 million in Elevance fines since 2019, most of them for denying Medicaid claims and stiffing providers on payment timeliness. In 1996 the buyer was WellPoint, ten minutes old, with no record to read. By 2024 the record was a quarter-century long, and it did not flatter the company asking 95,000 Louisianans to trust it.

The foundation looked like a shell. When a nonprofit insurer converts, the law won’t let the proceeds disappear into the buyer’s balance sheet; they capitalize a charitable foundation meant to serve the same public the insurer did. Louisiana’s was to be the Accelerate Louisiana Initiative, $3.1B promised for state health equity - a number that ought to disarm critics (it didn’t).

The deeper problem was the track record. California’s two conversion foundations spent the intervening decades doing what foundations do well — research on uninsured Californians, benchmark reports on health equity, multi-year grants to community clinics and advocacy organizations. These are pretty standard public health advocacy moves. But the objection was what it did not do: roughly 1.8% of grantmaking went to insurance subsidies, while the other 98% went to research, advocacy, and education that did not lower a single Californian’s monthly premium.

For a Louisiana policyholder watching their monthly premium rise every year, it was a practical choice between researchers studying inequity and a check covering this month’s bill - it was the difference between being studied and being served. When BCBSLA proposed the Accelerate Louisiana Initiative — the same three billion dollars, governed by four insiders — Louisianans did not have to imagine what could go wrong. They had California’s twenty-eight-year operating record telling them their premiums would keep going up no matter how many grants the foundation made.

The vote was the wrong shape. A mutual is owned by its members, and selling one needs their consent — a vote that looks like a corporate proxy but runs with the energy of an HOA election — and by February 2024, that governance had developed a constitutional problem. The buckslip BCBSLA mailed to its own members was titled “Grant your Proxy FOR our Plan of Reorganization.“ Senate Joint Committee findings documented “vote steering,” “voting integrity,” and “voting confusion” problems, including ballot design that favored the “FOR” option.

This changes the conversation from insurance wonkiness to something with more teeth: undemocratic voter steering. Whether a foundation is well-designed, whether Medicare Advantage scale is real, whether the fines are damning or routine — those are policy questions, with defensible arguments on both sides. Whether 95,000 people had been steered toward a vote about their rightful ownership of their own insurance company - that is no longer a policy question. It is a question about democratic process. A policyholder vote is, in the most literal sense, the only mechanism the owners have to consent to what happens to what they own. Engineering that vote is not procedural sloppiness. It has a different name in any other context - and that name is American.

The deal had to win both the substance and the process at once; the coalition against it needed only the process — and a stacked ballot handed them that.

The mutual identity question. The deal had walked into an election year, and the machine of state elections will steamroll corporate maneuvers. Jeff Landry had investigated the deal as attorney general - “as it currently stands, it’s a bad deal” - then won the governorship in October, and as governor-elect convened a private advisory council on the sale, its members instructed not to talk publicly about the meetings. BCBSLA sat on that council, and the deal it re-filed in December read like a list of concessions to the people in the room: the foundation re-incorporated in Louisiana, a board appointment for the governor, an observer seat for the incoming insurance commissioner. The deal team had negotiated with everyone it could see.

Then January 8, 2024: a new governor, attorney general, insurance commissioner, and state treasurer sworn in at the same noon ceremony - and the opposition began to roll. The new treasurer first: John Fleming, a family physician from north Louisiana, came out against the deal before his own inauguration day ended - “join my fellow physicians... vote no.” The hospital association voted no the same day. The senate committees by late January, drafting what became the thirty findings. The attorney general - the new one, holding Landry’s old office - on February 9, in a letter sent late at night. Thirty-six days from the noon ceremony to the board call, the moves to defeat the merger steadily marched forward. Same-day denunciations are not improvised; like the floats, they are built in the off-season and rolled out for the parade. The deal had made its concessions to the people with titles, and the coalition rolling past it had no one to negotiate with. A month after taking office, in front of the Senate Joint Committee, Fleming delivered the line he is most quoted for: “Their interests will be maximizing profits day in and day out and getting back the $2.5 billion purchase price.”

Convert a mutual to a stock corporation owned by Elevance shareholders and the policyholders lose the company they own. The deal priced that loss at 9% of the proceeds — about $3,000 per eligible policyholder — with the other 91% going to a foundation they did not control. Insurance is a way of pooling exposure to risk among people who share something — a state, a community, a profession, a family. That split made the pool visible enough that the people who owned it walked away from the sale. The LSMS called it “detrimental to put our patients’ health at risk to achieve exorbitant profits for a corporation.” That language sounds populist until you remember the people saying it were also, technically, the people selling. A mutual cannot sell itself without selling against itself.

What was different in 2024 was not the deal but the world it had to land in: most Americans now interacted with the Blue Cross brand through a denial code, and a sentence containing “three billion dollars” and “controlled by four insiders” read as a populist trigger rather than as a gift.

The M&A playbook written in 1996 was the answer to for-profit insurance. By the time it came to Louisiana in 2024, it had become a question — one the man who carried it to the board had spent thirteen months sure he’d already answered.

Subscribe now

The Four Forces Behind the Deal

From inside the deal, it never looked the way the opposition was reading it. Steven Udvarhelyi was a physician who had run BCBSLA since 2016, and he had been watching the numbers move in one direction for years. The plan he ran was not failing. Fitch had rated BCBSLA among the most profitable Blues in the country. Surplus was up 38% over five years. The company had been profitable in four of the prior five years. By the standard measures of a regional health plan, BCBSLA was holding its ground. The case for selling was in the slope of the line, not the value of it.

Four forces shaped what he was watching:

The most profitable book was disappearing. Large and mid-sized employers had spent two decades migrating from fully insured products to administrative services-only (ASO) arrangements, where the employer carries the medical risk and the plan earns a fee. ASO economics are an order of magnitude thinner than fully-insured economics. Every employer that crossed over took the most profitable kind of revenue BCBSLA had with them, and almost none ever crossed back.

The market was shrinking, and BCBSLA was concentrated in it. Roughly 90% of BCBSLA’s revenue came from employer-sponsored coverage. The employer-sponsored share of the Louisiana market had declined by 20% over the prior decade as employer count shrank, public coverage expanded, and the remaining employer book itself moved toward ASO. The plan was leaning more weight on a segment that was getting smaller and thinner at the same time.

Medicaid had become a national game. UnitedHealthcare and Aetna had built Medicaid managed care operations across dozens of states, with the data, technology, and operating leverage that comes with running ten million Medicaid lives at once. BCBSLA was running its Medicaid plan in one state. In every state procurement cycle, the national plans showed up with capabilities BCBSLA could not match and priced against a cost base BCBSLA could not approach.

The infrastructure floor kept rising. Udvarhelyi’s read on the runway was that by 2025 competing in any line of business would require investments in claims platforms, AI-enabled utilization management, member engagement technology, and analytics infrastructure that no single-state plan could build in time. Elevance had it. HCSC had it. BCBSLA did not, and the gap was widening every year.

By 2022, the trajectory had become unambiguous enough that the board authorized Udvarhelyi to find a partner. The deal in front of them in 2024 was the result. Udvarhelyi made the same argument everywhere he was allowed to make it, telling Louisiana lawmakers in 2023 that "the forces at play in the marketplace, the inevitable forces of consolidation, will happen and we will have to consolidate from a position of weakness." The deal was a chance to consolidate from a position of strength instead. The price would be better, the terms would be better, the foundation would be larger, and the employees and members would be protected by leverage BCBSLA would not have in five years.

This was a market intelligence read on where the business was headed. The opposition was reading where the business was. Both reads can be true at the same time. The structural tragedy of the Louisiana deal is that nobody in the room was actually arguing with anyone else. Instead, they were arguing about different timeframes. Resolving that would have required Udvarhelyi to make the case for the five-year trajectory directly to the providers, members, and legislators reading 2024 conditions, and the opposition pressure-testing the trajectory rather than rejecting the present-day terms it produced. That conversation never happened.

Two Years Later, Most of the Blues Are Under the Same Pressure

The BCBSLA-Elevance deal died two years ago, and the case Udvarhelyi was making to his board has largely held up. In August 2025, BCBSLA began rolling layoffs through attrition and position eliminations, citing rising medical costs and the expiration of enhanced ACA subsidies. Louisiana’s 2026 individual market rate filings came in with a weighted-average increase of around 21.9% across all carriers, later revised upward to 23.4%, the largest annual increase the state has seen in years.. The fully-insured employer book Udvarhelyi had been worried about kept shrinking. And the operating margin, which had been a slim positive 0.1% in 2024, dropped to -4.3% in 2025. The forecast he was selling against in 2023 is the present BCBSLA is operating in now, and the exit ramp he tried to take is closed for the foreseeable future.

Only seven Blues posted positive operating margins in 2025, down from eight in 2024. The for-profit acquisition path that ran for twenty-eight years is closed, but consolidation isn’t. It changed shape, and the chart shows the new shape working. Wellmark, the BCBS Michigan affiliate, posted +1.9%. Blue Cross of Idaho, which restructured into a mutual holding company, posted +1.7%. BCBS North Dakota, which joined Cambia in early 2026, posted +0.3% in its first year. Arkansas, which announced its Cambia affiliation in 2025, improved from -12% to -1.7%. The plans furthest from affiliation are the ones bleeding most: BCBS Arizona at -14.6%, North Carolina at -8.9%, and BCBSLA itself at -4.3%. The exception that proves the rule is BCBS Michigan, the parent itself, at -5.7%, expanding its affiliations across Wellmark, NextBlue, WyoBlue, and Vermont while bleeding at home.

Cambia spent the last twelve months absorbing two struggling Blues. HCSC closed a $3.3 billion acquisition of Cigna's Medicare business in March 2025, with 71% of its MA enrollment now in HealthSpring rather than in the legacy Blues plans. Highmark closed its Blue KC affiliation on March 31. BCBS Michigan is steadily building a five-state footprint while its own balance sheet deteriorates. The parent organization is becoming the operating unit. The local plan is becoming the brand the member sees on the card.

If you invest, the Elevance-style roll-up thesis is off the table, the deal flow you’re underwriting is now affiliations and shared-services consolidation, and the second-order opportunity is in the companies sitting downstream of the consolidated parents. If you sell to Blues, map your pipeline and installed base to parent organizations this quarter, because the plans most likely to affiliate in the next eighteen months are the ones sitting in the bottom third of that chart. If you advise plans, conversion advisory is a contracting market and federation advisory is the growth market. If you run a provider organization contracting against a Blue in the bottom third, the parent that absorbs them will have rate reference data across its footprint and less institutional incentive to preserve a local relationship that doesn’t perform.

Two years after the BCBSLA-Elevance deal collapsed, the question isn’t whether the Blues system is consolidating. The question is whether the plan you sell to, contract with, model against, or advise is going to be the one absorbed, the one absorbing, or the one bleeding out on a standalone basis.

Subscribe now

Close on Mardi Gras Night

Louisiana didn’t answer the question. It surfaced it. And the question — who is this insurance for? — has been forming longer than anyone in the BCBSLA boardroom on Mardi Gras night had been alive.

What has changed in ninety-seven years is not the pool — structurally, BCBSLA’s policyholders own the same thing its earliest member did — but what people are willing to do with it. Three live answers now compete for the role.

The for-profit answer. Insurance is a financial product. Shareholders accept risk, accumulate scale, and operate as one publicly listed company across many markets. This is the answer Elevance offered Louisiana, and the scale behind it is real. The Epic implementation BCBSLA was paying for out of its own pocket, Elevance had already amortized across forty-seven million members. The GLP-1 negotiations absorbing eight figures of regional plans’ annual budgets, Elevance ran through a national PBM with leverage no single-state plan can match. As of 2026, no for-profit acquirer has announced another Blue Cross conversion attempt. The path is not legally closed — it is politically exhausted.

The mutual answer. Insurance is a communal arrangement — owned by its members, governed locally, answerable to its community. This is the answer Bryan Camerlinck — Udvarhelyi’s successor, named CEO three months after the deal died — was testing under the Louisiana Blue rebrand: restructure internally, expand the profitable segments, outrun the trajectory before the scale gap becomes operationally fatal. The first two years of that bet have looked like Udvarhelyi’s February testimony reading itself back. Across 2024-2025, at least seven Blue Cross plans reported net losses.

None of these plans ran the business badly. The business has gotten harder for plans without national scale — exactly what Udvarhelyi predicted. The mutual answer is what Louisiana chose, and what Louisiana is now defending, with the data piling up on the side it just argued against.

The federation answer. Insurance is a multi-state nonprofit federation. Local plans keep their boards, brands, and mutual status, but share the infrastructure single-state plans cannot afford to build alone — claims platforms built once and deployed everywhere, compliance operations whose costs scale with rule volume rather than member count, drug procurement run through combined member volume. Cambia is deploying it in real time — North Dakota in February, Arkansas pending — with Highmark and BCBS Michigan running their own versions. Of 34 Blue Cross licensees, only eight posted positive operating margins in 2024. Most of the rest are choosing some version of the federation answer. Louisiana has not.

Underneath the three answers is the question itself: what is insurance supposed to do? In 1929, it pooled risk between a Dallas hospital and 1,300 of the city’s schoolteachers. In 1996, it became an asset class opening to public-market capital. In 2026, with seven Blue Cross plans posting losses and GLP-1 spending climbing thirty percent a year, the question has stopped being abstract: whoever owns the pool decides what the pool is for. The deal Louisiana refused was a vote on who that should be — 91% to four insiders, 9% to the 95,000 people who actually owned the company. The deals every other state has yet to make are votes on the same question.

What Mardi Gras night closed was not the deal, but one of the answers — and the next essays in this series profile the answers still competing for the role.

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact us

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

🎁 Unlocked: This post includes the full deep dive

Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

Before we get into it: I hope everyone in the States had a safe and happy Fourth of July. The Upward Growth staff took the week off, which is why you didn’t get an edition last week. That was a last-minute call, and I should have flagged it in the newsletter ahead of time. Going forward, I’ll do better about announcing when we’re skipping a week.

Personally, I spent a good chunk of the break watching some World Cup and the Tour de France. (Well, reruns, as I’m not getting up at 4 AM to watch it live!) Watching a sporting event rerun changes what you notice: you already know how the stage ends, so the strategic decisions everyone made in the hours leading up to it come into sharper focus. The breakaway that would normally look ambitious looks doomed. The team that would normally look defensive looks like it made the right call two hours ago.

Not a bad way to read what CMS did around the ACCESS Model launch on July 5th. The stage is over, but it’s still worth examining what everyone was thinking in the six months leading up to it, and what those decisions signal about the ten years ahead.

CMS has spent the last decade running payment innovation experiments through CMMI, one bespoke pilot after another. Each had its own contract structure, measurement methodology, reporting requirements, and sunset conditions when Congress ran out of patience. Vendors selling to health plans watched them come and go. Investors mostly ignored them. Consultancies earned fees on the ones that stuck. The Congressional Budget Office documented that only four of the roughly fifty models CMMI has tested have been certified for expansion, and only one since 2018.

The ACCESS Model, which launched on July 5, looks like the same kind of experiment at first glance. Four clinical tracks, a 10-year test, Traditional Medicare beneficiaries only, and payment rates ranging from $90 to $420 per beneficiary per year. That top-end rate is thin enough that several scaled digital health companies passed on the first cohort, and the industry press covered the launch through much the same lens.

In the six months leading up to July 5, CMS assembled operational infrastructure around ACCESS at a scale no prior CMMI test has received at launch. It published a set of four core principles that define what makes a chronic care arrangement "ACCESS-aligned." It committed to publishing a sample provider agreement, standardized track-specific G-codes any payer can adopt, and a CMS-hosted FHIR API that will run outcome measurement for participants and aligned payers on the same infrastructure. And it got fourteen of the largest health plans in the country, representing 165 million member lives across Medicare Advantage, Medicaid, and commercial coverage, to publicly sign the ACCESS Aligned Payer Pledge committing to offer payment arrangements aligned with the model’s principles by January 1, 2028.

That machinery is what CMS is signaling about where outcome-based chronic care should go over the next decade, and if you step back, the Medicare payment rates are the least interesting piece of it. The reference architecture, the operational infrastructure, and the 14 major health plans that publicly committed to align with it before the model launched are what to pay attention to, regardless of whether you plan to participate.

CMS just signaled where outcome-based chronic care will go over the next decade, your health plan buyers' evaluation criteria will look materially different by the middle of 2027, and health tech categories just got repriced up or down. Four months ago I wrote that every health tech vendor would need a point of view on outcome-based pricing. ACCESS is the version in which CMS wrote the reference implementation for the whole market, and 14 major health plans have already signed on to build against it.

Take the example of Remote Patient Monitoring (RPM). In 2019, RPM codes existed, and reimbursement barely covered device costs. Same then, most digital health companies passed on the category. CMS iterated the codes, expanded eligible conditions, and the HHS Office of Inspector General documented Medicare RPM enrollees growing more than 10-fold from 55,000 in 2019 to 570,000 in 2022 with Medicare payments rising from $15 million to $311 million, continuing past $500 million in Medicare payments by 2024. The companies that built the operational and evidence infrastructure while payment was thin are the scaled winners today. ACCESS is the same shape of bet one level up, paying for outcomes rather than monitoring activity, and the ten-year commitment signals CMS intends to iterate.

Subscribe now

What ACCESS Actually Is

ACCESS is a 10-year voluntary payment model in Traditional Medicare that pays participating organizations through Outcome-Aligned Payments (OAPs) tied to condition-specific performance thresholds. Four clinical tracks cover early cardio-kidney-metabolic (hypertension, dyslipidemia, obesity, prediabetes), cardio-kidney-metabolic (diabetes, chronic kidney disease, ASCVD), musculoskeletal (chronic pain), and behavioral (anxiety and depression). Per CMS, these conditions affect more than two-thirds of people with Medicare.

Per CMS’s Payments Amounts and Performance Targets document, OAP rates range from $90 to $420 per beneficiary per year, depending on the track and care period. Monthly payments are capped at 50 percent of the annual OAP over the care period, with the remaining 50 percent withheld until semi-annual reconciliation. Participants receive full payment if at least 50 percent of the aligned beneficiaries meet the outcome targets. Below that threshold, payment is proportionally reduced, capped at a 50 percent reduction. A Substitute Spend Adjustment reduces the OAP by up to 25 percent if aligned members receive duplicative services from other Medicare providers during the care period. A separate co-management fee pays primary care physicians approximately $30 per review, up to $100 annually per beneficiary, for coordinating with ACCESS organizations.

CMS accepted more than 150 organizations into the first cohort, the majority of which have never previously served Medicare beneficiaries. Rolling admissions continue through 2033. Only Traditional Medicare beneficiaries are eligible for the model itself, though CMS explicitly notes MA plans may independently adopt similar arrangements. Beginning in 2028, ACCESS OAP expenditures roll into ACO benchmark and performance year calculations for MSSP and ACO REACH.

Those are the mechanics. What CMS built around them is what really matters.

The Four Principles Behind an ACCESS-Aligned Arrangement

The launch marks a departure from typical CMMI behavior. CMS published a set of four principles that private payers can use when structuring their own outcome-based chronic care contracts, and it built the operational infrastructure that makes replicating that structure cheap.

Per Cigna’s announcement of signing the Payer Pledge, a payment approach qualifies as ACCESS-aligned if it adopts predictable recurring payments, accountability for clinical improvement or control, flexibility in care delivery that facilitates technology-enabled care, and coordination with primary care and referring clinicians. Those four principles are the anchor of the reference architecture. Every private-payer arrangement marketed as “ACCESS-aligned” over the next three years will trace back to them.

Around the principles, CMS committed to publishing a sample provider agreement structure and payment adjustment code, standardized track-specific G-codes any payer can adopt, and a FHIR-based reporting infrastructure with a CMS-hosted API for outcome measurement. Most of that collateral is expected to be delivered in phases through late 2026 and 2027, ahead of the January 2028 pledge deadline. Once it ships, what previously required a payer to build proprietary outcome measurement infrastructure, negotiate custom contract language, and hire actuaries to price a new arrangement becomes a plug-in kit maintained by the federal government.

CMS is engineering the private payer market's replication path in parallel with the Medicare launch, and doing it publicly enough that fourteen major health plans could sign on to align before the launch. The Pledge is looser than a strict contract. Signatories commit to offering an outcomes-based option for technology-enabled chronic care but retain discretion on which conditions to target, which outcomes to measure, which vendors to work with, and how the model gets operationalized. The technical commitment is a set of principles with productization support behind it, not a uniform contract each payer will execute identically, and that distinction changes very little strategically. The signatories collectively represent 165 million members' lives, committed to aligning by a specified deadline with the operational infrastructure the federal government is building on their behalf.

Subscribe now

Who Signed On to the ACCESS Payer Pledge

The ACCESS Aligned Payer Pledge, signed in February 2026, drew the signatories that make the strategic signal difficult to dismiss.

Four of the largest publicly traded national payers are on it: Humana, UnitedHealthcare, Cigna, and CVS Health. CVS also brings Caremark, its PBM subsidiary, along with an integrated PBM, retail pharmacy, and clinical services stack that reaches most of the largest self-insured employer relationships in the country. Centene brings the largest Medicaid managed care footprint in the country, at 17.9 percent of national Medicaid MCO enrollment as of Q1 2026 per HMA. Seven Blues plans signed on, and given how the Blues federation replicates operational patterns across state licensees, the practical reach extends past the seven names on the pledge.

The pledge has already moved from a voluntary experiment to a reference standard for the private-payer market. Non-signatory plans will be evaluated against ACCESS-aligned language whether they signed or not, and by 2027 their vendors will be pitching them arrangements they had no formal say in designing.

Where Health Tech Just Got Repriced

Over the next 12 to 18 months, the ACCESS framework becomes the yardstick your health plan buyer uses to evaluate every outcome-based pitch, whether or not you sell into Traditional Medicare. That reprices any health tech category evaluated on softer criteria before the launch. Some categories got elevated. Others got deprioritized.

What Just Got Elevated

Longitudinal chronic condition management with outcome accountability, particularly across the cardio-kidney-metabolic stack, is the clearest winner. If your value proposition is managing a chronic condition end-to-end with measurable outcome performance tied to a defined care period, ACCESS validated your category as the reference architecture. What earns the validation is longitudinal accountability for outcomes against a public threshold with technology-supported care as the delivery method, not the marketing label “chronic care management.”

Behavioral outcome measurement got a bigger lift than most vendors realize too. The anxiety and depression track places behavioral outcome measurement within the same reference architecture as physical health outcomes, using G-codes and API infrastructure to make outcome reporting an administrative workflow rather than a research project. Behavioral outcome measurement has been the least mature category in the outcome-based conversation for years, with measurement gaps documented across the industry. A public federal target changes the category's trajectory.

Care coordination and multi-vendor attribution moved up materially, through a mechanism most vendors have not connected to ACCESS yet. The Substitute Spend Adjustment (SSA) penalizes participants up to 25 percent if aligned members receive duplicative services from other providers, which requires knowing who else is touching your member and what they billed for. Any private-payer replication that includes an SSA-style clause requires the same visibility. Attribution, care coordination, and multi-vendor claims analytics are materially more valuable across MA, Medicaid, and commercial lines than they were before.

Musculoskeletal outcome measurement just got its biggest category re-rating in a decade. MSK has been largely treated as a commodity-priced, volume-driven business for years. Hinge Health and Omada’s public market receptions validated the outcome-based digital MSK thesis at the equity level in 2025. ACCESS validates it at the CMS reference architecture level, which changes how the category’s comp set gets read by health plan CFOs during their internal build-versus-buy conversations.

Outcome measurement infrastructure itself is the pick-and-shovel bet underneath all of it. Every private payer that intends to align by January 1, 2028 needs the measurement layer that enables them to do so. Most do not have it built at the scale ACCESS-aligned reporting requires, and those that try to build from scratch face a harder job than those that partner with vendors already carrying that infrastructure.

What Just Got Deprioritized

Now let’s look at the flip side. Point solutions without a longitudinal outcome story are not sitting as well. Simply put, if you cannot tie your work to a condition-specific outcome threshold measured over a defined care period, your health plan buyer’s evaluation framework now discounts you relative to a competitor who can.

Engagement-metric-only pitches are next on the list. “We drive 40 percent engagement” is a features-not-outcomes conversation against the ACCESS reference. The framework rewards outcome attainment rather than activity, and your buyers will make that comparison out loud in the next RFP even if they were willing to accept engagement metrics 12 months ago.

Coding-focused revenue capture plays are the third. This is not a new observation. Earlier this year, I wrote that CMS is systematically ending the risk adjustment arbitrage era by pulling revenue-arbitrage tools out of MA. ACCESS is the constructive half of the same policy strategy. Margin is moving from coding to outcomes. That trajectory now has a public reference architecture, standardized billing codes in the works, and a January 2028 private-payer alignment deadline attached.

Adjacent-condition vendors outside the four current tracks sit in the least clear position. Women’s health, oncology, geriatric syndromes, GI, and dermatology chronic conditions are pre-launch categories, and the chronic conditions plans are most likely to layer in independently are COPD and substance use disorders. Your health plan buyers’ near-term evaluation frame is CKM, MSK, and Behavioral for the next 18 months, with COPD and SUD as the credible adjacent candidates. Positioning work here is anticipatory, and vendors who acknowledge the gap and show they understand the shape of future track expansion will be evaluated more favorably than those who pretend the four tracks do not exist.

The through-line across every category is the same argument. Your buyers’ evaluation criteria are becoming more stringent in a way that specifically favors vendors who have built the outcomes evidence stack rather than the outcomes narrative. ACCESS made that already-shifting trajectory explicit and dated it.

Portfolio companies and management teams within the elevated categories are facing a valuation and buyer-evaluation tailwind that will be evident in board conversations by Q3 2026. Companies outside the elevated categories are looking at an open repositioning window, with a mid-2027 deadline before the first ACCESS-aligned private-payer procurements are written. Vendors that have not started the repositioning work by the end of Q3 are visibly behind the ones that have. Which side of that line you land on depends on the line of business you sell into.

Subscribe now

How ACCESS Alignment Reaches Your Buyer by Line of Business

Three distinct lines of business fall under the 165 million-member figure, each with its own buying cadence and path from the Payer Pledge to your pipeline.

Medicare Advantage

Humana, UnitedHealthcare, Devoted Health, Cigna, and the Blues signatories collectively run Medicare Advantage franchises that touch tens of millions of MA lives. Their alignment commitment directly conflicts with MA vendor selection in 2026 and 2027, well ahead of the January 2028 deadline. If you sell into any of those organizations’ MA books, expect the ACCESS-alignment principles to start appearing in vendor evaluation criteria in the next RFP cycle. Some of those RFPs are being written right now, and the CFO gate that MA plans have been running since 2025 on outcomes evidence just gained a public federal benchmark to point at.

Medicaid

Medicaid moves through Centene faster than any other signatory. Their commitment spans state Medicaid contracts in roughly two dozen states, and the same operational infrastructure that runs their commercial and MA books does not neatly bifurcate by line of business, so ACCESS-aligned arrangements will flow into their state Medicaid MCO relationships as those contracts come up for rebid. State Medicaid agencies have not yet published RFI language that references ACCESS by name, but the channel is already committed at the largest MCO level, where the real replication mechanics live.

Commercial and Self-Insured Employer

Employer coverage runs through CVS Health, a Payer Pledge signatory. Beyond Caremark, CVS operates one of the two largest PBM-and-clinical-services stacks in the country, and its footprint sits inside the vendor selection process at most Fortune 500 self-insured employers. How ACCESS-aligned payment structures enter those employer contracts through CVS’s stack over the next 24 months is the piece of the 165 million number that has received the least attention so far, and the specific thing vendors selling through national PBM or health services partners should be watching for is the language shift in employer RFP templates over the next four quarters.

Beyond those three channels, evaluation criteria will bleed into standard vendor RFPs at plans that never signed the pledge. When Cigna and UnitedHealthcare ask their vendors about ACCESS-aligned principles, competitor plans borrow the question set. It doesn’t seem far-fetched that questions like “How does your solution map to a condition-specific outcome threshold?” will appear in health plan vendor RFPs across all lines of business within 12 months, whether or not the plan asking it intends to formally align with ACCESS.

And finally, private-payer implementations will consolidate on a smaller, curated set of technology partners per condition category rather than distribute across the current long tail of point solutions, which is the typical outcome when a health plan operationalizes a complex network strategy. Which side of that consolidation your product sits on will be decided over the next 12 to 18 months.

The Positioning Runway Between Now and January 2028

The federal government just did work that vendors, investors, and provider strategy teams normally have to build for themselves. The practical work now is translating what CMS shipped into positioning decisions your buyers and boards will care about.

The ACCESS Request for Applications and the Payer Pledge documentation are strategic documents, not program launch materials. The OAP structure, the Substitute Spend Adjustment, and the four core principles that define ACCESS-aligned arrangements are the language your health plan buyers will use in evaluation conversations as early as Q4.

Every vendor pitch, product roadmap, and portfolio position now maps somewhere against the four tracks. Aligned, adjacent, or outside. Each position now carries a repositioning question and a timing anchor. Whether the conversation is with your buyer, board, portfolio company, or client, everything works backward from January 1, 2028. That deadline shapes private-payer alignment, which shapes the 2027 RFP evaluation criteria, which in turn shapes the positioning work you should be doing right now.

Provider organizations face a P&L question about whether direct participation in the ACCESS framework is more valuable than referral positioning to an ACCESS participant. The 2028 ACO benchmark inclusion means ACCESS-aligned attribution will affect ACO benchmarks and performance year calculations, materially changing referral economics for MSSP and REACH participants.

Plans will build the alignment mechanics themselves once CMS publishes the sample provider agreement and G-codes. Vendors will need help translating their story to a reference architecture they did not write, and that translation work is where the next 12 to 18 months of consulting demand actually lives.

Health plan buyers have been getting harder on outcomes evidence for two years already. ACCESS turns that from a slow shift into a dated one. And because this is a CMS-driven initiative with fourteen major health plans already aligned to it, the fingerprints show up in vendor evaluations regardless of whether the plan running the evaluation signed the pledge, participated in the model, or has any Traditional Medicare business at all. Every plan you sell into is now looking at your outcomes story through a framework CMS just published, and that starts happening this fall, not in 2028.

Subscribe now

Final Thought

CMS rarely engineers the direction of a market this openly. When it does, the pattern is usually the same: modest reimbursement early, a small first cohort willing to build against thin economics, and a long iteration cycle that gradually widens the aperture. RPM followed that arc from 2019 forward. So did the shared savings work that eventually became MSSP, and the bundled payment models that reshaped how orthopedic groups think about episodes of care. The organizations that showed up early with the operational infrastructure to participate became the reference examples CMS pointed to when the model scaled, and the ones building alongside them captured the second-wave demand as private payers began replicating what worked.

The ACCESS Model is early in that arc, and what makes it different from prior CMMI experiments is the machinery CMS built around it before launch: a set of four principles that make an arrangement ACCESS-aligned, standardized billing codes any payer can adopt, a CMS-hosted API for outcome measurement, and a Payer Pledge already signed by every major national payer and a meaningful share of the Blues. Read the ACCESS Model as a signal of where CMS believes outcome-based chronic care should go for the next decade, and read the Payer Pledge as the first meaningful private-payer response. The reimbursement rates will iterate. The reference architecture, once the major payers commit to align with it, does not.

If you are working through what this means for your positioning, your messaging, or your go-to-market strategy, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies to build strategy around how health plans actually buy, operate, and make decisions.

Thanks for reading.

Here’s to upward growth,

Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

🎁 Unlocked: This post includes the full deep dive

Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

The first half of 2026 hit nearly every line of business a health plan operates, and the headlines understated the picture.

• Medicare Advantage (MA) absorbed the CY 2027 Final Rule with the largest Stars overhaul in a decade, a Clover Health ruling that opened a bid recalculation window in the middle of an already-compressed bid cycle, and a Risk Adjustment Data Validation (RADV) audit cadence that has not let up.

• Affordable Care Act (ACA) enrollment shed nearly 4 million people in the first month after the enhanced premium tax credits expired and dropped from 23.1 million covered lives to 19.2 million, with double-digit 2027 rate filings already on file in early-filing states.

• Medicaid began absorbing the One Big Beautiful Bill Act (OBBBA) roughly $1 trillion in cuts across work requirements, eligibility redeterminations, provider payment changes, and state rate setting, on a state-by-state timeline that runs through 2030.

• Group (employer-sponsored commercial) absorbed Mercer’s 6.5 percent cost projection for 2026, the highest single-year increase since 2010, with 59 percent of employers responding with cost-cutting plan design changes in the first half.

MA, Medicaid, ACA, and Group commercial are each uncomfortable on their own. Health plans operating across multiple lines of business are absorbing all that compounding simultaneously, and the picture is materially worse than the individual stories suggest. A plan can absorb a major hit on one line of business and respond. The finance team reorders priorities, specialists get redirected, reserves get rebuilt, and the strategy calendar adjusts. None of that works when multiple lines of business take major hits at the same time, against one finance team, one actuarial bench, one provider contracting team, and one compliance staff. The response to each one is constrained by the responses to the others. The compounding is the story.

What follows is what the executive leadership team at the plan you are selling to, investing in, or advising is solving for in H2, and why the Medicaid phase-in running through 2030 is the variable that will keep rewriting the math on every other decision the plan makes for the rest of the year.

The Plan Underneath All of This Is the Same Company

Picture a regional Blues plan running roughly $4 billion in annual revenue across MA, Medicaid, ACA, and group commercial, with several hundred thousand to over a million covered lives in each. That plan has one finance team modeling reserves across all four lines, one provider contracting team negotiating with the hospital systems that anchor every line, one actuarial bench supporting bid recalculations and rate filings and audit response simultaneously, and one executive leadership team making the cross-line prioritization calls. The decisions that team makes in H2 will shape how the plan operates through 2027 and 2028.

The org chart will tell you the lines run separately. Plans have LOB Presidents for each major line, separate operating units, and specialist teams that don’t share much day-to-day work. None of that changes the company's fundamental structure underneath. The plan is one enterprise with one P&L, one capital allocation conversation, one executive leadership team, and one strategy-planning process, in which the lines are prioritized against each other during annual planning. Reserves are held at the company level. Major vendor commitments above a threshold get reviewed by an enterprise committee that includes the CFO and General Counsel. Multi-year strategy decisions are made by the CEO and CFO, with the LOB Presidents weighing in but not deciding.

Cross-line pressure gets sorted at that enterprise level, and the lines act on each other. MA pulling the actuaries through bid recalculation leaves ACA pricing on the same queue, waiting on the same people. Hard ACA reserve decisions in spring shrink the capital pool the Medicaid impact analysis was also drawing from. A state-level Medicaid rate assumption that just shifted in Q1 reaches back into the commercial pricing the plan was preparing to lock for renewal. Each move on one line is a constraint on the next move on another. These trade-offs get made by the CEO, CFO, and executive leadership team, not at the LOB level.

If you are reading the plan from the outside, this is the level to read. The headlines in MA tell you about MA, but the same plan's response also tells you about its capital posture, specialist availability, and strategy attention across every other line. Capital posture is where compounding shows up first, with three lines pressing on the same reserves at the same time, and the CFO running a tighter conversation than the headlines suggest.

Subscribe now

MA, ACA, and Group Are Hitting Capital Reserves at the Same Time

Four million people dropped out of the ACA marketplace in the first month after the enhanced premium tax credits expired, and the market settled at 19.2 million covered lives by spring, down from a peak of 23.1 million at the end of 2025. The lives that dropped coverage were the healthier subsidized ones, which left the plans writing on that market with a sicker pool to price against. Filings in early-filing states are showing rate increases above 15 percent, with “death spiral” warnings returning to ACA market analysis: healthier enrollees drop coverage, premiums rise to cover the sicker remainder, more drop, the cycle compounds. Several plans cut footprint, withdrew from counties that did not pencil at the new mix, and started repricing the markets they kept.

Elevance’s $935 million risk adjustment accrual in May was the most visible of the MA pressures hitting the same finance and actuarial teams. The CY 2027 Final Rule had landed in April with the largest Stars overhaul in a decade, the Clover Health ruling forced Quality Bonus Payment (QBP) recalculation and a bid resubmission window in the middle of the bid cycle, and RADV audits accelerated against a CMS coding workforce that grew from 40 to roughly 2,000 contract reviewers. Membership shed across MA continued through the first half of the year, and the plans carrying the most market exits also carry the most pricing pressure on what is left.

Mercer’s projection for 2026 employer cost growth landed at 6.5 percent, the highest single-year increase since 2010, and the employer-side reaction was immediate. 59 percent of employers made cost-cutting plan design changes in the first half on the group commercial line, narrow network adoption picked up across mid-market and enterprise buyers, and Individual Coverage Health Reimbursement Arrangement (ICHRA) migration accelerated as employers pushed pricing accountability back onto plans. The line plans had been counting on for margin stability is the line absorbing the most aggressive employer-side pushback in over fifteen years.

Three lines pressing on the same capital reserves simultaneously produce a hardened posture across the enterprise. The CFO is defending margin on all three lines at once, and the executive leadership team is maintaining the same public posture through Q1 2026 earnings calls: defend margin over chasing enrollment, model harder on rate, and tighten vendor evaluation. Enterprise investment committee approvals that used to clear in one meeting now clear in three. Multi-year vendor commitments above a threshold now go through legal and compliance review, which wasn’t part of the process 12 months ago. Nearly half of health plan C-suite executives report uncertainty about the near-term outlook, and the procurement posture vendors and partners face reflects that uncertainty. The posture is defensive across every line at the enterprise level, where the prioritization calls get made.

Capital posture is only half of what gets set this year. The other half is what the plan will actually pay out to deliver care, and the contracting team is working through that question against the same compounding from a different angle. Three lines are pulling on the same hospital systems at the same time, and how that plays out is the next collision.

MA, Medicaid, and Group Are All Renegotiating Provider Networks at Once

The same group renewal cycle pushing back hardest on commercial pricing is also pushing back hardest on the plan’s provider network. Employers shifting to narrow networks force plans to renegotiate composition with the systems they keep, and ICHRA migration accelerating in the first half brings a different actuarial profile through the network that has to be re-priced. Every employer that transitioned from a fully-insured arrangement to ICHRA in H1 sent the plan back to its hospital partners with a different risk profile and reimbursement structure.

OBBBA Medicaid is pulling on the same contracting team from a different direction. The phase-in includes provider payment changes that do not align with state rate-setting cycles, which means plans are renegotiating with the same hospital systems on the Medicaid side, using payment assumptions that may shift before the contracts are fully implemented. Some states are pushing payment changes through in 2026 while others wait until 2028. Hospital systems do not experience this as a state-by-state policy implementation, rather they experience it as the plan’s contracting team showing up with a different number than it had eighteen months ago, on the same line they were already renegotiating.

MA adds a third factor. Plans that exited counties in 2026 are rebuilding their MA network footprint in the markets they kept, often on the same hospital contracts that the group renewal and Medicaid renegotiation are touching. The county exits forced the network to be reconstituted under tighter economics, with the same systems holding more leverage in the remaining markets.

One plan, one provider contracting team, three lines pulling on it simultaneously, and the hospital systems on the other side of the table know exactly what is happening. A system that gives ground on MA network breadth knows the same plan is coming back asking for commercial rate relief in six months. A system that absorbs OBBBA-driven payment changes on the Medicaid side knows the commercial line will push for offsetting concessions at the next renewal. Systems can stage asks across the plan’s lines because they view them as a single balance sheet, even as the plan’s contracting team is still managing them as three separate negotiations.

Cross-line leverage also extends across renewal cycles, not just across lines at a single moment. A concession on Medicaid under OBBBA this year appears as the same system's opening position in the MA contract next year. A walk-away from a commercial renewal this quarter changes the terms of the MA network rebuild in that market two quarters later. The system's memory of the plan's give-backs runs longer than any individual contract cycle, and the contracting team is negotiating against that memory every time it comes back to the table. The Blues consolidation that accelerated in H1 is partly this collision: smaller plans could not sustain provider-side pressure across all of their lines simultaneously, and the affiliations are how they tried to absorb it.

Every one of those network moves runs through the actuaries, analysts, and lawyers the rest of the plan is also trying to deploy, and the rest of the plan is not where those specialists are. The audits already have them.

Subscribe now

The Audit Calendar Is the One Calendar That Doesn’t Move

Every other workstream inside a health plan has flex in its calendar. Capital posture tightens across a quarter, network negotiations stage across renewal cycles, and strategy reviews slip a month when the priorities ahead of them demand it. Audit response has no flex. The federal regulator sets the dates, the penalties for missing them carry real payment recovery and civil exposure, and no internal prioritization conversation changes any of it.

The wall expanded on four fronts in H1. Medicare Advantage RADV moved to a quarterly cadence against payment years 2020 through 2024 simultaneously, putting risk adjustment and compliance teams within every plan on a 90-day response cycle across 5 years of submitted data, with material payment recovery at stake. ACA HHS-RADV ran in parallel with Initial Validation Audit (IVA) requirements in revision through the 2026 Payment Notice. The Office of Inspector General issued its first MA-specific compliance guidance since 1999, raising the standard for every plan’s compliance program. And the public posting of prior authorization metrics in March introduced a new monthly reporting cadence for the same legal and regulatory affairs staff already managing the rest. Four federal compliance workstreams accelerated inside the same six months, and none of them had movable dates.

Other H1 pressures all live downstream of that wall. A plan can defer a vendor evaluation, slow a network renegotiation, or push a strategy decision to the next quarter. It cannot defer a RADV submission. So when audit work is dense, every other H1 priority has to plan around it.

Take personnel, for example. The people who own audit response are the same people every other H1 priority is trying to deploy. Actuaries running MA bid recalculation after the Clover ruling are on the RADV queue. Risk adjustment leadership signing off on MA submissions after the Elevance $935 million accrual is working HHS-RADV alongside it. Actuaries pricing ACA for the new morbidity are modeling the impact of audit findings on the same numbers. Compliance staff working OBBBA Medicaid implementation through 2030 are also working federal audit response timelines. One plan, one specialist bench, every pressure pulling on it.

Three of the four H1 collisions are working themselves out against an immovable audit wall. The fourth is a baseline that does not stop shifting. The Medicaid phase-in keeps changing the math the other three are pricing against, every quarter, for the next five years.

Medicaid Keeps Resetting the Math the Other Lines Are Pricing Against Through 2030

A typical line absorbs a shock, the planning team responds, and the company moves on. The Medicaid phase-in will keep generating new variables every ninety days through 2030, which means the company never gets to move on.

OBBBA’s Medicaid cuts are phasing in across work requirements, eligibility verification redeterminations, provider A typical line absorbs a shock, the planning team responds, and the company moves on. OBBBA Medicaid keeps generating new variables every quarter through 2030 as different states implement different pieces on different timelines, and the math the plan is pricing against keeps moving with them.

OBBBA’s Medicaid cuts are phasing in across work requirements, eligibility verification redeterminations, provider payment changes, state rate-setting cycles, RFP timing, and competitive dynamics in Dual-Eligible Special Needs Plans (D-SNPs). None of those tracks share a calendar. Work requirements are coming online in some states in 2026 and others in 2028. Eligibility verification systems are being rebuilt in states that have not yet implemented the redetermination cadence. State-level rate filings going in this year are pricing against federal payment assumptions that may shift before the filings get approved. By the time a plan’s strategy team finishes modeling what one state’s implementation means for the Medicaid line, two other states have moved.

Inside the plan, the work each other collision required already has to be redone. Capital reserves modeled during Q1 annual planning against a Medicaid rate assumption will be remodeled during the spring mid-year reforecast as Q1 results post and additional states implement payment changes, then re-run again during Q3 strategy refresh, with different inputs every cycle. Provider network economics renegotiated this quarter with a hospital system will be re-priced next quarter when an OBBBA-driven payment change hits the same system on the Medicaid side, with the system already aware that the assumptions have shifted. Actuaries and compliance staff who would have rotated off the current RADV wave will rotate into OBBBA compliance work every ninety days as new state implementations generate new federal compliance reviews.

That is what the executive leadership team at every plan operating across these lines is solving for in H2. Four collisions, one company, one set of leadership decisions remade quarter after quarter against a Medicaid baseline that will not stop moving through 2030.

Final Thought

H1 2026 hit nearly every line of business a health plan operates, and the headlines understated the cross-line picture. Four pressures are landing on one finance team, one provider contracting team, one specialist bench, and one leadership group at the same time, with a Medicaid baseline that will not stop resetting through 2030. Cross-line decisions are made by one CEO, one CFO, and one strategy-planning process, and every decision is constrained by the other three pressures working through the same group.

The next ninety days run through Q2 earnings posting in late July and August, the mid-year strategy reviews that follow, and the Q3 reforecasts that lock the 2027 capital posture. These are the cycles where H1 absorption becomes 2027 and 2028 operating decisions. Strategy work that has been sitting in committee since Q1 either gets approved or shelved, and what gets shelved signals where the company chooses to absorb pressure and where it chooses to defer. Audit deadlines will keep absorbing the actuaries and compliance staff every other line also needs, which means the second-half decisions on MA, ACA, and Group get made by a leadership team with less specialist support than it had when the year started.

What to read in H2 is how the plan underneath manages four pressures that remake each other every quarter, against a Medicaid baseline that does not stop moving through 2030. That is what your buyer, your portfolio company’s customer, or your client is solving for right now.

If you are working through what this picture means for your positioning, strategy, or portfolio, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies on exactly this kind of question. Get in touch.

Thanks for reading.

Here’s to upward growth,

Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

🎁 Unlocked: This post includes the full deep dive
Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

Most people who aren't elbows-deep in CMS regulation cycles have never heard of the Medicare Payment Advisory Commission (MedPAC). They should. MedPAC is one of the few sources of analysis that consistently shapes what the Centers for Medicare and Medicaid Services (CMS) does next.

Congress chartered MedPAC in 1997 as an independent advisory body, and twice a year, in March and June, the Commission publishes a report to Congress with formal recommendations on Medicare policy. The report is the closest thing the program has to a neutral technical read on what's working and what isn't.

While the recommendations are not binding, they tend to be adopted at a higher rate than those of most advisory bodies. The site-neutral payment policy, which is reshaping outpatient hospital procurement right now, traces directly back to MedPAC. In fact, the current Medicare Advantage (MA) coding intensity adjustment exists because MedPAC pushed for it for a decade before Congress required it.

The June 2026 report dropped this past Monday. Three findings inside it should change how anyone selling into health plans (or backing the companies that do), thinks about who’s buying inside MA plans for the rest of 2026 and into 2027.

In its June 2026 Report to Congress, the Commission attached $22 billion in higher-than-justified MA payments in 2026 to coding intensity alone. It documented $23.7 billion in improper MA payments for fiscal year 2025. And the same report endorsed a federal role for technology in fixing Medicare enrollment, in the same chapter that flagged the broker channel as part of the problem the technology is meant to solve.

The health plan CFOs I talk to do not need MedPAC to tell them coding intensity is a margin issue, prior authorization is a political issue, or member acquisition costs are out of control. But what they do need is the dollar figures cited back to them by their boards, compliance teams, and actuaries, which is now happening for the rest of the bid review cycle.

For readers of this newsletter, this means each MedPAC finding will change how health plans evaluate vendors over the next 18 months. Recognizing which finding falls within your category and which plans are most exposed to it is what separates the vendors who adjust their positioning this quarter from those who get filtered out of 2027 procurement decisions without knowing why.

The MA Plans Capturing the $22 Billion and the Ones Leaving It on the Table

MedPAC’s June report estimates that the federal government will overpay MA plans by $22 billion in 2026 from coding intensity alone. The required coding intensity adjustment cuts MA risk scores by 5.9 percent (the statutory minimum), but the actual coding intensity gap between MA and traditional Medicare is closer to 10 percent. The four-point delta is the $22 billion.

The split underneath the average is the part of the Commission’s recent reporting that should have gotten more attention, as the headline and the operational reality are two different numbers.

By insurer count, the market is roughly split down the middle. About half of MA insurers code below the 5.9 percent adjustment minimum and get penalized by it. The other half code above the adjustment and retain net revenue from the gap. By enrollment, though, the split is quite lopsided. The half-coding above the adjustment covers 84 percent of MA enrollees because the upper-coding plans cluster in the nationals and the PE-backed regionals, where enrollment is concentrated. The other half covers 16 percent. The market is split 50/50 by plan count and 16/84 by member count, and the second number is the one you should be more aware of its implications.

The upper-coding half is concentrated in large nationals with mature risk adjustment operations and integrated provider assets, and in regional plans owned by private equity or backed by PE-style growth capital that have built risk adjustment into their operating models as the principal margin lever.

The lower-coding half is concentrated in mid-sized regional Blues with conservative compliance postures, provider-sponsored plans whose physician networks resist the documentation workflow burden, dual-eligible-heavy plans whose populations are clinically complex but documented unevenly, and newer entrants who built their networks faster than they built their risk adjustment infrastructure.

So, half of MA plans are coding above the CMS intensity adjustment, and the other half are coding below it. The Inovalon and Harvard study MedPAC cited found that MA enrollees use 18 to 22 percent fewer services than comparable fee-for-service (FFS) Medicare beneficiaries, with the variance concentrated in plans that document chronic conditions less aggressively, rather than in plans gaming the system. Plans that document chronic conditions aggressively end up coding above the federal floor. Plans that do not end up below it.

The distribution is due to the coding intensity gap, not primarily to fraud. It is about documentation completeness, encounter data submission discipline, clinical workflow integration with risk adjustment, and the operational maturity of the chart review and member outreach functions.

What Compliant Capture Actually Means in 2026

Compliant capture means the process of pulling documented but uncoded clinical complexity from a member's record into the risk adjustment submission. It is legal, expected, and aligned with how CMS designed the program. Plans submitting hierarchical condition category (HCC) codes that reflect conditions clinicians have documented and treated are doing the work the payment system asks them to do. (HCC codes are the diagnosis groupings CMS uses to set risk-adjusted payment per member.) The work of submitting HCCs that are not supported by documentation, or that are based on chart reviews that pulled diagnoses providers had not validated, is the work the Department of Justice and the Office of Inspector General (OIG) have been recovering against. The split in MedPAC's data is between plans that have built mature, compliant capture and plans that have not. It is not a matter of honest plans versus dishonest plans.

That line matters more right now than at any point in the program’s history, because the federal enforcement posture has shifted hard.

The OIG published its first MA-specific compliance program guidance in twenty-six years in February. The Department of Justice recovered $6.8 billion in False Claims Act settlements in fiscal year 2025, with MA risk adjustment named as a top enforcement priority. Elevance booked a $935 million risk adjustment accrual in early May, which triggered every other publicly traded plan to run an internal audit pass against the same exposure. Risk Adjustment Data Validation (RADV) audits are now expanding, and CMS has announced it will apply extrapolation to recover overpayments at scale.

Each of those facts has been in the trade press separately. MedPAC’s report consolidated them into a single document, attached the $22 billion figure, and put it before Congress in the same week the bid cycle was closing.

High-Coding Plans and Low-Coding Plans Are Buying Different Things Now

A plan in the upper-coding half is no longer making risk adjustment vendor decisions with the same internal stakeholders it had eighteen months ago. Compliance, legal, and the chief financial officer are now sitting at the table. The question those teams are asking is not how much more capture can you produce. It is whether the work the vendor already did holds up. Will the documentation survive an extrapolation-based audit? Will it withstand DOJ scrutiny? Does the chart review methodology align with what the OIG flagged as low risk in the February guidance? Do the contract terms put the audit liability on the vendor, or leave it sitting with the plan? Vendors who built their pitch around capture volume as the headline are walking into those conversations answering questions they did not prepare for, in front of stakeholders they did not previously sell to.

A plan in the lower-coding half is asking a different procurement question. Those plans are looking at the $22 billion figure and recognizing that their upper-coding competitors are being paid more per member by CMS for documenting the same kinds of patient complexity. The lower-coding plans are leaving compliant revenue uncaptured on their own membership, in a margin environment where every dollar of compliant capture matters more than ever. The growth, finance, and revenue cycle teams within those plans remain the decision-making authorities. Their internal political problem is that increasing coding intensity in 2026 will require doing so under the most aggressive federal enforcement posture in the program’s history. The procurement question becomes how to do the work compliantly at scale, with audit-defensible documentation built into the workflow from the start.

This is the next iteration of the regulatory squeeze that has been building since the OIG guidance landed in February and accelerated through the Q1 2026 payor earnings cycle. Every publicly traded plan that reported in April or May named margin discipline as the operating posture for the rest of the year. Risk adjustment is one of the largest single levers in the margin equation. MedPAC just made the upper and lower halves of the market visible at the same time the enforcement posture forced them to behave differently.

Risk adjustment is one of three dollar magnitudes that MedPAC applied to plan operations. The second was buried deeper in the report and got even less coverage.

Subscribe now

CMS Just Validated the Procurement Structure for AI Utilization Management

MedPAC's second number worth your attention is $23.7 billion in improper MA payments for fiscal year 2025. What CMS is already doing to recover that money is the part the trade press missed. The Commission’s chapter on Medicare payment operations walks through the Wasteful and Inappropriate Service Reduction (WISeR) Model, a Center for Medicare and Medicaid Innovation (CMMI) demonstration that launched in 2026. WISeR tests artificial intelligence (AI) and machine learning-based prior authorization in fee-for-service Medicare for high-volume services with established overutilization patterns, including cervical fusions, knee arthroscopy for osteoarthritis, and percutaneous vertebral augmentation. The model excludes inpatient stays, emergency services, and anything in which a delay could harm a patient.

CMS contracts with what it calls “participating data companies” (AI vendors, in commercial terms) to conduct medical reviews on flagged claims pre-payment. Vendors are paid a percentage of the expenditures avoided through appropriate care. The contract structure is essentially identical to the way MA plans have purchased utilization management services for the better part of two decades. The difference is that the agency itself is now the buyer, and the procurement vehicle is operating in fee-for-service Medicare under a federal demonstration.

The political weight of that procurement structure hasn’t been fully realized yet. The OIG’s 2018 report on MA prior authorization denials and its 2022 follow-up audit set in motion a decade of regulatory pressure on how plans had been operating in the category. The 2022 audit found MA plans denied prior authorization requests that met Medicare coverage rules 13 percent of the time. The Interoperability and Prior Authorization Final Rule (CMS-0057-F) went into effect on March 31st of this year and made prior authorization metrics publicly visible at the plan level for the first time in program history. WISeR is the agency taking the same direction of travel and inverting it. Instead of regulating how plans use prior authorization, the agency is contracting directly with AI vendors to run it itself, using a shared-savings structure that aligns vendors' economics with denial accuracy and clinical appropriateness.

Read in that sequence, WISeR matters less as a demonstration and more as a signal. The federal government is now buying AI-driven prior authorization under a shared-savings contract, and the language inside that contract makes the public health case for the work itself. That is what AI utilization management vendors had been waiting for through all of 2025, when the AI label carried headline risk and no federal customer existed to point to. Whether the demonstration will survive long-term is less known; however, the fact that the procurement validation now exists means vendors selling AI-driven UM to health plans can point to it tomorrow.

The commercial side of the UM market is moving in the same direction. Cigna placed eviCore on strategic review on April 30, with incoming CEO Brian Evanko explicitly framing the rationale as industry standardization and automation, making the asset a better fit elsewhere. eviCore is the largest pure-play utilization management asset in the commercial health insurance industry. The strategic review, in the broader context of Evanko’s portfolio rationalization, reads as a sales process with the buyer pool already in mind. Whoever buys eviCore (a strategic acquirer with adjacent utilization management capabilities, a private equity sponsor building a vertical, or a recapitalized standalone with a different growth model) will become the comp that resets multiples across the utilization management category for the next eighteen months.

The federal procurement validation and the commercial market repricing are happening simultaneously, and the MedPAC report quantified the established commercial precedent for both. The Commission cited KFF analysis showing 1.7 prior authorization requests per MA beneficiary in 2024 compared with 0.02 per FFS Medicare beneficiary, an 85-fold intensity differential between the two programs before WISeR even ran a claim. It also incorporated interviews with hospital representatives reporting 17 percent of inpatient claims initially denied by MA plans, with overturn rates on appeal of 60 to 80 percent. MA plan representatives pushed back during those same interviews, framing prior authorization as a tool to prevent inappropriate or wasteful care. Both readings are now on the record in a federal document, which means both can be cited in procurement conversations from whichever side of the table a vendor is selling.

For vendors selling AI-enabled utilization management or payment integrity into health plans, the ground has shifted. Through 2025, the AI label was a positioning liability, which is why so many vendors quietly buried it in their decks. They do not have to anymore. CMS just signed a federal contract for the work, and the language inside that contract makes the public health case for it. The reframe for the commercial pitch is to lead with clinical appropriateness, audit-defensible denial methodology, and shared-savings accountability. AI gets to be a how, not a what. The reason it matters is that health plans want to be able to defend their decision to buy the work in front of the same compliance teams now sitting at the risk adjustment table, and WISeR gives them the language to do so.

The third finding got its sharpest commentary forty-eight hours after the report dropped, when CMS itself responded to a related court case in a way that made the finding land harder.

Subscribe now

Why the June 17 CMS Memo Sharpened the Member Experience Pitch

The third MedPAC chapter carries the most direct implications for vendors selling into plans for member acquisition, retention, and experience. It is also the chapter most vendors will skip.

Medicare enrollment is genuinely hard. Beneficiaries face dozens of plan options, complicated coverage rules, and tradeoffs between MA and traditional Medicare that they often do not fully understand until they are living with the consequences. Decisions made during the initial enrollment period carry permanent financial implications, and most beneficiaries make them with little help. CMS funds the existing help, primarily through Plan Finder and the State Health Insurance Assistance Program (SHIP), but funding has not kept pace with MA enrollment growth. MedPAC put it directly in the report, writing that "there may be a need for additional updates to Plan Finder and greater support for SHIP, as well as an increased role for technology to help reduce the complexity of the choices that beneficiaries face."

That single sentence is the federal endorsement of the member experience technology category as a policy answer to enrollment complexity. Vendors selling decision-support tools, digital member onboarding, clinically informed enrollment guidance, supervised broker enablement, and plan comparison engines now have a federal advisory body citation they did not have before. The procurement justification shifts. A pitch that previously had to compete on “we help your members shop better” can now compete on “we help your members shop in the way the Commission advising Congress says they should be shopping.” The difference matters more in front of a chief financial officer or chief compliance officer than in front of the member experience team, because the citation moves the conversation from elective spend to advisable spend.

The same chapter creates the headwind on the opposite end of the same workflow. MedPAC named MA marketing growth and Third-Party Marketing Organizations (TPMOs) as contributors to beneficiary confusion and specifically called out insurance agent compensation. CMS caps initial enrollment commissions but does not cap supplemental bonuses, and the Commission flagged concerns that agents may be financially incentivized to steer beneficiary decisions toward certain plans through uncapped bonus payments. The chapter does not propose a specific rule change. It does signal that the next round of marketing rule tightening is coming, and the political risk sits on the unsupervised side of the channel, which has been the direction of travel since the TPMO rule changes in 2023.

And on June 17, CMS issued an updated guidance memo on the 2027 Quality Bonus Payment ratings, following the May Clover v. HHS ruling. CMS recalculated 2026 Star Ratings on a "better of" basis, meaning a contract keeps the higher of its original rating or the recalculated rating, with no plan exposed to a downgrade. The narrowness of what the agency conceded matters more than the recalculation itself. CMS removed the measures the court ruled it lacked authority to collect, but kept the measures the court flagged for rulemaking deficiencies. CMS has until late July to file its notice of appeal. The recalculation is structured to accommodate the court order without conceding the legal grounds underlying the program.

Read against the MedPAC endorsement of member experience technology, the agency's narrow Clover compliance reshapes one piece of the vendor pitch. Member experience vendors whose ROI math is built mainly on Stars uplift are now selling into a procurement environment where the regulatory citation underneath that math is legally contested. A plan CFO evaluating a member experience pitch in Q3 2026 cannot get a confident read from their own legal team or actuary on what the Stars architecture will look like in 2027 or 2028. CMS has not yet filed its appeal, but is expected to before the late July deadline. If the Eleventh Circuit eventually hears the case, it could overturn the ruling, narrow it, or affirm it in part. CMS could also pursue accelerated rulemaking on the procedural finding to cure the defect identified by the court. Congress could intervene. Each path produces a different Stars architecture, and none is predictable enough for a CFO to underwrite a vendor relationship priced solely on Stars uplift.

The move for member experience vendors is to reframe the ROI conversation around outcomes that hold regardless of how the Stars architecture resolves. Member retention. Friction reduction in the enrollment workflow. Gap closure that maps to clinical and operational value independent of measure specifications. Risk adjustment data quality that improves through better member engagement. Cost-of-care reductions tied to earlier intervention. Each of those holds up in front of a CFO regardless of how the Clover litigation resolves. Stars uplift becomes the bonus on top, not the headline.

The same dynamic hit equity-focused vendor categories after the CY 2027 Final Rule’s health equity rollback, when plans serving dually-eligible populations still needed the work, but the regulatory citation under the pitch went away. The procurement conversation shifted from “you have to” to “you choose to.” Choosing to requires a stronger ROI case than a regulatory citation ever did, and the vendors who already had that ROI case kept selling. The vendors who had built the pitch on the citation lost their footing for two or three quarters. The member experience category is now in that same transition, accelerated by the timing of the agency’s Clover response.

The CFO Filter Is Now Folding the Three MedPAC Findings Into the Same Question

The three findings are located in three different places within the plan's operating model. They share one operational consequence that ties them together.

The risk adjustment vendor conversation now includes compliance, legal, and the chief financial officer. The utilization management vendor conversation now includes the same compliance function, which is weighing in on risk adjustment vendor selection. The member experience vendor conversation now includes the chief financial officer asking whether the ROI math survives litigation the plan’s own legal counsel cannot predict. The common pattern across all three is that the procurement decision authority inside the plan has migrated up and across, away from the line-of-business owner who used to be your champion.

The CFO filter has been doing this for a while. I wrote about it last fall when the financial discipline shift was first making vendor renewal conversations look different. The pattern keeps showing up because the underlying pressure continues to compound. The CFO filter started tightening in 2024, accelerated during the Q1 2026 earnings cycle, and is now incorporating MedPAC’s three findings as additional lenses within the same filter. Each new lens makes the filter finer. Each new lens raises the procurement bar. Each new lens means the champion you have in the plan is bringing your pitch to a wider set of internal stakeholders than they did a year ago.

The practical implication is that your next plan conversation is one your champion is preparing to defend in front of a wider audience. The work this quarter is making your champion’s defense easier. That means the deck answers the compliance question before compliance asks it. The ROI model survives the CFO’s stress test before the CFO runs it. The audit liability terms are written in language that legal will not need to rewrite. The clinical and operational outcomes are documented in a way that holds regardless of which specific federal rule survives or evolves over the next eighteen months.

A vendor who has done that work before the Q3 conversation gives their champion something to defend with. Without it, the champion absorbs harder questions on the vendor's behalf, from a wider set of people than were asking them six months ago.

Subscribe now

Final Thought

None of the three findings in MedPAC’s June report requires Congressional action to reshape what plans buy. The regulatory architecture underneath each one could still move. The Clover ruling could be narrowed or overturned. The WISeR Model could end the way several CMMI demonstrations before it have ended. The coding-intensity adjustment could be re-engineered by a future CMS administrator with a different posture. None of that changes what is in front of you this quarter.

The operating question is which buyer is making the procurement decision inside each plan in the second half of 2026, and whether your pitch is built for the version of that plan they are running now or the version they were running eighteen months ago. MedPAC grouped the buyers, attached the numbers, and put the grouping in a federal document that boards and chief financial officers will be reading for the rest of the summer. The work this quarter is to read the grouping, find your buyer in it, and rebuild around what that buyer is being asked to defend.

If you want to think through what any of this means for your positioning or your next renewal conversation, reach out.

Thanks for reading.

Here’s to upward growth,
Ryan Peterson

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Every health tech company whose product touches a Medicare Advantage member is now contributing to its health plan customers’ Star Ratings. Most don’t know it yet.

Here is what one of those touchpoints looks like. A nurse practitioner sits at Bob’s kitchen table in suburban Tampa. Bob is 74. She has 45 minutes to complete a Health Risk Assessment (HRA), document hierarchical condition categories, and close two care gaps. She is kind, professional, and efficient. To Bob, she is also one of the only people from “the health plan” he has met all year.

Two years from now, when the Centers for Medicare & Medicaid Services (CMS) Health Outcomes Survey (HOS) arrives in Bob’s mailbox and asks whether his physical and mental health is improving, staying the same, or getting worse, that 45 minutes will sit somewhere in his memory, whether Bob can name the company that sent her or not.

The risk adjustment vendor that sent her doesn’t lead with Stars in any pitch. The touchpoint they just created is now an input into one of the fastest-growing measure categories in the 2027 Star Ratings calculation.

In the CY 2027 Final Rule (published April 2, 2026), CMS tripled the weight of two HOS measures (Improving or Maintaining Physical Health and Improving or Maintaining Mental Health) starting with the 2027 Star Ratings. By 2029, HOS, plus the Consumer Assessment of Healthcare Providers and Systems (CAHPS), will account for close to 40% of the total Star Ratings weight. The measures CMS removed are ones plans could fix with internal operations. The measures CMS elevated are ones plans can only move by reshaping the member’s actual experience over two years.

That experience is almost entirely a portfolio of vendor-delivered moments held together by an ID card. Whoever creates one of those moments owns a slice of what the member will remember about their plan when CMS asks. Your share of member memory just got more expensive to lose and more valuable to win.

You may have read the CY 2027 Final Rule, seen “Star Ratings,” and filed it away as someone else’s problem. It is now your problem.

Subscribe now

What CMS Just Did and Why Most Vendors Filed It Under “Not My Problem”

Two things in the April rule look small individually and significant together. CMS removed 11 administrative and topped-out measures from Star Ratings, and CMS elevated the weight of the remaining survey-based measures. The directional message is a shift of relative weight toward survey-based and clinical outcome categories.

For HOS specifically, the two functional-status measures are now triple-weighted. Plans have three times as much riding on whether members report improving or maintaining their physical and mental health over the two-year survey cycle.

The broader pattern is consistent: CMS continues to refine Star Ratings by removing process-oriented measures and reinforcing the categories that capture how members actually experience care. That direction has been visible in CMS signaling for several cycles. The 2027 rule is the version that finally puts real Quality Bonus Payment (QBP) dollars behind it. Total QBP spending will reach at least $12.7 billion in 2025, more than quadruple the 2015 number, with the average plan earning roughly $400 to $500 per enrollee per year in bonus revenue. Every measure reweighting moves real money across plan P&Ls and across vendor budgets downstream.

Most health tech vendors read this rule, scanned for the line item that affects their product, found nothing, and closed the tab. Most risk adjustment vendors don’t lead with Stars. And most prior auth vendors don’t either. Care management vendors increasingly do, but mostly through the side door of HEDIS quality measures. Engagement platforms talk about member experience without connecting it to a specific Star Ratings measure with a dollar value attached.

That filing was a mistake. The measures CMS elevated do not sit inside any vendor’s product. They sit inside the member. The member is in regular contact with vendor-delivered touchpoints, whether the vendor recognizes it or not.

HOS Doesn’t Measure What You Think It Measures

To understand why this matters for vendors who never thought of themselves as Stars-relevant, start with what HOS actually asks.

HOS is a longitudinal survey. CMS samples roughly 1,200 members per MA contract at baseline and resurveys the same members two years later. Has your physical health improved, stayed the same, or worsened? Has your mental health improved, stayed the same, or worsened? Are you able to do the things you used to do? Do you have help when you need it?

The detailed survey methodology and current measure documentation are available on the CMS HOS site. Three things about HOS matter for the rest of this article.

First, members are not asked about specific vendor encounters. HOS does not ask whether they liked their care manager, their meal delivery, their MSK program, or their prior auth experience. It asks about the overall functional trajectory over a two-year period.

Second, samples are small, and the data is anonymized at the plan level. No vendor can credibly point at a Star Ratings movement and say “we did that.” (Anyone selling that claim is selling something else…)

Third, the cohort is already in the field. CMS HOS Cohort 29 baseline samples are being collected through 2026, with the two-year follow-up landing in 2028 to feed the 2029 Star Ratings. Plans have roughly 16 months to influence the experience of members who have already been surveyed. That timing also explains why plans are tightening discipline across the entire vendor portfolio in 2026 and not just on Stars-specific programs. With margins compressing into 2027, plans are evaluating total value across every vendor relationship: product ROI, implementation effort, proactive partnership, and the member experience signature each vendor leaves behind. HOS is one input to a broader review already underway.

One boundary worth naming: providers carry the largest share of the clinical arc HOS measures. The PCP, the specialist, and the hospital drive most of whether the member is getting healthier. Vendors are not the whole story. But what vendors do carry are many of the recurring, memorable non-clinical interactions inside the two-year arc the survey is asking about, and that share is more than large enough to move HOS at the margin.

That is the link vendors miss. HOS isn't measuring your product. It's measuring what happened to your health plan customer's members over two years. In the survey's eyes, your product and the member's experience are the same thing. Outside of their doctor, what members remember most is the human who called them back, the meals that showed up, and the app that worked. Often, those are vendors.

Four Kinds of Member Memory, and Why Vendors Create Most of Them

To understand which vendors are about to matter more to plan buyers, start with what members actually carry from one year to the next.

Members do not remember formulary decisions, claim adjudication, the PBM contract, or network adequacy. They remember a small number of concrete experiences across two years, and those experiences fall into four categories. Each category has its own vendor types, its own upside, and its own downside.

High-emotional-bandwidth moments. These are the encounters that happen when the member is at a hard point. The behavioral health intake call. The maternity navigator. The MSK program after the back gives out. The oncology care coordinator. The care manager who answers the phone after a hospital discharge. These touchpoints carry the most memory per minute spent, because they happen when the member needs help and is paying attention. A care manager who calls back when she said she would becomes the answer to “is your plan helping you” for two years. A behavioral health vendor who can’t get the member into a therapist appointment for six weeks becomes the answer, too.

High-frequency ambient moments. Member apps, portals, prior authorization status pages, and benefit explainers each create small interactions, but the cumulative imprint is large. Members rarely remember individual sessions. They remember whether things worked or whether things were broken. Vendors in these categories own the ambient feel of the plan relationship. A clunky app does not create a single bad memory, but it can create a steady, background sense that the plan is not put together.

Tangible benefit moments. Food delivery after a hospital discharge. Companion care visits for isolated members. Transportation. OTC. Fitness benefits. These touchpoints were originally bought as enrollment and retention plays. They are increasingly being bought as Stars plays too, because they are designed to be memorable and to leave the member with a positive answer when CMS asks. The strategic question for vendors in this category has shifted. Plans used to ask how many members used the benefit. They are starting to ask what the member said about it three months later.

Transactional moments that help or hurt. This is the category most vendors don’t recognize as a member experience moment. Risk adjustment home visits. HRA documentation. Prior auth decisions. Payment integrity letters. Coordination of benefits outreach. None of these are sold as member experience programs. All of them are member experience moments. A fast, well-explained prior auth decision (even when the answer is no) leaves a different memory than a slow, opaque one. A home visit that feels like care leaves a different memory than one that feels like an audit. Vendors in this category have been measuring themselves against operational metrics such as turnaround time and capture rate; health plans are now starting to measure them by the impression they leave behind.

Within these four categories lies a problem most plans have known about for years, and most vendors have missed. Most vendor-delivered member experiences never get connected to the health plan brand. The member remembers the meal company that showed up after a hospital discharge, not the plan that paid for it. The member remembers the companion who came over on Thursdays, the gym they used, the ride that took them to dialysis, or the nurse who arrived for the in-home visit. The plan paid for all of it. The member does not always know that. Commonwealth Fund data shows nine in ten MA enrollees say supplemental benefits are important, but only seven in ten report using them. A meaningful share of the seven who do use them never trace the experience back to the plan that funded it. That disconnect is an HOS leak. Plans are paying for experiences they are not getting survey credit for.

The way members actually behave throughout the plan year has long been an underappreciated factor in MA economics. The CY 2027 rule put a dollar value on it.

Vendors who help plans close that leak will start winning conversations they used to lose on price. That means co-branded delivery, plan-attributed follow-up surveys, member welcome packaging that includes the plan’s name, and program communications that thread plan attribution through the experience.

Subscribe now

What Vendors Can and Can’t Credibly Claim About HOS

Winning those conversations starts with what you say next, and most vendor sales teams are about to say the wrong thing. Your sales team will want to add a Stars claim to the pitch. The instinct is right; the standard execution is what gets vendors cut from consideration.

You cannot prove HOS attribution. The survey samples too few members per contract, the data is anonymized, the questions don’t reference your product, and the two-year cycle puts any movement downstream of dozens of variables.

What you can do is build the evidence base plans are starting to ask for. Not satisfaction scores from the moment of service. Peer-reviewed work on NPS in healthcare has shown that single-item, point-of-service measures have well-documented limitations for assessing the kind of complex, longitudinal patient experience plans actually care about. What plans want is member sentiment data months later, longitudinal experience tracking through the program, and brand attribution data showing whether the member connects the experience to the plan or to your company.

At minimum, the shape of credible evidence looks like three things. A short member sentiment instrument administered at 90 days and again at 12 months after a member’s first interaction with your program. A brand attribution question that tests whether the member can name your customer’s plan when asked who provides the service. And a sample size large enough that the plan’s Stars leader can defend the data in an internal portfolio review. The instrument design, cadence, and report-out structure are custom work for each vendor and each plan customer. The starting point is committing to measure these things at all, which is more than most vendors do today.

What the Stars leader hears as marketing: “Our program lifts member experience and that lifts Stars.”

What the Stars leader hears as evidence: “Here is what members say about your plan three months after we engage them, here is how those responses changed over twelve months, and here is the percentage who connect the experience back to your plan brand.”

The second version is the kind of evidence a Stars leader can take into a portfolio review.

We’ve covered why every vendor that touches a Medicare Advantage member is now in the Star Ratings math, what HOS actually measures (and what it doesn’t), the four categories of member memory your product is creating right now, and what separates a credible Stars story from a pitch that plans will stop believing.

Below is the operational layer beneath it all: the four shifts reshaping how plans evaluate vendors, the discovery question that opens unbudgeted Stars money (and what to do with the answer), the case-study evidence plans are starting to demand, and the three diligence questions investors should be asking.

Paid subscribers get this, plus 50+ frameworks, scripts, and deep dives built for health tech teams selling to health plans. One qualified conversation from these frameworks is worth more than a decade of subscription.

🔓 Upgrade to a paid subscription to keep reading.

Read more

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

🎁 Unlocked: This post includes the full deep dive

Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

A federal judge just threw twenty Medicare Advantage (MA) Star Ratings measures out of one health plan’s rating calculation. The order itself is narrow, but the reasoning behind it is not.

On May 27, 2026, Judge Lisa Godbey Wood of the Southern District of Georgia set aside Clover Health’s 2026 Star Rating and ordered the Centers for Medicare and Medicaid Services (CMS) to recalculate it. The court found that CMS lacked statutory authority to use ten of the measures at all, and that CMS had skipped the rulemaking process required to change the specifications on the other ten. The financial stakes for Clover alone, by Clover’s own accounting, are roughly 120 million dollars in quality bonus and related payments for a single plan year.

You have probably seen headlines like this before. SCAN, Elevance, UnitedHealthcare, and Humana have all been in court over their Star Ratings in the past two years. Some won, and some lost. CMS recalibrated, and most readers who don't live inside Stars moved on after a news cycle. Every prior case fought about the math. Clover fought about the foundation. The court agreed on the foundation.

That distinction is why Clover matters even if you don’t sell into Stars, don’t model Stars, and don’t have a regulatory affairs lead who reads Technical Notes for sport.

LinkedIn has been full of strong coverage since the ruling dropped. Jenn Kerfoot at DUOS has been pulling on the legal threads with two pieces worth reading, one on the structural difference between Clover and prior cases and a second on the potential circuit split forming between Judge Wood in Georgia and Judge Reed O’Connor in Texas after Humana filed a notice of supplemental authority on June 2. Melissa Smith of Newton Smith Group, Ana Handshuh of CAT5 Strategies, and Kevin Lamb of WilmerHale recently ran a webinar through RISE that walked through both the holdings and the operational response health plans are now mobilizing. And Jessica Assefa, Mick Twomey, and Phillip Collins of Press Ganey released a three-part video series modeling the financial impact across hundreds of contracts. All of them are worth your time, and all of them are doing the heavy lifting on the legal, operational, and analytical sides.

As for my take, I'll translate what happened, why Clover is a fundamentally different kind of case from every prior Star Ratings lawsuit, and what the ruling means for the vendor executive, investor, consultant, or plan leader who has to react to it. I am not a lawyer or a Stars calculation expert. I take complex regulatory events and turn them into practical reads for the people who have to operate through them.

You will leave with three things. A clean way to explain why Clover is structurally different from the prior cases without sounding like you read a hundred pages of court filings. A frame for how this ruling lands in the middle of the broader pressure environment that Medicare Advantage has been absorbing over the past eighteen months. And a three-zone framework for figuring out exactly where your company, your portfolio, or your client sits.

Subscribe now

Why Clover Is Different From the Court Cases That Came Before It

To understand why this ruling lands differently, start with the cases that came before it.

SCAN Health Plan sued CMS in 2024 over how the agency applied cut points and guardrails to its 2024 rating. Elevance Health filed a similar challenge in the District of Columbia, then again in Texas. UnitedHealthcare sued in the Eastern District of Texas in late 2024 over a single secret-shopper phone call that the plan said had been counted unfairly. Centene sued in the Eastern District of Missouri the same fall over a similar secret-shopper dispute and ended up with a 200 million dollar recalculation in its favor. Alignment Healthcare filed in the District of Columbia in January 2025, challenging the Tukey outlier rule and the role of CMS contractors, and won a partial recalculation in June. Humana lost a procedural fight in the Northern District of Texas in October 2025 and is now on appeal at the Fifth Circuit. Blue Cross Blue Shield plans from Massachusetts, Florida, and Louisiana have all been in court at various points. CareFirst is the latest, alleging roughly 32 million dollars in lost bonus payments tied to its 2026 calculation.

If you scanned these as a category, you saw “plan sues CMS over Star Ratings” headlines and moved on. That was a reasonable read at the time because, as a category, the earlier cases all asked variations of the same question:

Did CMS do the math right? Did the agency apply its own cut-point methodology in the right order? Did the Tukey outlier deletion run on time and apply to the correct contracts? Did the guardrail caps work the way the rules said they would? Did the secret-shopper call get counted fairly under the protocols CMS itself wrote?

When the plans won (and they did win some), the remedy was always the same shape. Recalculate this one plan’s rating for this one year using the right math. But the measures and the methodology stayed in place. The program's architecture kept running. CMS adjusted, the affected plans got their payments squared up, and the rest of the industry watched the news cycle pass.

Clover’s lawsuit raised two arguments the court ultimately agreed with, and the specifics explain why the legal theory has so much room to run. The first was that 10 of the measures in its 2026 rating were based on data that CMS had no statutory authority to use for Star Ratings. The Medicare Act states that the ratings shall be determined based on data collected under a specific quality improvement provision, which includes exactly three sources: the Healthcare Effectiveness Data and Information Set (HEDIS), the Health Outcomes Survey (HOS), and the Consumer Assessment of Healthcare Providers and Systems (CAHPS). Clover argued, and Judge Wood agreed, that ten of its measures were pulled from data outside that pipeline: Prescription Drug Event (PDE) data that CMS gathers for Part D payment reconciliation, call center monitoring data that CMS collects itself, and Independent Review Entity (IRE) contractor data on appeals.

Clover’s second argument was that CMS changes the specifications on a separate set of ten measures every year through Technical Notes and other sub-regulatory guidance, but the Medicare Act requires formal notice-and-comment rulemaking whenever CMS establishes or changes a substantive legal standard governing payment for services. Star Ratings drive Quality Bonus Payments (QBPs) and rebate percentages. QBPs and rebate percentages are payments for services. The measure specifications themselves, the court found, are therefore substantive legal standards that require the kind of rulemaking CMS never did. That second holding is the one with the longer reach. The first could, in theory, be cured if Congress amended the statute to authorize the data sources CMS has been using. The second cannot be cured that way. It can only be cured by CMS actually running its measure specifications through the same kind of public rulemaking it uses for an annual Final Rule. The notice-and-comment requirement, if applied broadly, touches almost every measure in the Stars program, because almost every measure has had its specifications adjusted through Technical Notes at some point.

Clover is a structural challenge, whereas the prior cases were procedural. The prior plaintiffs asked whether CMS followed its own rules. Clover asked whether CMS had the statutory authority to write those rules in the first place. The judge ordered a narrow recalculation for one plan's 2026 rating, but the reasoning is portable. Any plan whose rating turns on PDE data, IRE data, monitoring data, or specifications that moved through Technical Notes rather than rulemaking can now make the same argument Clover made and point at the same opinion.

This is the throughline Jenn Kerfoot has been pulling on across her writing, and it traces back to a much bigger shift. In 2024, the Supreme Court overturned the Chevron doctrine in Loper Bright Enterprises v. Raimondo, ending forty years of judicial deference to federal agencies’ own statutory interpretations. For the four decades before that, when CMS said “this is what the Medicare Act lets us do,” courts mostly took the agency’s word for it under what was called Chevron deference. Loper Bright told judges to read the statute themselves and apply their own independent judgment. Health Affairs has a strong primer on what that shift means for healthcare regulation if you want a deeper read.

Judge Wood read the statute herself, and she came out somewhere CMS did not. Judge Reed O’Connor in the Northern District of Texas read the same provision in the Humana case last October and came out closer to CMS, which is exactly why Humana stapled the Clover ruling to its Fifth Circuit appeal on June 2. Two federal judges, same words, opposite answers, one potential circuit split forming in real time. The end of Chevron was supposed to produce exactly this. It is producing exactly this.

A few caveats worth holding onto. One district court ruling is not binding precedent outside the Southern District of Georgia. CMS has sixty days from the May 27 ruling to file a notice of appeal and will almost certainly do so. The Eleventh Circuit will rule sometime in the next twelve to twenty-four months. The Fifth Circuit will rule on Humana on its own timeline. CMS may pursue accelerated rulemaking to address the procedural finding before any appeal resolves. Congress could step in with a statutory fix, though that gets harder in an election year. The ruling could be narrowed on appeal, affirmed in full, or split with parts upheld and parts reversed.

Eighteen Months of MA Headwinds, and Clover Is Just the Latest

Every plan you sell to, invest in, or advise has been absorbing pressure from multiple directions for the past eighteen months. Clover is the latest pulse in a pattern that has continued to create headwinds for the MA market.

Risk Adjustment Data Validation (RADV) is the most obvious shift. The Department of Justice (DOJ) recovered 6.8 billion dollars through False Claims Act cases in fiscal year 2025, with risk adjustment as a top enforcement priority. The Office of Inspector General (OIG) released its first MA-specific compliance guidance since 1999 in February 2026, the first time in twenty-six years the office has issued targeted guidance for the program. RADV audit activity has been accelerating. Risk adjustment now sits at the executive table inside every plan.

Prior authorization transparency rules went into effect at the same time. As of March 31, 2026, under the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F), every plan in the country had to publicly post its prior auth metrics, including denial rates, turnaround times, and appeals outcomes. I wrote a full breakdown of what those numbers reveal across the major payors, but the short version is that the variation is significant and the pressure is no longer about whether plans hit the deadline. It is about what their numbers say to regulators, providers, and competitors, all of whom can now see them. Compliance and operations teams that thought they had finished the prior auth work in March are now being called on the numbers in June.

Market geography has been shifting at the same time. National plans have exited counties, exited entire states, and rationalized product portfolios over the last two enrollment cycles. KFF analysis on the 2026 plan year found supplemental benefits contracting across the board: over-the-counter (OTC) allowances dropped from 73 percent to 66 percent of plans, meals from 65 percent to 57 percent, and transportation from 30 percent to 24 percent. Roughly 1.8 million members were forced to choose new plans heading into 2026. The health plan you knew two years ago is not the plan you are talking to today, and the membership and benefit picture they are managing is different, too.

Margin discipline has become the public posture across every publicly traded plan. UnitedHealth Group, Elevance, Molina, Centene, and CVS all reported Q1 2026 earnings within a few weeks of each other, and all five chose to defend margin over chasing enrollment. Humana named the three percent sustainable margin target by 2028 as Priority One. Cigna installed an actuary as its new chief executive. Every plan’s actuarial team is running the bid build with more discipline than they had eighteen months ago, and the budget conversation vendors and partners are walking into is harder than it was.

Then came the Elevance $ 935 million risk adjustment accrual in early May, triggered by a CMS notice from late February regarding historical risk adjustment data submission practices. Every plan in the country is now running its own audit pass on its historical submissions before regulators come asking. The whole industry reorganized around it. Compliance and legal teams got a meaningful authority bump in the procurement chain that is unlikely to be reversed soon.

The CY 2027 Final Rule landed in April with the largest Stars overhaul in a decade. CMS removed 11 measures, added 1 (Depression Screening and Follow-Up), and dismantled 4 sets of health equity requirements in a single document. The Rate Announcement that came out alongside it was friendlier than the preliminary numbers suggested in January, but the risk model freeze that produced the friendlier number is temporary. CMS effectively told plans they have one more cycle of relief, and then the math gets harder again.

None of this is happening just to Medicare Advantage. The One Big Beautiful Bill Act (OBBBA) cut nearly a trillion dollars from Medicaid, and most national plans run Medicaid and Affordable Care Act (ACA) lines of business alongside MA. When plans cut capital in response to Medicaid losses, the MA-side budget shrinks too. Pressure on one line of business at a multi-line plan is pressure on the others. The senior team at the plan you are talking to is splitting its attention across all of it, and the share left over for any new vendor conversation has gotten smaller.

The Clover decision does not arrive in a stable environment; rather, it arrives atop an accumulation. The attention, the budget, and the procurement bandwidth at the plan you are trying to sell to, invest in, or advise have already been consumed by RADV, by prior auth transparency, by market contraction, by margin discipline, by the Elevance accrual, by Final Rule changes, by Medicaid cuts. Clover is the next thing, and it is the first in the pattern to ask whether the underlying machinery of one of the program’s biggest revenue levers was ever legally built in the first place.

When a system this layered absorbs this much pressure this fast, the buyer changes. Not just the buyer’s mood. The buyer’s actual identity inside the plan.

More Functions Are Now Weighing in on Stars Decisions

For most of the last decade, if you were selling something that touched Stars, your champion at a health plan was most likely a Stars or Quality Improvement executive. That person owned the relationship, ran the internal business case, walked the contract through procurement, and signed off on implementation. The decision authority sat with them, and the supporting cast (legal, finance, compliance, actuarial) signed off on what the QI/Stars team brought forward.

Inside the plans now running their full response to Clover, this is no longer a Stars workplan topic. Legal, finance, actuarial, compliance, enterprise risk management, board governance, investor relations, and operations are all weighing in, and that broader involvement is likely to persist as long as Clover remains unresolved. Your existing champion at a plan is currently running scenario math on every contract and every open payment year, and the conversations they used to handle alone now involve more people. The procurement path for any vendor category that touches Stars goes through more reviewers than it did six months ago.

What this looks like depends on which side of the deal you sit on. Vendors need to help their existing champion brief upward to an audience that thinks in legal risk and financial exposure rather than measure performance. Investors should model a two- to four-quarter procurement freeze as the base case for portfolio companies with Stars-exposed revenue. Consultants have meaningful work helping health plan clients run cross-functional modeling exercises. And Providers in value-based and shared savings arrangements that tied to Stars performance should expect their plan counterparts to be in a unique contracting posture for the next few quarters.

This pattern is not isolated to Stars. McGuireWoods noted that the OIG’s first MA-specific compliance guidance in 26 years heightens scrutiny of investors, vendors, and providers contracting with MA plans. Prior authorization metrics are now visible to general counsel offices that did not previously consider them. Supplemental benefit verification requirements added a compliance layer to what used to be a benefits design conversation. The slowdown vendors are feeling inside plans is the cumulative effect of these authority shifts happening at once. Clover is the most recent and visible one.

The deeper pattern is the same one I wrote about after the Elevance accrual hit and after the Final Rule landed. Compliance and finance are weighing in on procurement decisions in ways they were not eighteen months ago. The CFO filter has gotten tighter. There is more legal involvement than there used to be. Clover added to both.

Three Zones of Exposure to the Clover Ruling

The most useful exercise to run this week, whether you sell to plans, invest in companies that do, or advise either side, is figuring out which zone of exposure you actually sit in.

The first zone is direct exposure. Your value proposition is explicitly tied to one of the twenty measures Clover challenged, or to the measure-specification machinery the court found procedurally invalid. Medication adherence vendors on the Part D side. Statin use in persons with diabetes. Call center quality vendors (foreign language, TTY availability). Appeals timeliness. Care for older adults. Several of the CAHPS-driven Part D consumer measures. If your last health plan quarterly business review (QBR) included a slide titled something like “our impact on adherence” or “our improvement in call center metrics,” you are in zone one. Your buyer’s question in the next conversation will not be whether you think the measure will survive. They know you cannot answer that. Their question will be whether your value still holds if the measure changes or disappears. Walk in with three answers ready: what your value looks like if the measure stays, if it falls out, and if it comes back through rulemaking with different specifications. The vendors having that conversation right now are getting different treatment than the ones brushing past it.

The second zone is adjacent exposure. Your measure is not in the Clover suit, but it shares the same statutory or procedural vulnerability the court flagged. The Press Ganey video series walks through this in detail across Part 1, Part 2, and Part 3, showing how the legal reasoning, if extended, reaches measures that ride on PDE data, on CMS-collected monitoring data, on IRE contractor data, and on parts of CAHPS the court called out specifically. And if your measure was added or modified through Technical Notes rather than codified rulemaking, the procedural holding the court reached on the second set of ten could apply to you, even though Clover did not name your specific measure. The honest move in zone two is acknowledging the adjacency directly. Better that the buyer hears it from you than from a board member sending them a Becker’s article.

The third zone is indirect exposure. Your value proposition has nothing to do with the specific measures or the specifications. Care navigation. Member engagement. Population health platforms outside the measure machinery. Social determinants of health (SDOH) solutions. Broader analytics. Most provider-facing tools. The substance of what you do is unaffected on the merits. The operating environment around your buyer is not. Procurement freezes can last two to four quarters, champions get pulled into cross-functional response teams, and pipeline forecasts that looked clean in March stop moving by July. The forces inside the plan that slow your deals down are the same forces that just got compounded.

If your sales pitch leans on “CMS requires plans to do this” as a shortcut for closing, that shortcut got a question mark next to it. The clinical, operational, and competitive reasons your work matters still hold. The regulatory citation does not carry the same weight it did three weeks ago because the buyer now has to ask whether the requirement will survive, which version will survive, and on what timeline.

The same dynamic hit the equity-focused vendor categories after the Final Rule’s health equity rollback. Plans serving dually eligible populations and plans competing on quality in markets with significant disparities still need that work. The conversation shifts from “you have to” to “you choose to,” and “you choose to” requires a much stronger return-on-investment (ROI) case than a regulatory citation ever did.

Walk through which zone you are in before your next substantive conversation, with a plan. Have an answer ready for the questions you are about to get asked.

Subscribe now

How to Operate While the Case Works Through the Courts

The companies that operate well through this kind of uncertainty share three habits: scenario fluency, a defensible ROI case, and operating without freezing. None of them requires you to be a lawyer or a Stars expert. (If you want the underlying theory, here is a foundational framework on strategy under uncertainty worth reading.)

Your buyer does not want a vendor or partner who pretends Clover did not happen. They also do not want one who leads with panic. The valuable posture is being able to engage on the substance of what the ruling does and does not change for the work you do together, without overclaiming expertise you do not have. If a plan asks what happens to your ROI when the measure goes away, give them the numbers by running some scenarios. The scenarios may be imperfect, but at least both sides are on the same page about the possibilities.

Regulatory citations were always shortcuts. They closed deals quickly because the buyer’s compliance team would push the work forward, whether the financials were tight or not. That shortcut is weakened, and in some categories it is gone. Clinical, operational, competitive, and member experience cases all still work; they just take longer to develop and require stronger evidence. The vendors who can stress-test their ROI at seventy percent of projected performance and still defend the math to a chief financial officer (CFO) are the ones who keep getting funded.

Procurement freezes happen. They do not last forever. The companies that come out the other side stronger are the ones that use the freeze period to deepen relationships, refine positioning, build the case studies that prove out the work, and avoid burning cash chasing deals that are not going to close in the current window. I wrote about this last winter when the broader market mood shifted into uncertainty, and the same playbook applies here. Discipline beats activity. Patience beats panic. Plans notice which vendors show up prepared and which ones show up panicking.

For investors, the litigation overhang on Stars-exposed assets is real, but it is not uniform. Companies in zone one need to be assessed on scenario math. Companies in zone three are unaffected by the ruling itself, but their buyers at the plan have less time and attention to give right now, which slows deals down. Diligence questions worth adding to your standard list: where each measure or capability falls across the three zones, the portfolio company’s exposure to procurement freeze, how the company is handling the question with existing customers, and what its plan-side relationships look like at the legal and finance level, rather than just the Stars team level.

For consultants and advisory firms, your plan clients need help thinking through this, whether they have asked yet or not. They are sitting in cross-functional working groups thinking through scenario math, vendor management exposure, and board communication, and not every plan is set up to do that work well in-house. There is room to be useful here without claiming legal expertise. The most concrete deliverable you can offer a plan client this quarter is a map of which existing plan vendor contracts have Stars-linked performance terms and which need to be revisited.

For health plan executives reading this, the cross-functional response your team is already running is the right starting point. The piece I would add is vendor contract exposure. The twenty measures in the Clover suit affect thousands of vendor contracts industry-wide, many of which include Stars-linked payment terms, performance guarantees, or shared-savings arrangements. Scenario modeling that stops at QBP impact and skips the contracts is only running half the exercise.

Final Thought

I wrote, when the CY 2027 Final Rule came out, that the agency’s throughline was “fewer rules, higher stakes, and a smaller set of requirements they fully intend to back up with enforcement.” That read held. The Elevance accrual was enforcement showing up. Clover is the other side of the same coin, a court showing up to ask whether the rules CMS has been enforcing were ever legally built.

The throughline underneath all of this is the end of Chevron deference. Loper Bright told judges to read statutes themselves rather than defer to the agencies enforcing them. That means judges sometimes reach different conclusions, which is exactly what Judge Wood and Judge O’Connor did with the same Medicare provision. That dynamic will produce more rulings, more uncertainty, and more opportunities for plans to challenge CMS in the years ahead.

Companies that operate well in this environment can sit with the uncertainty. They hold sharper ROI conversations when the regulatory citation no longer carries the close. Their champions inside health plans trust them enough to bring them into the wider conversation when legal, finance, compliance, and the board join it.

The legal theories at play in Clover, Loper Bright, and the Allina notice-and-comment requirement both cross programs. The same arguments could surface in Medicaid managed care, in Affordable Care Act (ACA) marketplace plans, in commercial quality programs that ride on federal data sources or specifications. Stars is just the first complex MA program to get hit with this. It will not be the last federal program where these theories show up.

If you are working through what this means for your positioning, your messaging, or your go-to-market strategy, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies on exactly this kind of question. We help companies build strategy around how health plans actually buy, operate, and make decisions, including in moments like this one when the rules under the program are themselves being challenged. Get in touch.

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

I’m in Chicago this week speaking on a panel about performance improvement in Medicare Advantage at the HEDIS Risk Stars conference. Prepping for it, I keep landing on the same observation: what vendors bring into health plan meetings is rarely what plans are actually evaluating them on. There’s a gap between vendor pitches and plan-buying behavior that is often overlooked, and it’s why many good programs from credible companies stall before they get a fair hearing.

The shorthand of the gap: vendors are pitching their results. Plans are evaluating their durability. Most pitches deliver on the first and underdeliver on the second, which is why even credible programs lose ground.

If you sell into health plans on Stars, the dynamics below will look familiar, whether for quality, risk adjustment, prior authorization, utilization management, care management (or anything else with a clinical or revenue outcome attached). You’ve probably lost a deal and blamed the pricing, the timing, or the competitor. The real explanation is usually somewhere else: an evaluation lens that the plan was running the whole time that your pitch wasn’t built for.

The Three Things Plans Are Calculating While You Pitch

Your plan champion is running three calculations while you pitch, and none of them are directly about your product. All three decide whether your deal advances long after the pitch ends.

Start with the money. Plans are managing tighter margins, Medical Loss Ratio (MLR) pressure amid rising medical cost trends, and the downstream effects of recent Centers for Medicare & Medicaid Services (CMS) rulings on rates, risk adjustment, and prior authorization. Every vendor relationship gets read through a CFO lens now. What does the program lift, what’s the revenue impact, what’s the administrative load, what’s the off-ramp if it doesn’t work? Vendors who can’t answer those four questions in the pitch are answering “no” on the plan’s behalf.

Then there’s the team itself. Plan quality, risk adjustment, clinical, and operations teams aren’t adding headcount. They’re inside a market that’s still tightening operations as margins compress, and every implementation has a full-time equivalent (FTE) cost the plan absorbs. Your pitch isn’t only competing against other vendors. It’s competing against the plan team’s own capacity, and a sharper pitch doesn’t win that fight. The way health plan teams score vendors has only gotten sharper.

The third calculation is the chain of reviewers your champion has to walk your deal through after you leave. Clinical, operations, finance, strategy, and increasingly the board. Each has different questions, different evidence thresholds, and different reasons to say no. When your champion can’t translate your program for each of those audiences, the deal stalls in committee. Your job stops being the pitch in front of you and starts being whatever your champion needs to win the next four conversations without you.

Everything underneath this sits on top of that third calculation, including the one question in the average outcomes pitch that decides whether your champion can defend your evidence when you’re not there.

Subscribe now

Why Your Outcomes Numbers Don’t Land the Way You Think

Plans aren’t evaluating your outcome data for how strong the number is. They’re evaluating it for defensibility. Whether the number you led with in your pitch can be defended by a non-clinical reviewer two layers above your champion, when the program doesn’t track exactly to plan in month 14. That reframe (from “is the number good” to “is the number defensible to people reading it cold”) is the part most vendors don’t internalize.

The engagement-cohort question is where this shows up most cleanly. Most pitches lead with a version of “members who engaged with our program saw an X-point lift on Y measure,” followed by a chart, a logo wall, and a question about timing. The next question the plan asks decides whether you advance: what happened to the members who didn’t engage, and what was the lift across the entire eligible cohort.

Your engaged-cohort number tells you what happened to the members who said yes. The plan needs to know what the program will do at the population level. That’s the level Star Ratings, Healthcare Effectiveness Data and Information Set (HEDIS) measures, Consumer Assessment of Healthcare Providers and Systems (CAHPS) results, risk adjustment recapture rates, and prior-auth turnaround commitments are all calculated against, not the cohort level your case study captured. The gap between what vendors claim about outcomes and what their evidence base actually supports is wide enough to be measured across hundreds of digital health companies, which is exactly the gap plans are trying to close when they ask the cohort question.

A smaller eligible-cohort number doesn’t kill the deal. Being unprepared for the question does. The vendor who answers, “Engagement-cohort lift was X, eligible-cohort lift was Y, and here’s the engagement rate that bridges the two,” is handing the buyer a defensible answer for the next reviewer. The vendor who hears the question for the first time from the buyer is handing them nothing.

A reframe that fixes most of this on the spot:

Instead of: “Members who engaged saw an X-point lift on Y measure.”

Try: “Across the eligible population, we delivered a Z-point lift on Y measure, with an X-point lift among the engaged sub-cohort and an engagement rate of W%.”

Same story. Same data. But surfaced in the order the plan actually needs to evaluate it. Denominator first, sub-cohort second, engagement rate third, methodology underneath. That ordering is the operational version of what makes a case study actually move a deal forward. Plans are buying evidence at the population level your contract will cover, not impressive numbers at the cohort level your case study happened to capture, whether the underlying outcome is member engagement, recapture rates, denial reduction, or anything else with a clinical or financial result on the line.

The cohort question is the cleanest test of that lens, but it isn’t the only test.

Criteria Health Plans Weigh Beyond Your Evidence

Even when your evidence holds up, the deal isn’t won. Plans weigh four other things about your offering before they commit, and these are the questions that surface in the second meeting, the procurement review, and the contracting cycle, long after you thought the hard part was over.

Replication at their size and book mix. Plans want to know where else you’ve deployed at their member count, line-of-business mix, and population complexity, and whether they can call the quality lead or risk adjustment lead at that plan directly. A regional Blue with 400,000 Medicare Advantage (MA) lives, and a Dual Eligible Special Needs Plan (D-SNP) population, isn’t interested in case studies from a national plan running a commercial program. They want plans that look like them, and the peer-reference circuit among the Blues, the regional independents, and the provider-sponsored plans is fast and active. Vendors who proactively offer a named peer reference at a comparable plan close that gap before the buyer has to ask.

Durability of outcomes over time. Most outcomes-oriented programs show their strongest results somewhere between month six and month nine, then slide. That slide is a known pattern, and plans have been burned by it enough times that they ask about it explicitly. What does year two look like? Year three? The stakes are sharper for plans that slipped below the 4-Star line in the 2026 ratings, because a partnership that delivers a one-year bump and then slides isn’t a strategy a plan can ride into the next bid cycle. The buyer who’s been through one of these slides is the toughest one on this question because they remember the cleanup. Vendors that win durability come with multi-year data and an honest story about what happens after the strongest results land, and how they keep them from sliding further. Vendors that lose it come with one impressive number…and a hope that nobody asks about year two.

Operational load on the plan team. What does the plan actually have to do to run your program? How many FTEs are from member services, IT, clinical, analytics, and reporting? How many cross-functional meetings, weekly status reviews, and one-off data pulls? If the answer is some version of “your team will love working with us!” the plan hears either a vendor who hasn’t deployed at scale or one hiding the real cost. The same teams running benefit design, provider contracting, risk adjustment, and Stars in 2026 are the ones evaluating your program. Every FTE-hour you ask for has an opportunity cost that the plan is calculating in real time.

Off-ramp clarity. The plan needs to know what happens if the program underperforms. What the performance thresholds are, what the consequences are when the vendor misses them, and how the contract adjusts when results don’t hold up. A multi-year contract with no accountability built in is read as risk by a buyer who has watched too many vendors confuse certainty with control. The vendors who handle this best put real performance accountability into the contract, sometimes before the buyer thinks to ask.

Most pitches don’t address these criteria at all. Strong programs don’t lose ground on the evidence. They lose ground on what comes after it.

Subscribe now

What Separates the Vendors Who Advance

The vendors who keep their deals moving consistently do three things. Preparation, specificity, and adaptation.

Preparation that’s specific to the plan you’re in front of. Plans can tell within five minutes whether you read the earnings call, looked at the supplemental benefit changes, understood the book mix between MA, Medicaid, and Commercial, and know what their Star Ratings did in the most recent release. A vendor who opens with, “We know you slipped on three measures in last year’s release, your D-SNP book grew faster than your general enrollment, and your 2026 bids signaled tighter benefit design. Here’s what that means for the program we’re discussing,” often earns more credibility in two sentences than a generic pitch earns in 45 minutes. Plans aren’t asking you to do their work for them. They’re asking you to prove you’ve done your homework, especially when their own buying posture has been paralyzed by market uncertainty.

Preparation also means bringing a one-page implementation sketch into the first conversation: integration points, data exchange model, FTE asks, decision gates, week-one through month-six timeline, and a candid view of where things typically go sideways. The sketch doesn’t have to be perfect. It has to exist. Showing it signals you’ve done this at scale and gives the plan team something concrete to react to. The underlying move is sensemaking in complex B2B sales: the best sellers reduce the buyer’s cognitive load most effectively, and a one-page sketch carries more weight than a longer pitch.

Specificity about what you’re not. Vendors who name a specific strength, draw a clear boundary, and point to a partner for what falls outside it earn more credibility than vendors who claim to deliver across the full performance stack. Plans have learned to discount full-stack claims by default, because they haven’t held up in implementation. Specificity, including the parts where you’re deliberately not the answer, reads as maturity to a buyer who’s already thinking in portfolios. It tells them you’ve thought about how you fit alongside the other vendors in their book, which is the world they actually operate in.

Adaptation to the audience inside the buying committee. Clinical wants methodology, sample sizes, and confidence intervals. Operations wants FTE detail, implementation timelines, and downstream effects on existing workflows. Finance wants the ROI math at the population level, with the cohort assumptions surfaced. Strategy wants competitive positioning and the multi-year story. Vendors who run the same materials through every audience aren’t selling. They’re contributing to the message fatigue that’s costing them deals. Remember: Tailoring the materials to each audience is the difference between a closed deal and a stalled one.

We’ve covered the three calculations every plan champion is running while you pitch, what plans are actually reading for when they evaluate your outcomes claims, the four criteria they weigh beyond your evidence, and what separates the vendors who keep their deals moving. Below is the operational layer underneath all of it: the five questions to pressure-test your outcomes claims before you pitch a plan again.

Paid subscribers get this, plus 50+ frameworks, scripts, and deep dives built for health tech teams selling to health plans. One qualified conversation from these frameworks is worth more than a decade of subscriptions.

Upgrade to a paid subscription to keep reading.

Read more

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

In 2017, I was selling into health plans when UnitedHealth, Aetna, and Humana walked away from the Affordable Care Act (ACA) exchanges. The execs I'd been working with at midsize plans (the people who decided which vendors and partners got funded) went radio silent for months while their leadership figured out whether to follow. Even procurement teams paused ACA-adjacent deals that we were in the process of contracting, since everything was up in the air. Two years of relationship-building went on hold while plans worked out their 2018 posture.

That’s the lens I keep coming back to as I try to interpret 2026, as the ACA is shuffling itself again. Aetna walked in 2025. Cigna walked in 2026. Baylor Scott & White Health Plan, Providence Health Plan, Molina at the service area level, and a cohort of regional plans have all announced retreats of varying depth. Enhanced premium tax credits (ePTCs) expired at the end of 2025. Bronze plan migration is reshaping the risk pool in real time. A Republican Congress is heading into midterms with no replacement plan after 15 years. The plans staying in are taking five distinct strategic postures, and reading those postures (rather than reading the headlines) is how to make decisions about this market in 2026 and 2027.

One trap to avoid before the comparative work begins. The convenient story is that 2017 was a narrow exit (the three commercial nationals) and 2026 is a broad multi-tier retreat. That framing is wrong. The 2017 shakeout was just as broad, possibly broader by raw insurer count. What’s genuinely different about 2026 is the cause, the mechanism, and, in Molina’s case, the scale of a single operator’s pullback. Misreading 2017 leads to misreading what comes next.

Subscribe now

The 2017 Shakeout Was Broader Than You Remember

Back in 2017, the headline story was that UnitedHealth, Aetna, and Humana walked. The actual story was broader. In fact, Becker’s Payer Issues documented 48 insurers that reduced their 2017 ACA exchange footprint. Every plan category currently making news in 2026 had an analog in 2017. Commercial nationals walked at scale (UnitedHealth across 28-plus states, Aetna across 11). Medicaid-DNA operators pulled back from individual markets, too. Provider-sponsored plans exited in numbers that should look familiar to anyone reading the 2026 retreat (more than a dozen health-system plans contracted or exited that year, including Scott & White Health Plan, the predecessor plan in the same Baylor Scott & White Health family, announcing its 2026 exit recently). State Blues retrenched in PPO and county footprints. Even tech-native plans were sorting themselves: Oscar exited New Jersey and Dallas in 2017 (the same Oscar that’s now profitable and growing).

The story underneath the plan-level retreat was the collapse of the ACA co-ops, with 17 of 23 closed by mid-2017 and hundreds of thousands of members displaced. The co-op story is critical because it’s the closest 2017 analog to what’s happening to Medicaid-DNA operators like Molina now: a category of plan designed for this market that still couldn’t make the operating math work at the scale required. The aggregate effect was that the average number of insurers per state dropped from 5.6 in 2016 to 4.3 in 2017, then bottomed at 3.5 in 2018. Single-insurer counties went from 7% to 31% in a single year. The dominant narrative at the time was “death spiral.”

What actually happened was a shakeout that sorted across every category of operator. Centene leaned in through Ambetter even as it pulled out of Wisconsin. Some Blues absorbed displaced membership while others retrenched. Medicaid-DNA operators consolidated where the underwriting worked. Enhanced premium tax credits arrived in 2021 under the American Rescue Plan, and enrollment grew to 24.3 million by 2025. The plans that emerged stronger weren’t the ones in a particular category. They were the ones whose operating models fit a smaller, sicker, more price-sensitive pool.

What’s Genuinely Different in 2026: Four Contrasts, One Cause Profile

Aetna walked again in May 2025. Cigna walked in April 2026. Both decisions landed almost exactly one year apart. Premiums are up roughly 26% on average. Net enrollment dropped from 24.3 million to 23.1 million. Bronze plan share jumped from 30% to 40% in a single year. The retreat extends beyond the nationals into provider-sponsored plans, Medicaid-DNA operators, and regional plans, as it did in 2017.

Four things actually distinguish 2026 from 2017, and they roll up to a single observation about cause: the 2017 shakeout was driven by initial-market actuarial losses on a still-maturing risk pool and by the co-op funding shortfall when risk corridor payments never materialized. That said, the 2026 shakeout is largely driven by the ePTC cliff and capital allocation pressures within vertically integrated insurers. Both forces genuinely did not exist as primary drivers in 2017, and the four differences below show how those two new primary drivers are emerging in the operating environment.

1. Subsidy environment. 2017 happened with the ACA’s original subsidy structure intact. 2026 is happening after the enhanced premium tax credits expired and were not renewed. KFF estimates subsidized enrollees’ average net premiums rose 114%. The pricing pressure on enrollees is operating in real time.

2. Bronze plan migration. A 10-percentage-point shift in plan tier mix in a single year is among the largest single-year tier shifts in marketplace history. The 2017 shakeout reshaped which plans were in the market, but the 2026 shakeout is reshaping which products inside the market are growing and shrinking.

3. Vertical integration math. The three largest national payers now sit under parent companies with major non-insurance businesses: UnitedHealth and Optum; CVS Health and Aetna; and Cigna and Evernorth/Express Scripts. Aetna's 2017 exit was driven by actuarial losses. Aetna's 2025 exit and Cigna's 2026 exit are capital allocation decisions evaluated against adjacent businesses that can absorb the capital and management bandwidth an ACA presence consumes. That contrast is structural and didn't exist in 2017.

4. Tech-native maturity. In 2017, Oscar exited New Jersey and Dallas while still figuring out the model. In 2026, Oscar is profitable, growing, and operating with a disciplined posture. Bright Health collapsed in 2023, and the takeaway (capital discipline matters more than growth velocity) shaped how every surviving tech-native plan operates today.

The political environment is the connective tissue underneath those four contrasts rather than a separate one. The Republican Congress chose not to extend the ePTCs before they expired at the end of 2025. The Trump administration's regulatory and reconciliation actions, including the One Big Beautiful Bill Act (OBBBA) Medicaid cuts and the Marketplace Integrity rule, are sharpening the morbidity selection carriers are pricing into 2027 rate filings. The absence of a replacement plan after 15 years is why the ACA stays structurally intact even as these dynamics reshape it. The political environment is shaping how each of the four contrasts above unfolds.

Subscribe now

Reading the Retreat Plan by Plan

The 2026 retreat reads differently depending on which kind of health plan you're looking at. Each kind is telling a different operational story about what changed since the 2017 shakeout. The headlines compress them into one narrative (which they shouldn’t), as each tier of retreat is producing a specific signal about which plan operating models are viable in this version of the market and which aren’t.

At the national tier, two of the largest commercial insurers exited within twelve months of each other. The vertical integration math (which I covered in detail in my recent article on Cigna’s exit) is the signal. The Aetna and Cigna exits were capital-allocation decisions, evaluated against the returns those parents could earn by deploying the same capital and management bandwidth into CVS/Caremark and Evernorth/Express Scripts. Sure, the underwriting math contributed, but it didn't drive the call. The 2017 national exits were actuarial. The 2026 national exits are strategic-financial. That’s a different signal, and any plan with deep vertical integration is now evaluating ACA participation against the same internal benchmark.

At the provider-sponsored tier, Baylor Scott & White Health Plan announced in April 2026 it would exit Texas Medicaid by August and stop offering individual marketplace plans after 2026, affecting roughly 100,000 marketplace enrollees and 125,000 Medicaid members. This is the second ACA exit by a Baylor-affiliated plan in the past 9 years. CEO Pete McCanna identified the operating-model problem: high turnover in marketplace and Medicaid populations makes the integrated provider system model harder to sustain than in Medicare Advantage and direct-to-employer populations. A month earlier, Providence Health Plan, the insurance arm of a 51-hospital Catholic health system that sells individual ACA coverage in Oregon and Washington, announced it is exploring strategic options, including a sale. The signal at this tier is that the integrated delivery system model (which is supposed to have a built-in advantage in coordinating care for a defined population) doesn’t have a structural advantage in markets where the population turns over annually, and price elasticity dominates the purchase decision. Provider-sponsored plans pulled back in 2017 too. The 2026 version of the same retreat reinforces that lesson rather than refuting it.

At the Medicaid-DNA tier, Molina Healthcare announced significant 2026 service-area reductions, exiting Michigan and Wisconsin entirely and withdrawing from roughly one-fifth of its counties across eight additional states. Molina projects ACA membership dropping from approximately 655,000 to 250,000 by the end of 2026, a 62% decline. The stock fell 27% hearing the news. Molina is also planning to exit traditional Medicare Advantage in 2027.

Medicaid-DNA pullback isn’t itself new (Ambetter exited Wisconsin and WellCare left Kentucky and New York in 2017), but the scale of Molina’s retrenchment is without 2017 precedent. The signal here is perhaps the most important of the three because it complicates the durability thesis that emerged from the 2017 shakeout. Medicaid-DNA operating models were supposed to be the most durable under the ACA. Molina’s retreat shows that durability is conditional, not categorical: Medicaid-DNA plans win when they have geographic concentration in their existing Medicaid markets, and they lose when they overextend into ACA-only territory in pursuit of growth.

Regional plan turnover (HAP CareSource, Health Alliance, Chorus Community Health Plan, Mountain Health CO-OP exiting Wyoming only, Primewell, UM Health Plan, Celtic/WellCare from North Carolina, BCBS Arizona’s PPO terminations) follows the same pattern the 2017 cycle produced. Michigan’s exchange went from ten participating insurers in 2025 to seven in 2026. What’s different in 2026 is the absorbing cohort. In 2017, the plans absorbing displaced membership were broad: Medicaid-DNA operators leaning in, Blues stepping up, and regional plans growing into vacated counties. In 2026, the absorbing cohort is narrower because Molina is retrenching at scale, and the Medicaid-DNA category is being more selective about where it adds membership. That narrowing of the absorption side is the operational point that should matter most to anyone modeling where displaced ACA members are going to land.

Reading the Plans That Stayed: Five Strategic Postures

Plans operating in the 2026 ACA market can be segmented in several ways: by parent size, by enrollment, by Medicaid managed care exposure, and by geographic concentration. The five postures below are organized by buyer behavior, capital allocation logic, and forward strategic posture because these dimensions predict what each plan does next. If you're triaging a pipeline, rereading a portco, or reframing client work, what a plan does next is what drives your decisions.

Tech-native operators. Oscar Health turned its first full year of profitability into 56% membership growth. The company was built around technology-enabled member engagement, transparent member experience, and a willingness to operate in individual markets where traditional insurers couldn’t make the economics work. Q1 2026 numbers came in at a record $679 million net income on $4.65 billion in revenue, with medical loss ratio dropping from 75.4% to 70.5%. Management reaffirmed full-year guidance. The buyer this profile produces is one that funds technology investments against measurable return on medical loss ratio, member acquisition cost, or retention, and disengages from vendor pitches that can’t connect to one of those metrics.

Default-absorbing plans. Blue Cross Blue Shield (BCBS) plans hold the dominant ACA position in most state markets. They were there before the nationals arrived, they stayed when nationals walked, and they absorb displaced membership when others exit. Capital allocation logic is mission-adjacent for most BCBS plans, which are nonprofit or operate under community-coverage mandates. In states where the local Blue is the default ACA insurer, vendor and partner go-to-market runs through that plan. The Blues consolidation dynamics I covered earlier are accelerating that reality, because the Blue you’re selling into in 2026 may be operating under a parent organization that controls procurement, contract architecture, and technology standards across multiple states.

Selective Medicaid-DNA operators. AmeriHealth Caritas Next grew its 2026 ACA footprint while Molina cut its own by 62%. AmeriHealth Caritas operates Medicaid managed care plans across multiple states and entered the ACA exchange in 2021, with its Next product expanding into Delaware, Florida, South Carolina, and additional North Carolina counties in 2023 and growing again for 2026. The operating logic mirrors Centene’s at a smaller scale: government-program operating DNA, cost discipline, and a member population overlapping the Medicaid book the plan already serves. The contrast with Molina is in geographic discipline. AmeriHealth Caritas Next expanded ACA only where its existing Medicaid operations provided a cost-of-care anchor. Molina’s ACA footprint outpaced that anchor in several states, which perhaps made the retrenchment necessary.

Concentrated-bet operators. Centene's Ambetter is the clearest example at scale. The company built its commercial story around the ACA Marketplace, and Ambetter is one of the largest individual exchange players by enrollment. ACA membership came in at 3.6 million in Q1 2026, down from 5.6 million a year earlier, a 36% drop. Over one-third of remaining members now hold bronze plans, and 75% of silver membership came from renewals. Two million members lost in a year and still the largest plan in the market. That's what concentrated-bet looks like in 2026: a leading position that's smaller than it was, in a market that's smaller than it was. Vendors and partners selling into Ambetter should expect a buyer sophisticated about ACA-specific economics, disciplined about cost-of-care, and managing a materially smaller book than twelve months ago.

Vertically integrated retreaters. Aetna and Cigna made their decisions 12 months apart, and both were capital-allocation decisions measured against the vertically integrated parts of their respective parent companies. Aetna had losses to point to, including a $448 million premium deficiency reserve in Q1 2025. A price transparency analysis published in early 2026 revealed a structural detail behind those losses: Aetna's ACA exchange networks expanded substantially in 2025 while peer national payers maintained or compressed their exchange networks. Network expansion, higher contracted rates, and a price-sensitive enrollee population drove the cost trend that led to the exit. Anyone modeling the next round of payer ACA exits should weigh network expansion data first. Cigna's exit came from the opposite direction: a smaller ACA book that an incoming actuary CEO determined wasn't worth the management bandwidth relative to Evernorth/Express Scripts. Vendors and partners selling into vertically integrated plans need to make their pitch against that internal capital allocation benchmark, not against ACA-segment economics in isolation.

The key takeaway is that treating the ACA market as a single Total Addressable Market (TAM) was always a stretch, and in 2026, it stops working entirely. Each of the five postures buys differently, funds differently, and operates differently. The work for the rest of this year is figuring out which postures show up in your pipeline, your portfolio, or your client list, and what each one needs from you next.

Subscribe now

How To Operate Inside The Shakeout

Here’s how to use the five-postures map. Centene Ambetter, AmeriHealth Caritas Next, a regional Blue, and Oscar each buy on different motions, success metrics, procurement timelines, and willingness-to-pay. A pitch that worked across the ACA-exposed plan list eighteen months ago will land unevenly in 2026, because the plan list itself has changed, and the plans still in the market are operating under a different logic than they were.

Pipeline triage is the next move, and the work is sorting your ACA-exposed deals into three groups. The first group covers plans that have exited or are in significant retreat, including Aetna and Cigna fully, Molina at the service-area level, and a cohort of smaller regional exits. Those deals need to either wind down or be transferred to a surviving line of business within the parent company. The second group is deals at plans still in the market under one of the four staying-in postures. Those deals stay in pipeline, but the posture and buyer may have changed. Reread each one against the posture before your next pipeline call. And the third group is the trickiest: deals where the ACA component is part of a broader plan-wide contract. The contract math at the rollup level might still look fine while the ACA-specific portion has shifted underneath it. Pull the ACA component out and evaluate it on its own merits.

Investor implications cut sharper than the headline numbers suggest. Private equity (PE) and venture capital (VC) firms holding portfolio companies (portcos) with ACA-exposed pipeline need to recalibrate. The TAM math has shifted, the buyer set has narrowed, and the comp set for ACA-focused operators (Oscar as a public comp, the Bright Health post-mortem as a cautionary comp, Centene Ambetter as the scaled comp) is sharper than 18 months ago. Limited partners (LPs) are going to ask.

Provider organization implications are immediate and extend beyond bronze migration. The 2024 risk pool isn’t the 2026 risk pool, and the reason runs deeper than plan tier mix. In 2026 rate filings reviewed by Georgetown’s Center on Health Insurance Reforms, carriers across markets explicitly priced for adverse morbidity selection: healthy enrollees dropping coverage at materially higher rates than sicker enrollees, with Vermont’s MVP assuming healthy subsidized enrollees will drop at twice the rate of other subsidized enrollees, and Maryland’s Optimum Choice and Texas’s Celtic Insurance (Ambetter) both citing the Marketplace Integrity rule as expected to accelerate that healthy-enrollee attrition through eligibility friction. Wakely's modeling projects that if H.R. 1 provisions and the Integrity rule stay in place without ePTC restoration, individual market enrollment could decline 47-57% nationally with deeper losses in non-expansion states. The population that 2024 value-based care actuarial models were built around is turning into a smaller, sicker, more administratively burdened cohort in real time. Renegotiating capitation, shared savings, and downside-risk arrangements is easier now against carriers already pricing for morbidity selection than it will be a year from now after the first cycle of contract underperformance. That actuarial recut is worth starting now.

Management consultancy implications are about giving clients a frame that holds. Clients asking “what does my GTM look like for the ACA market in 2026 and 2027” need a defensible analytical structure to anchor the answer. Use the postures map to segment a client’s addressable plan list and build differentiated GTM motions per posture, so the strategy fits the buyer instead of generalizing across the plan list.

Health plan competitive intelligence (CI) implications run through the membership data. Membership redistribution from Aetna and Cigna exits is concentrating in concentrated-bet, selective Medicaid-DNA, default-absorbing, and tech-native plans. Tracking where displaced members are landing tells CI teams where vendor and partner opportunities are heading next. Plans absorbing membership are also revealing pricing posture in their 2027 rate filings.

What I’m Watching For Through Q3 And Q4

Six indicators on my watchlist heading into the back half of 2026. The 2017 cycle taught me what signals to track when a market sorts itself, and the 2026 differences taught me which of those signals to read differently this time around.

2027 rate filings will soon be landing with state regulators and will be widely available across most states by mid-summer. The question is whether plans staying in are pricing for stable participation or pricing for managed decline. Rate filings show the answer faster than press releases do.

Q2 and Q3 earnings calls from public plans will include ACA-specific commentary worth tracking closely. Molina’s calls matter for a different reason than the others: following the 27% stock drop and the projected 62% decline in ACA membership, those calls will reveal whether Molina is positioning for a complete ACA exit by 2027 or a stabilized, smaller footprint. Centene’s calls will reveal whether the decline from 5.6 million to 3.6 million members has stabilized. The ACA-specific commentary in last week’s earnings synthesis already foreshadowed some of these dynamics. Subscribe to the newsletter to get the Q2 and Q3 syntheses as they land.

The Aetna 2026 absorption pattern is the leading indicator of what the Cigna 2027 picture will look like: which plans absorbed displaced Aetna members, how that changed their enrollee mix and risk pools, and whether the plans that picked up share-priced for it or got caught short. That data lands through Q3 and Q4 2026, right as Cigna’s 2027 wind-down begins. Build the watchlist now.

Congressional movement on ePTC restoration is where I’m putting the most analytical weight, and where the conventional read is most likely to be wrong. The default assumption is that restoration would be a clean positive for the market: healthier enrollees come back, premiums stabilize, bronze migration slows, the shakeout settles. The actual dynamics are more complicated. Restoration this late in the year (or in 2027) wouldn’t undo the structural changes the 2025-2026 cliff already produced. Plans that exited won’t reenter for at least one cycle. Plans that retrenched won’t expand back into the counties they pulled out of based on a single policy signal. The morbidity selection that carriers are pricing into 2026 and 2027 rate filings doesn’t reverse because subsidies return. Restoration would slow the narrowing of absorption capacity I described earlier, which is the more important second-order effect. Continued absence accelerates the shakeout and makes Molina-style retrenchments more likely at other Medicaid-DNA operators. My read for the year-end legislative package: the political path to restoration is narrower than the consensus expects, because Republican leadership has limited incentive to spend capital on ePTC restoration absent a clear electoral threat. The operational read should be biased toward planning for continued absence.

Open enrollment for 2027 starts November 1, 2026. The number that will matter most is whether enrollment stabilizes around the new lower baseline (around 23 million) or continues to decline.

Further plan announcements for 2028 are the last item on the watchlist. The 2026 retreat spans every category of operator, just as the 2017 cycle did. What’s worth watching is whether the cohort of plans absorbing displaced membership is large enough to stabilize the market or whether the absorption capacity is materially thinner than it was in 2018.

Final Thought

The lesson from 2017 that I keep coming back to is that the operators who emerged stronger were the interpreters, not the predictors. They read each retreat in real time as evidence about which operating models would survive a smaller, sicker, more price-sensitive market, and they rebuilt accordingly. Some plans in 2017 were priced and staffed for an enrollment recovery that didn't materialize on the timeline they needed.

The 2026 ACA market won't be a milder version of what came before. It will be a different market: narrower absorption capacity, structurally smaller risk pool, sharper morbidity selection, and a tighter set of buyer postures across the plans that stay. A correct read in 2026 shows up in 2027 as deals closed, portcos repositioned before LP questions get pointed, client frameworks that hold up in plan boardrooms, and risk contracts renegotiated before the first cycle of underperformance.

That reading is the work in front of you right now. It’s also the work we do at Upward Growth. If you want help applying any of the analyses above to your pipeline, portfolio, or client list, please reach out.

The weekly Upward Growth newsletter gives health tech vendors, investors, provider organizations, and management consultancies a clearer view of how the payor market actually works.

If your colleagues are making decisions in this market, they should be reading this too.

💰 Invest in your team with a paid subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Five publicly traded payors just reported Q1 2026 earnings, and the cross-plan story everyone is writing is “margin over membership.” UnitedHealth on April 21. Elevance on April 22. Molina on April 23. Centene on April 28. CVS on May 6. All five chose to defend margin trajectory rather than chase enrollment growth.

Sure, that was the clear theme that emerged, but the more useful read is what these earnings calls signal about the next six months. Calendar Year (CY) 2027 bids are due to the Centers for Medicare & Medicaid Services (CMS) in early June, with final benefit decisions locked in July and August. Meanwhile, compliance teams are running the audit pass triggered by the Elevance accrual across the industry. By the time the 2027 plan year benefit information becomes public in October, every phrase a CFO used on these calls is already set in stone inside the plan.

This article focuses on UnitedHealth, Elevance, Molina, Centene, and CVS, with Humana and Cigna referenced where their commentary adds to the pattern. A number of readers have asked for the Upward Growth lens on payor earnings calls, so this is the first in a recurring quarterly read of the publicly traded health plans.

What follows is a read on the language and events that did real work this quarter, what got talked about less, and what those signals tell us about where the industry is heading.

What “Disciplined Pricing” Tells You About the CY 2027 Bid Cycle

The disciplined pricing language was the most universal across the quarter and anchored everything else these calls said. It tells you how plans will behave heading into the CY 2027 bid window and how aggressive they will be with benefit redesign and product rationalization in late summer.

Stephen Hemsley framed UnitedHealth’s 2026 strategy as margin recovery and product stability with a deliberate trade-off on membership growth. Gail Boudreaux described Elevance as remaining disciplined heading into 2027 bids. Sarah London returned to tangible progress in margin recovery multiple times on Centene’s call. Joe Zubretsky framed the Medicare Advantage Prescription Drug (MAPD) product exit as a discipline move. Steve Nelson at CVS tied disciplined pricing to Aetna’s roughly $1 billion year-over-year operating income improvement. Humana, on its own call, named the 3% sustainable margin by 2028 as Priority One, basically the same frame stated more bluntly. The Cigna leadership transition puts the same trend in the CEO seat: an actuary now runs the company, and the margin discipline message is being institutionalized at the executive level.

Five plans, one frame. Inside the plans themselves, that kind of public commitment usually produces a specific operational sequence. The actuarial team takes the lead role on bid construction. Bids submitted to CMS in early June, benefit decisions lock in July and August, and plans are communicated to brokers in September. By October, the 2027 benefit landscape will become public.

Looking ahead, the bid season we are about to watch will look more like a contraction cycle than a competitive one. The CY 2027 Final Rate Announcement was friendlier than the January preliminary notice, but the gap between funding and trend is still meaningful, and the risk model freeze that made the 2.48% possible is temporary. Plans heard "you have one more cycle" from CMS, and they are using it to defend margin rather than expand benefits. CY 2027 will reflect that.

The internal piece of this is worth flagging. The executive team that said “disciplined” in April cannot walk into a bid review in July and approve a generous benefit redesign without contradicting itself in front of investors. Public language on an earnings call constrains internal decisions over the next four months. That is true at every plan, every quarter, but it matters more in a cycle where the public commitment is to discipline.

Subscribe now

The Internal Build Is the Dominant Procurement Story of 2026

The technology and AI investment language on these calls signals where the procurement budget is moving and which categories are getting harder to sell into. Every one of the five plans named it as a 2026 P&L line item, not a future bet.

UnitedHealth committed to roughly $1.5 billion in AI investment for 2026, with about a third concentrated at OptumInsight. Elevance described scaled AI implementation across clinical, operational, and administrative workflows. Aetna’s prepared remarks reported standardizing data requirements for 88% of prior authorization volume, approving 95% of eligible Prior Authorizations (PAs) within 24 hours, processing 83% in real time, and eliminating more than 1 million provider calls through automation. Centene framed cost trend management as process modernization. Molina, the smallest of the five, tied operational efficiency through technology to its embedded earnings story.

A few years ago, the technology language on payor calls was about partnerships and ecosystems. The 2026 language is about internal capability and AI investment. Both words are doing real work. “Internal” means the work is being built or absorbed inside the plan rather than purchased from vendors. “AI” means the productivity assumptions baked into 2026 and 2027 operating budgets already count automation that may or may not actually perform as projected.

Why Vendors Are Losing Health Plan Deals to the Plan’s Own Internal Build covered this dynamic, and the Q1 calls confirm what was already taking shape. No-code and low-code AI tooling has lowered the technical barrier to building functional solutions internally. Health plan CEOs at public companies are under board-level pressure to demonstrate AI leadership, and less to select vendors. Internal builds become assets the plan owns rather than subscriptions it pays for, and that distinction matters to investors and acquirers evaluating long-term enterprise value.

The forward read is that the next two procurement cycles at these plans will favor vendors solving problems the plan cannot credibly build internally, and will be muted toward vendors whose work overlaps with what the plan thinks it can build. The line between those two camps is being redrawn this year, and where it lands determines which vendor categories will be funded in 2027 and which won’t.

The procurement implications run deeper than the budget line. When AI becomes an enterprise commitment, the CIO or CDO has authority that used to live with the operating units. The director of utilization management (UM), who used to make the call on a UM vendor, now has to align with the AI strategy team before signing any new contracts. That changes the procurement path for every category that touches a workflow.

What the $935 Million Elevance Accrual Tells You About the Next Six Months

The Elevance risk adjustment story tells you the most about the next six months, because it is the one story most plans went out of their way not to discuss. Elevance had to address it because of a CMS notice. The other plans had a choice, and most chose silence.

Elevance accrued $935 million on its Q1 financials related to a CMS notice from February 27 about historical Medicare Advantage risk adjustment data submission. The exposure range is wide, with current management estimates putting the possible liability between roughly $350 million and $1.5 billion. The CMS deadline has been extended to July 31, 2026. Boudreaux framed the matter as a historical interpretation dispute and emphasized that current practices and governance are sound.

What stands out is not what Elevance said about it, but what the other plans did not say.

UnitedHealth, Centene, Molina, and CVS were notably careful in their language about risk adjustment, in some cases not addressing it as a discrete topic at all. That is unusual for a quarter when the largest single regulatory action against a national plan in several years happened in that exact space. The silence reads as a choice. Every plan in the country knows its own historical risk adjustment data submission practices are getting reviewed inside its walls right now. Saying that out loud on an earnings call would invite questions about their own exposure that nobody is positioned to answer with confidence.

What this signals for the next six months is that risk adjustment compliance and accuracy are the most consequential industry-wide stories, and almost nobody is writing about it that way. The July 31 CMS deadline sits right in the middle of the bid construction window. Compliance teams at every plan are racing to validate their own historical submissions before regulators come asking. Vendors with offerings in audit, accuracy, and submission process integrity are in the strongest demand environment they have seen in years, even as the rest of the vendor market is feeling margin pressure. That divergence is the part of the story that the financial coverage misses entirely.

The internal authority shift across the plans just gave Compliance and Legal teams a meaningful authority bump. And while risk adjustment operations teams are under their own internal audit, we may now see additional compliance overlay on top of coding accuracy and coding submissions teams.

Subscribe now

What These Q1 Payor Earnings Calls Talked About Less

The hardest read on these calls is not decoding what was said but noticing what got dropped. Quarter-over-quarter language comparison is the key here. Three things were notably less present on the Q1 2026 calls than they were on the same five companies’ Q4 2025 calls, and each of the three signals something specific about where the industry is heading.

Supplemental benefit innovation language is mostly gone. The 2025 calls had detailed commentary on Over-the-Counter (OTC) card programs, food-as-medicine pilots, transportation expansion, and various MA supplemental benefit experiments. The 2026 Q1 calls have replaced that language with benefit redesign, market exits, and discipline. CMS rule changes to supplemental benefits, combined with margin pressure, have made benefit expansion a topic that plans are no longer discussing on calls. The signal for CY 2027 is that supplemental benefits will be smaller, simpler, and more rationalized than CY 2026. Plans built around supplemental benefit administration as a primary value proposition should expect contraction, not growth.

Named vendor partnerships have thinned out. The 2024 and 2025 language on these calls often included specific vendor or partner names as proof of innovation. The 2026 calls speak in platform language, internal capability language, and AI investment language. Specific vendor partnerships are visibly less prominent. Whether that is just Investor Relations (IR) script discipline or a real shift in how plans want to talk about vendors publicly is the open question. Either way, the optics of being a named partner have changed. Public co-marketing has historically been a piece of vendor narrative leverage. That leverage is less prominent than it was eighteen months ago.

Growth-specific commentary has been replaced by margin-specific commentary. The headlines capture this, but the magnitude of the shift matters. The 2024 calls had detailed commentary on enrollment growth, market share, and competitive positioning. The 2026 calls have replaced almost all of that with margin trajectory and product stability. Growth language is now framed as a deliberate trade-off rather than a goal. That is a complete reframing of the strategic narrative in roughly eighteen months, and it changes what counts as a credible vendor pitch about anything growth-adjacent.

A dropped talking point is rarely accidental on a public earnings call. Somebody often intentionally decides to drop it, and the reason matters. Tracking what gets de-emphasized across quarters is its own form of market intelligence, and these three drops are worth watching as the year unfolds.

Where the Industry Is Heading Before the Next Cycle Resets

Pulling the threads together, the Q1 2026 calls signal four things about where the industry is heading over the next six to twelve months:

The CY 2027 cycle is a contraction cycle. The disciplined pricing language is a public commitment to a bid season that favors margin defense over benefit expansion. CY 2027 will look noticeably leaner than CY 2026 by the time the benefit landscape becomes public in October. That is the cycle vendors, investors, and consultants need to be planning against right now, before bid filings lock in early June.

The line between vendor categories is being redrawn this year, not next. The internal-build dynamic is not a 2027 procurement story, but a 2026 story already in motion. The areas that will get funded for CY 2027 implementation are being decided in the next few months, and the plans are using the technology investment line to fund internal alternatives that compete with categories vendors used to own.

The Stars story has split into two industries. The plans that have stabilized their Stars investment and those that are still rebuilding from a 2025 hit are now running on different calendars. Aetna explicitly carries leading Stars into 2027. UnitedHealth and Elevance are stable. Humana is openly rebuilding after losing its 2025 Stars lawsuit in October. Centene and Molina were less direct on Stars than in prior quarters. The variance tells Stars vendors which accounts will fund them through Q3 and Q4 and which are still in a defensive posture. The late-summer Stars consolidation (which happens annually) will look meaningfully different in plans that have stabilized than in plans that are still reactive.

The compliance authority shift will outlast the news cycle on Elevance. The Elevance accrual will fade from headlines in a few weeks, but Compliance and Legal teams at every plan now sit atop decisions that used to belong solely to operating units. Meanwhile, procurement paths that ran through quality and risk adjustment operations are may now run through or be augmented by compliance. And that changes the buyer map for any vendor category that touches risk adjustment, quality, or member-level data.

Subscribe now

Final Thought

Q1 earnings are the first major data point of the year, and the operational sequence sketched out above runs through August, when CY 2027 bid filings lock in every word these CFOs said in April. By the time Q2 earnings report in late July, Compliance teams will have completed the audit pass that the Elevance accrual triggered, supplemental benefit decisions will be set, and the bid landscape for next year will be public. The next CMS Advance Notice for CY 2028 lands in early 2027, which is when the risk model freeze begins to lift.

The mood on these calls was steadier than it was a year ago. The math underneath the mood has not changed as much as the mood suggests, and the next regulatory cycle is closer than it feels. The plans heard “you have one more cycle” and are using it accordingly. Q2 will tell us whether the discipline holds.

If you are working through what this means for your positioning, your messaging, or your go-to-market strategy, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies to build strategy around how health plans actually buy, operate, and make decisions. Contact us here.

The weekly Upward Growth newsletter gives health tech vendors, investors, provider organizations, and management consultancies a clearer view of how the payor market actually works.

If your colleagues are making decisions in this market, they should be reading this too.

💰 Invest in your team with a paid subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

Brian Evanko, the incoming CEO of The Cigna Group, used the phrase “portfolio shaping” twice on the April 30 earnings call. Once to describe the Affordable Care Act (ACA) individual exchange exit and once to describe the eviCore strategic review. Two announcements presented as a single coordinated decision, both “proactive” and “based on a deliberate review of management focus, relative size and scale, as well as the degree of standardization and automation.” That’s the language of a CEO who’s been running the numbers for two years and finally has authority to act on them.

Add the Medicare Advantage book Cigna sold to Health Care Service Corporation (HCSC) for $3.7 billion in March 2025, announced fifteen months before that. Three businesses divested, exited, or are in active strategic review within eighteen months. Cigna posted $1.7 billion of net income on $68.5 billion of revenue, raised 2026 guidance, and used the same call to walk away from two more lines of business. The earnings beat got the press treatment. The repositioning is the story.

Evanko becomes CEO on July 1. He’s an actuary through and through. Fellow of the Society of Actuaries (FSA), Member of the American Academy of Actuaries (MAAA), Chartered Financial Analyst (CFA). He spent the bulk of his Cigna career as CFO before taking operating roles. From 2017 to 2021, he personally ran Cigna Healthcare’s U.S. Government business. Medicare Advantage. Medicaid. Individual and Family Plans (IFP). Every book Cigna is now exiting.

The April 30 earnings call was his opening statement as the incoming CEO. The portfolio shaping language was his. So were the ACA exit and eviCore review decisions. If you sell to payers, partner with them, invest in them, advise them, or compete with them, the read-through is sharper than the headlines suggest. The Cigna account you knew at the start of 2024 is already gone. By 2027, it won’t be recognizable.

Subscribe now

The Profile Behind the Pattern

David Cordani spent seventeen years as CEO and grew Cigna from an $18 billion regional insurer into a $275 billion revenue integrated health services company. The Express Scripts acquisition closed in 2018. The Evernorth rebrand unified the services and supply businesses in 2020. Total shareholder return ran north of 750%. Diversification was the strategy, and it worked.

Evanko’s profile is different. He served as CFO before running the U.S. Government business from 2017 to 2021, then returned to the CFO role. In January 2024, he was named President and CEO of Cigna Healthcare. In March 2024, he became President and Chief Operating Officer of the entire Cigna Group. In 2025, he took unified responsibility for both Cigna Healthcare and Evernorth. On March 3, 2026, he was named the CEO's successor. Each step concentrated decision authority on the person who already had the deepest read on Cigna’s capital base, member economics, and segment-level returns.

What Evanko said on the call shows how he thinks.

He framed the ACA exit two ways. The team did not see the potential to scale the marketplace business to make a significant impact in the broader enterprise. The blunter version: “This is small business for us today, and it’s been shrinking in recent years.” The reason was relative size, not cost trend. Cigna’s first-quarter ACA margins improved alongside the rest of the industry as carriers repriced for 2026. The exit was about relevance, not margin. The line was too small to earn the capital and management attention it required.

The eviCore framing was sharper. Evanko said industry progress toward standardizing and automating prior authorization could open new doors for the eviCore business, potentially leading to a partnership or combination with our complementary industry participants. That’s a CEO previewing the buyer pool while announcing the strategic review. The framework is settled. What remains is execution.

Cigna’s incoming CEO ran Cigna’s Government books from 2017 to 2021. He’s the one moving Cigna out of those books now. The moves carry his signature.

The next two years won’t be quiet. Evanko’s framing on the call (”management focus, relative size and scale, as well as the degree of standardization and automation”) is a four-variable test for any line of business. Run it against any Cigna segment and you can sketch the answer he’ll reach in 2027. Lines earning their capital and management bandwidth get more of both. The lines that don’t earn their keep get strategic alternatives or divestitures.

The lens has changed. Cordani built. Evanko prunes. Both are coherent strategies. They produce different companies and different relationships with everyone selling into them.

When the Board Promotes the CFO

The Evanko archetype isn’t new. Boards have a history of promoting finance executives into the CEO seat at scaled payers when the diversification phase has run its course and the next chapter requires sharper capital allocation. The closest recent precedent is Joe Zubretsky at Molina.

Zubretsky took over Molina Healthcare in November 2017. Former Aetna CFO, former CEO of Hanover Insurance, and finance executive in the same mold as Evanko. He inherited a company that had just posted a $512 million loss and an executive shake-up. His first eighteen months produced a textbook portfolio rationalization. Molina Medicaid Solutions was sold in Q3 2018, and high-cost provider contracts were terminated or renegotiated, networks narrowed, and stop-loss thresholds reset. Non-strategic health plans were evaluated for exit. By the end of 2018 Molina’s net income had swung from a $512 million loss to a $707 million profit, the company had repaid more than $750 million in debt, and the divestiture cycle was largely complete. The pattern was concentration where the segment was performing, exit where it wasn’t, and a hard look at every contract structure that touched margin.

Wayne DeVeydt is the broader version of the same pattern. Anthem CFO from 2007 to 2016. Then CEO of Surgery Partners, then operating partner at Bain Capital, now CFO of UnitedHealth Group as of September 2025. Finance-first executives keep getting pulled back into operating roles at scaled payers, even as boards want margin discipline and portfolio focus. That’s not coincidence. It’s the move boards make when the integration and growth chapter has produced the company it was going to produce, and the next chapter needs sharper capital allocation than the prior CEO was built for.

The Cordani-to-Evanko transition fits the same archetype. The build phase produced a $275 billion company. The next phase requires deciding which lines of business inside that company deserve the capital and management attention they’re consuming. That decision-making belongs to a CFO's mind. The Molina case is the cleanest recent precedent for what the playbook looks like in motion. The divestiture cycle was largely complete within eighteen months of Zubretsky's arrival. Cigna is roughly fifteen months in from Evanko taking unified responsibility for Cigna Healthcare and Evernorth in 2025. The April 30 announcements land right on the timeline a Zubretsky-style portfolio rationalization would predict. Whether the next eighteen months produce a similar pace of further moves is the open question (but precedent says yes).

Subscribe now

The Earnings Call vs the Coverage

Two readings of the April 30 announcements have circulated this week in payer-facing trade press, vendor sales decks, and PE memos. Each captures part of the picture, and each looks different next to what Evanko actually said.

The first is that this is an ACA cost-trend story, with Cigna following Aetna out of an unsustainable category. Premiums up, enrollment down, subsidies expiring, margins compressing. That’s the backdrop. The trigger was different. Cigna’s Q1 ACA margins improved alongside the rest of the industry. Evanko’s stated reason was different: “small business for us today, and it’s been shrinking in recent years.” The exit was driven by relative size.

The second is that the eviCore review is being driven by regulatory pressure on prior authorization. Federal and state prior authorization (PA) reforms have intensified, and the easy story is that Cigna is divesting a politically exposed asset. Evanko’s framing inverts that. He cited industry-standardization and automation as reasons eviCore could be more valuable outside Cigna than within it. The pitch was framed as upside-down, with the strategic review as a sales process with the buyer pool already in mind.

How Cigna Will Buy Differently in 2026 and 2027

Three buying behavior shifts are already in motion.

Cigna’s procurement focus is concentrating on commercial retention and specialty cost economics. On the call, Evanko said he intends to position Cigna as “the clear leader in consumer-focused and AI-enabled health services, with an emphasis on clinically complex patients.” That’s a buyer who spends on broker enablement, employer-direct partnerships, ASO retention tools, behavioral health integration, network design flexibility, and specialty cost trend management. With MA gone to HCSC over a year ago and ACA winding down through 2026, the Government program buyer at Cigna is functionally retired. If your product roadmap was built around that buyer, you need a different home plan.

The Signature pharmacy model is now a forcing function across every vendor relationship that touches Evernorth. Cigna is targeting a rebate-free pharmacy structure with roughly 30% lower brand pricing and 50% adoption by 2028. That changes how Express Scripts evaluates partnerships, how Accredo structures specialty contracts, and how MDLive prioritizes clinical integration. A vendor aligned with the rebate-free model has traction available in 2026. A vendor whose economics depend on rebate flows is looking at either 2 years of value proposition rebuilding or shrinking renewals.

Given that eviCore is now likely to be shopped, expect a 6 to 12-month procurement freeze on workflows it touches. And anyone selling into eviCore-managed utilization management (UM) and PA workflows at Cigna should run two parallel scenarios. One where eviCore lands with a strategic acquirer holding adjacent UM assets, and one where it lands with a private equity (PE) sponsor running it for cash flow. The buyer profiles produce different procurement behaviors, technology priorities, and contract structures.

The three shifts add up to a Cigna that's sorting its segments into three different procurement states at once. Vendors with an active 2026 Cigna conversation know which state each of their relationships is in.

Subscribe now

How Cigna Will Partner Differently

Buying behavior is one signal. Partnership structure is the other, and it tends to lag the buying signal by a quarter or two before the shifts become visible.

Cordani-era Cigna was structured to do big, multi-year strategic partnerships across business units. The Express Scripts integration is the obvious example, but the same pattern appeared in smaller deals as well. Point solution vendors signed strategic alliances that simultaneously touched Cigna Healthcare and Evernorth, with commercial and specialty teams co-selling and partnership economics that assumed cross-business-unit value capture. The diversification thesis required that kind of partnership architecture, and Cordani's team built it.

The first thing to watch is what happens to the existing Cordani-era strategic alliances. Some of those partnerships are safe under Evanko’s framework because the partners are embedded in lines of business that are receiving more capital, including specialty pharmacy partnerships through Accredo, employer engagement partners that drive ASO retention, and platform partners supporting the Signature pharmacy build-out.

Others don’t sit as comfortably. Strategic alliances built around cross-business-unit value, where one of the business units is now winding down or under review, will get the same four-variable test Evanko is applying to the lines of business themselves. If the partnership doesn’t pass on its own merits inside Commercial or Evernorth or Express Scripts, the renewal conversation gets harder. Vendors and partners currently inside Cordani-era alliances should expect those agreements to be reviewed in light of the new framework, and should know which side of the line their partnership lands on before the renewal conversation opens.

Four forward shifts to expect on new partnerships:

PBM-led co-selling becomes more central. Cigna’s center of gravity has shifted toward Evernorth and Express Scripts, and the Signature rebate-free pharmacy model is the strategic bet that has to work. Vendors whose economics align with Signature, whose data integrates cleanly with Express Scripts, or whose specialty pharmacy story plugs into Accredo will find Evernorth willing to co-sell into employer accounts in ways that didn’t exist in 2024. The opportunity is real, and so is the cost. Co-selling arrangements with PBMs typically include rate concessions, exclusivity provisions, or revenue share commitments. Vendors entering those conversations need a position on what they’re willing to give up for the distribution.

AI and data partnerships get evaluated differently than they did a year ago. Evanko’s positioning of Cigna as the leader in “AI-enabled health services” isn’t generic earnings call language. It signals that AI and data partnerships are now strategic infrastructure rather than experimental pilots, which changes the procurement bar. Pilots that produced inconclusive ROI in 2024 don’t get renewed. Partnerships that demonstrated measurable trend impact, claims accuracy improvement, or specialty cost reduction get expanded. Vendors with AI capabilities that map to Evernorth’s specialty cost mandate or Express Scripts’ Signature build-out will find Cigna a more aggressive partner in 2026. Vendors whose AI doesn’t tie to a specific line-of-business outcome will find the partnership conversation has grown more skeptical, even when the underlying technology is strong.

Employer-direct partnerships become a competitive lane. Commercial and ASO are now the primary buying centers at Cigna Healthcare, which puts pressure on Cigna to differentiate on employer experience, broker support, and specialty cost outcomes. Vendors with employer-direct distribution are more interesting partners than they were when Cigna was simultaneously optimizing across MA and ACA. The flip side is that Cigna will also pursue employer-direct deals aggressively itself, which means the same vendor capabilities that make a partnership attractive can look like a competitive threat. Read the partnership conversation in that light.

Cross-business-unit deals get harder to close. When the businesses themselves are being evaluated for relative scale and management focus, cross-business-unit partnership economics become a tougher pitch at the executive level. A vendor pitching a deal that requires alignment between Cigna Healthcare and Evernorth now has to make the case to two separate buying tables, with two separate procurement teams running their own versions of the four-variable test to determine whether the partnership is worth the management attention. Deals that would have closed as a single Cordani-era strategic alliance now look more like two parallel single-line-of-business deals.

The structural takeaway is that partnerships with Cigna over the next two years will be smaller, more focused, and more transactional than the Cordani-era strategic alliances. The environment is different, not worse. The vendors and partners who recognize the shift early will be positioned for the deals that close.

Finally, for investors with payer-services portfolio companies (portcos), the same logic surfaces two beats at the fund level. eviCore's potential market entry at scale resets the comp set for UM and PA assets. Whoever buys it (a strategic with adjacent UM assets, a PE platform building a vertical, or a recapitalized standalone) becomes a meaningful comp for any UM-adjacent portco, and that comp will set or compress multiples across the category. Portfolio theses built around "diversified national payer exposure" also just got narrower. The peer set fragmented into five companies doing five different things, and limited partners (LPs) will ask sharper questions about which specific payers and lines a thesis depends on. The defensible answer in 2026 is line-of-business-specific. Category-level theses are gone.

Subscribe now

The Pattern Across the Other National Health Plans

There’s a useful parallel from one year back. CVS Health announced Aetna’s ACA exit on May 1, 2025, affecting roughly one million members across seventeen states. Cigna’s announcement came April 30, 2026. One year apart almost to the day. Two of the largest national payers reached the same conclusion on the same line of business inside twelve months.

The pattern question for the rest of the national plans writes itself. UnitedHealth, Elevance, and Humana each face their own version of the focus-or-divest math, and the Q1 calls already hinted at how those decisions are being made. That’s the subject of next week’s piece in this newsletter, where we’ll walk through what the Q1 cycle has already said and where the Q2 and Q3 calls are most worth tracking. The week after that, we’ll look at what the post-Aetna and post-Cigna ACA picture means for the underlying health of the marketplace itself. That’s a different conversation from the leadership-driven repositioning Cigna’s call surfaced.

The diversified national payer label was always more of a Wall Street comp set than an operating reality, and Cigna fit it least of the five. UnitedHealth has Optum and the provider assets that come with it. Elevance has regional Blues geography. Humana is now a pure-play MA. Cigna built into a pharmacy and specialty company with a commercial insurance arm, and the April 30 announcements made the operating reality match what the segment economics already showed. The Blues' consolidation of the last two years told a parallel story in a different geography. The “national plan” comp set is already collapsing into five companies that do five different things.

For anyone selling into payers, the addressable plan list for any given product is getting smaller and sharper. Total Addressable Market (TAM) work that assumed access to all national plans as the buying universe is now outdated, and the peer group has fragmented faster than most comp models have been updated. That gap is the operational risk on every payer-facing pipeline right now.

Final Thought

The April 30 announcements sit on top of a Medicare Advantage divestiture that closed last March and a leadership transition that names Evanko CEO July 1. The framework Evanko described on the call (management focus, relative size and scale, standardization, automation) is now in the public record, and the divestitures that match it are underway. Account plans built on the 2024 version of Cigna are stale. Comp models that still group Cigna with the diversified nationals are using a category that’s been a Wall Street fiction for two years. Vendors and investors who see the April 30 announcements as the start of an eighteen-month repositioning will hear the next two earnings cycles differently than those who see them as one quarter’s news.

What’s still being written is whether the rest of the national plans run a version of the same calculation, and how soon. Q2 and Q3 calls at Elevance, UnitedHealth, and Humana are now must-listen events. Cigna moved first among the post-Cordani-era nationals. Whether anyone moves next, and how soon, is the open question for the rest of 2026.

The weekly Upward Growth newsletter gives health tech vendors, investors, provider organizations, and management consultancies a clearer view of how the payor market actually works.

If your colleagues are making decisions in this market, they should be reading this too.

💰 Invest in your team with a paid subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

The buying sequence at health plans has inverted in the last 18 months. Financial scrutiny used to be an end-of-cycle review. It now applies twice; once upfront through the operating leader before finance ever sees the deal, and again at the end through the formal finance review that’s always existed. Participants describe the same pattern from different sides of the market: a first call goes well for a vendor, and the operating leader is interested. A follow-up is scheduled, and then the cycle slows or stops in a way that doesn’t match the energy of the first conversation. Meanwhile, investors hear it on portfolio-company forecast calls. And consultants hear it from clients explaining why a previously active opportunity went quiet. The buying motion has changed structurally, and most of the work across the payor ecosystem is still being done against the way decisions had been made.

The change isn’t dramatic enough to make headlines, which is part of why this shift has been harder to read. There’s no announcement, no press release, no single quotable executive change at a single named plan. The clearest description comes from the consulting firms watching plans most closely. McKinsey’s work on rewiring payers for digital and AI describes payers moving away from siloed transformation programs and toward capabilities embedded inside the operating functions that run the business. That’s the inversion in a different language. The financial and regulatory pressures in healthcare for the last two years have reshaped how health plan operating leaders run their own evaluation processes, and the new sequence has consequences for everyone whose work depends on understanding how plans buy.

This article works through what changed, why it changed when it did, what it does to the buying motion day to day, and what it costs the people whose pursuit motions, pipeline forecasts, engagement scopes, and operating models are still built for the older sequence. The free portion lays out the analysis. The paid section gives you what to do with it.

Subscribe now

Operations and Finance Run the Same Conversation Now

The structural change is simple to describe and easy to miss if you weren’t already watching for it. Operating leaders within plans have started running financial logic in their own evaluations before vendors are even advanced to finance review.

The VP who owns Stars used to be able to advance a vendor proposal on operating merit and let finance handle the financial defense at the end. The same VP today is constructing the financial defense as part of the operating evaluation, either by pulling finance into the conversation early or by building the model themselves from finance-supplied templates. The operating and financial decisions occur in parallel rather than in sequence.

The shift is evident across multiple lines of evidence, each pointing to the same underlying integration. Cost containment, modernization, AI deployment, and member experience aren’t being absorbed at plans as four separate workstreams. They’re running as one integrated effort, and integration on that scale isn’t possible while operations and finance keep their reviews separate. HealthEdge calls this year “the great rebalancing” in its 2026 annual payer report, with managing rising costs ranked the top priority for the second straight year, and 85 percent of executives reporting that compliance burden is directly cutting into margins.

Bain’s 2025 healthcare IT investment survey of 228 provider and payer technology leaders shows the same pattern in how plans are choosing technology. Total cost of ownership has become the dominant payer vendor selection criterion, alongside functionality and scalability. Total cost of ownership is finance language. It’s now the operating leader’s first selection criterion, not finance’s last filter.

The contracting layer underneath the buying motion has been rebuilt around similar logic. Health plans are increasingly selecting vendors based on track record. In fact, performance-based contracting is in use by nearly half of purchasers and is growing. Seventy-three percent of vendor contracts run two years or less, and more than half of plans review their vendor solutions annually. The through-line is unmistakable: short contract terms with measurable performance gates are how plans run vendors when finance is in the room from the start.

This isn’t finance taking over operations, as operating leaders still own their metrics. But what has changed is what they are bringing to their own evaluations. They’re bringing finance with them, and they’re bringing it earlier than vendors are prepared for.

What Forced Operations and Finance to Integrate

Plans integrated operations and finance because the financial environment of the last two years made running them as separate conversations unaffordable. Five forces compounded across 2024-2026 to make integration the only response that worked.

Margin compression at historic levels. Milliman’s analysis of 2024 statutory financial statements showed the composite Medicare Advantage underwriting margin at -0.7 percent for 2024, the lowest in five years. National carrier margins compressed about 20 percent year over year. The share of MA plans reporting positive underwriting margins fell from approximately 60 percent before 2020 to around 40 percent in 2023 and 2024. Every major MA carrier announced market exits, benefit cuts, or “margin over membership” pivots through 2025 and into 2026. At that level of pressure, every operating decision becomes a margin decision, which means the operating outcome and the financial defense have to be the same conversation.

V28 risk adjustment is fully phased in. V28 finished its three-year phase-in to 100 percent in payment year 2026, completing a methodology shift that consistently put downward pressure on average risk scores across the transition window. Plans absorbed that pressure by retraining clinical workflows, retooling HCC capture processes, and renegotiating provider arrangements. None of that work happens without finance in the room.

The CY 2027 risk model recalibration paused, not canceled. The CY 2027 advance notice proposed a further recalibration to a model built on 2023 diagnoses and 2024 expenditures. CMS subsequently paused it for the final rule, and the 2.48 percent rate bump in April 2026 came almost entirely from removing the recalibration from the math. The pause is a deferral, not a retreat. CMS has been explicit that the recalibration will return, and when it does, the math reverts to something closer to the 0.09 percent rate that landed in the January advance notice than the 2.48 percent in the April final rule. Plans pricing their next bid cycle, vendor commitments, and benefit design against the current rate are baking in a baseline they’re going to lose, and the operating leaders running those decisions know it, which is why finance is leading the next-cycle planning instead of reviewing it after the fact.

CMS-0057-F operational requirements live. The first public prior authorization metrics were due March 31, 2026, with API requirements taking effect in 2027. Compliance against operational SLAs is now visible publicly, which means the operating leaders who own those SLAs have to defend their technology investment choices against performance that their peers can see in real time.

Stars methodology rewriting toward member experience. CAHPS and HOS measures are projected to reach a combined weight in the high-30s percent of overall Star ratings by the 2029 measurement cycle. The shift moves Stars revenue away from operational compliance and toward measurable member outcomes, which changes which vendor categories actually move the bonus and changes how operating leaders defend Stars investment to finance.

Each force carries its own compliance cost, operating implications, and technology investment. Plans running them as five separate workstreams pay five separate coordination costs and produce five separate financial defenses for capital coming out of the same constrained budget. Integration is the response that makes the math work.

The plans furthest along this path didn’t announce the change. They started running their operating reviews differently.

Subscribe now

Three Things This Changes About How Plans Buy

The integration changes the buying motion in three concrete ways. None of them are messaging refreshes. All three are structural.

1. Financial logic is now table stakes for the first conversation.

The operating leader doesn’t have time to advance a proposal that can’t withstand the financial defense they know finance will apply. They’re also not going to do that work for the vendor. A vendor that shows up to a first call with capability framing and ROI promises but no financial architecture (no model of which budget line is affected, no quantified outcome at the buyer’s plan size, no break-even analysis at lower performance, no answer to what happens if MLR runs high) is signaling that the buyer’s organization will have to do the financial construction itself. Most operating leaders won’t take that on.

The vendors winning at this level show up to first calls with the financial defense already built. I wrote about the specific questions CFOs ask when evaluating proposals (and how vendors can build materials that preempt them) last fall. The principles in that piece have only become more critical as operating leaders have started running those questions themselves, in the first conversation, before finance ever sees the deal.

2. Procurement, security, and (often) legal review now run alongside the operating evaluation, not after it.

In the older sequence, security questionnaires, BAA review, data use agreements, and procurement contracts were completed after the operating leader endorsed the deal. More frequently, they run in parallel much earlier in the process.

A vendor whose security questionnaire takes three weeks to complete, whose BAA template needs legal review, or whose data use agreement requires custom drafting is paying that time cost during the active operating evaluation rather than after. The vendors who move fastest hand over the entire package in the email after the qualification call, which signals seriousness in a way the operating buyer can read.

3. Track record now outweighs capability differentiation.

The recent PHTI data is direct on this. Health plans largely select vendors based on their track record, and the contracting environment rewards measurable performance and shorter contract lengths.

The vendors who can produce dated, attributed, plan-specific case studies covering financial outcomes (not just clinical or operational ones) are evaluated differently than vendors whose case studies live at the capability or pilot level. The pilot-then-scale market-entry approach that worked in the 2010s doesn’t work the same way now. Operating buyers under financial scrutiny aren’t running pilots without a clear path to enterprise scale.

The three shifts compound. A vendor without financial architecture loses the first conversation. Without parallel-track procurement-readiness, they lose the next two months. Without referenceable financial outcomes at comparable plans, they lose the comparison to the incumbent. The deals that used to advance through the gates one at a time now have to clear all three at once.

The vendors winning at this level show up to first calls with the financial defense already built.

What's Breaking in Pipelines, Diligence, and Engagements Right Now

The integration of operations and finance inside plans changes what's true about the buyer, which changes what's true about the work being done against that buyer. The four inputs most exposed are vendor pipelines, portfolio diligence, consulting engagement scopes, and a plan's view of itself. Each one is being valued today on inputs that have already changed underneath it.

Vendor pipelines are the most immediately exposed. A list of named opportunities at named operating leaders looks healthy on a forecast review, but the financial defense the deal will actually face is now the gating factor, and most pipeline reviews don’t surface it. Reps who can articulate how their proposal will hold up against the questions the operating champion’s CFO will ask have forecast quality. Reps who can’t are reporting confidence on opportunities that will die at finance, and the gap between projected pipeline and closed revenue is going to keep widening until the qualification standard catches up.

Portfolio diligence runs into the same blind spot one level up. Reviews of named accounts at portfolio companies typically check the buyer’s title, the rep’s relationship strength, and the deal stage. The new sequence requires a fourth check: whether the rep can construct the financial defense the deal will face. That answer doesn’t surface in a standard sales review and can usually be reconstructed in a focused conversation with the head of sales and the head of finance. Forecast risk is materially different across plans further along the integration versus plans still running the older sequence, which is a diligence question most frameworks haven’t started asking.

Consulting engagement scoping carries similar exposure. Payor strategy work scoped around clinical operations, vendor consolidation, or operating model design without explicit business case architecture is missing the financial layer plans now expect to see embedded in the work itself. Oliver Wyman’s TOMORROWPlan operating model work describes decision rights moving closer to the leaders who own the operating metrics, which means engagements designed for an older decision-rights map are landing in front of stakeholders with different priorities than the ones the work was scoped to serve. The scope that worked in 2023 is now a partial scope, and the engagements being won today bake CFO-defensible business case modeling into the deliverables rather than treating it as a separate workstream.

Health plan executives face a version of the same question internally. The integration has already started at most plans because the financial environment forced the issue. What's still being decided is whether it was deliberately designed or arrived as a series of late CFO vetoes. The first version produces an operating advantage, while the second produces the slowdown vendors are feeling at the front of every deal.

The four exposures compound. Pipelines built for the older sequence overstate forecast quality. Diligence reviews built for the older sequence miss the gating factor. Engagements scoped for the older sequence land in front of the wrong stakeholders. Plans that drift into integration rather than design the integration produce the slowdown their vendors are feeling. Whoever rebuilds their pursuit motion, diligence framework, or engagement scope against the new sequence first has the advantage.

Subscribe now

Everything above is the analysis. Below is what I actually use with clients: a one-page champion brief that arms your operating champion for their CFO meeting, and the discovery language to use in the conversations you're already having.

Paid subscribers get this section plus the full archive of frameworks, scripts, and deep dives.

🔒 Upgrade to a paid subscription to keep reading.

Read more

🤝 Work with Ryan on payor growth strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships are available: Learn More

In January, I wrote about how the prior authorization deadline was already affecting vendor deals. At the time we were 60 days out from the public reporting deadline, and I argued four things: plans would meet the deadline by denying faster rather than deciding better, the friction would simply relocate to appeals and provider relations, public reporting would force plans to answer for their numbers, and the window between the current moment and whatever comes next wouldn’t stay open long.

The March 31st data confirms all four.

For the first time in U.S. healthcare history, every Medicare Advantage (MA) plan and Medicaid Managed Care Organization (MCO) was required to publish what amounts to a prior auth report card: denial rates, approval rates, appeal overturn rates, and decision turnaround times, all posted on the plan’s own public-facing website. Those numbers are now visible, benchmarkable, and permanent.

Industry-wide, the MA appeal overturn rate is 80.7%. Four out of five appealed denials get reversed. Only 11.5% of denials are ever appealed, which means providers are walking away from billions in approved care they could have recovered with a letter.

The aggregate numbers are bad. The plan-level variation underneath them is worse, and it is where the real market intelligence lives.

This article walks through what the report cards show, what the data confirms, and how to use the numbers in your next buyer conversation. If you sell into health plans, advise clients who do, invest in companies that do, or work inside a plan and want to see how vendors will read your metrics, the data is working for you now that it couldn’t before March 31st.

Subscribe now

What the Numbers Show

Until the March 31st deadline, the industry had no choice but to take payers at their word on prior auth performance. Health plans said their denial rates were reasonable, their appeal processes fair, and their turnaround times competitive. None of that could be independently verified at the plan level until now.

The CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) required every MA plan, Medicaid MCO, and Children’s Health Insurance Program (CHIP) issuer to publicly post their prior auth metrics by March 31st, 2026. KFF’s analysis of CY2024 CMS submissions sets the industry baseline: 52.8 million MA prior auth requests in 2024, 4.1 million denials, a 7.7% industry-wide denial rate, an 80.7% appeal overturn rate, and an 11.5% appeal rate.

Those are the benchmarks. What makes the data useful is the variation underneath them.

Harris Secure Connect pulled together a compilation of the seven largest MA insurers, which together hold the majority of MA enrollment. Their report gathers the data. I'm going to analyze five of those plans against each other to show the pattern underneath. Same regulatory framework, same March 31st deadline, but very different operational postures.

Centene (Wellcare MA) denies 12.3% of requests and overturns 95.5% of them on appeal. Read that again. Centene issues denials on more than one in ten requests and reverses nearly every single one when a provider pushes back. That is the highest overturn rate in the entire report card, and it is the single most revealing number in the disclosure. The initial determination process is generating decisions that do not survive clinical review. Every other pattern in the data has to be read against this one.

UnitedHealthcare denies at 12.8% with the lowest prior auth volume per enrollee (1.0 request per enrollee). Few requests, high denial rate. The U.S. Senate Permanent Subcommittee on Investigations (PSI) connected that pattern to UHC’s deployment of the nH Predict algorithm, which drove its post-acute denial rate from 8.7% in 2019 to 22.7% in 2022. Humana and CVS were flagged in the same report for similar post-acute denial behavior, though their overall numbers look different.

Elevance (Anthem) denies at 4.2%, the lowest of the majors. Same market, same regulatory framework, very different operational posture. Elevance has publicly committed not to use AI to automate denials, and its PA Pass program waives prior auth entirely for hundreds of procedure codes for qualifying provider groups. This is what operational maturity at the front door looks like in the data.

Aetna (CVS) denies at 11.9% with the highest appeal rate of any major insurer at 19.9%. Providers invest in appeals only when they believe they will land, which makes that 19.9% a signal about what providers experience with Aetna denials. When providers are willing to push back at almost double the industry rate, they are telling you something about the initial review process.

Kaiser Permanente denies at 10.9% with a 1.6% appeal rate and a 51% overturn rate. The headline denial rate looks similar to the others, but the 1.6% appeal rate is the story. Kaiser's integrated model means the provider making the request and the plan denying it are often the same organization, which collapses the (often) adversarial dynamic that drives appeal behavior everywhere else. The data reflects it: very few appeals, and only half of those filed are overturned. (Kaiser is not a useful benchmark for any plan that doesn't share its structure.)

The Medicaid picture is starker. The Office of Inspector General’s (OIG) 2019 baseline put MCO denial rates at 12.5%, more than double the MA rate at the same time, and the overturn rate on Medicaid appeals is only 36%, less than half the MA rate. The gap comes down to accountability structure. In MA, a denial upheld on internal appeal automatically routes to an independent external review. Only 15 of 39 MCO states have an equivalent external review requirement for Medicaid, and 89% of Medicaid enrollees never appeal. Same denial behavior, but far less backstop.

Cigna is the outlier worth watching. They published their first Customer Transparency Report on March 12, nearly three weeks before the deadline, reporting that fewer than 2% of customers receive a prior auth denial and that 80% of prior auths are approved within 24 hours. They also removed 345 services from their PA list, a 15% reduction. Publishing early was a strategic choice. Expect Cigna to use those numbers in the 2027 bid cycle.

There is more to the numbers than what appears on the surface. Here's what they confirm about how plans handled the March 31st deadline.

What the Data Confirms

Health plans have not been sitting still. On April 7, AHIP and the Blue Cross Blue Shield Association reported that the roughly 50 insurers who signed the June 2025 voluntary prior auth pledge have eliminated 11% of prior authorizations since the commitment, reducing 6.5 million requests and achieving MA reductions of more than 15%. Plans are pulling procedures off PA lists, building continuity-of-care protocols for members who switch coverage, and working toward real-time electronic determinations on the 2027 FHIR timeline.

But reducing the volume of prior auths does not automatically improve the quality of the ones that remain, and the CY2024 data confirms that. Four patterns I flagged in January now have the numbers to back them up:

Plans met the deadline by denying faster. Centene is the cleanest case study. A 95.5% overturn rate on a 12.3% denial rate means the initial decisions are not surviving clinical review. That pattern only occurs when decisions are made faster than they should. The American Medical Association’s (AMA) 2024-2025 prior authorization survey puts physician burden at 39 prior auths per physician per week and 13 hours of staff time, and 61% of physicians reported concerns that plans were using AI to increase denials with minimal human review. The data confirms what providers were already living.

Compliance relocated friction rather than eliminating it. The industry-wide 80.7% overturn rate is the evidence. Friction moved downstream into appeals, where it now sits in a different cost center and a different part of the member experience.

Plans with poor numbers are starting to face questions from brokers, consultants, and members. The disclosures are public, benchmarkable, and already being referenced by advocacy groups and trade press. Plans cannot claim their prior auth numbers are defensible without being prepared to answer for them in every renewal conversation and every member-facing review cycle.

The window on this data is short. This is the pattern that matters most because every other insight in this article is most useful right now. In 90 days, the industry will be talking about CY 2027 bids, summer enrollment, and the next CMS drop. The data will still be public, but vendors who show up in Q3 referencing it will be walking into rooms where five competitors already did.

Two things have shifted since my January article. The Trump administration pulled three of the original CMS-0057-F requirements in June 2025. Health equity analysis of prior auth practices is no longer required, plan-level reporting was reduced to contract-level aggregate data, and the AI oversight requirements for MA denial systems were dropped. What is still enforced: the 7-day standard and 72-hour expedited decision timelines, contract-level reporting, specific denial reasons on every denial, and the annual public posting. The transparency infrastructure held even under a deregulatory administration, which tells you something about where CMS has conviction and where it does not.

One thing CMS did not mandate was where plans had to post the data. The numbers live in different spots on different plans’ websites, some on compliance pages, some in provider sections, some in footer links that take three clicks to reach. The information is there, but vendors and consultants who want to read these numbers have to look for it. Most won’t, and that is part of why the window is open for the ones who do.

The second shift is on the horizon. The Fast Healthcare Interoperability Resources (FHIR) Prior Authorization Application Programming Interface (API) mandate takes effect January 1, 2027, which means the technology that would let plans make better initial decisions at scale arrives in eight months. Between now and then, plans are operating on the manual infrastructure they built to hit the January 2026 deadline, and that infrastructure is exactly what produced the 80.7% overturn rate. The report cards you are reading today are the best-case output of a system that wasn’t built for the job it is being asked to do.

So pull up your prospect’s prior auth numbers before your next meeting. Even if you don’t sell prior auth, they tell you something about how the plan operates that most of your competitors haven’t bothered to look up.

Subscribe now

The Four Patterns Worth Recognizing in the Data

Having the data matters less than knowing what it means. Most vendors will read the report cards, note the big numbers, and move on. Those who get something useful from the disclosure are those who read plan-level patterns as operational signals.

Four patterns are worth learning to recognize. Each one shows up in different parts of the market, and each one points to a different buyer situation:

1. High denial rate plus high overturn rate equals an initial determination problem. Centene is the archetype, with a front-door process that produces decisions that collapse on appeal. If you sell clinical decision support, documentation improvement, utilization management (UM) workflow tooling, or anything that touches first-pass decision quality, you have a data-backed hook. The plan’s own numbers show the initial process is not working, and the downstream costs in appeals volume, provider abrasion, and member experience hits are known and real.

2. High denial rate plus low appeal rate equals a provider relations problem. When providers stop appealing despite high denial rates, they have decided the effort isn’t worth the return. That disengagement affects network adequacy, network stability, and eventually Consumer Assessment of Healthcare Providers and Systems (CAHPS) scores, which feed into Stars. KFF polling already shows that most insured adults find prior auth difficult to manage, so member experience is a documented pressure point before you factor in broken initial decisions. If you sell provider engagement, network management, or member engagement solutions, the data points you toward the right accounts and conversations.

3. Low denial rate equals operational maturity at the front door. Elevance and Cigna have already invested in the front end. (i.e., Selling UM tools into those plans might be harder.) Quality, care management, and clinical workflow tools may be an easier fit because they are the next layer up the stack, and those plans have shown interest in investing there.

4. Missing or late disclosures equal a compliance bandwidth problem. A plan that did not publish on time or published only the minimum contract-level aggregate is sending a signal. It is either short on compliance capacity or deliberately minimizing its exposure, and both readings argue for the same vendor posture: calibrate your ask to what their team can actually absorb.

The pattern-recognition layer matters because the data itself is a commodity. Every vendor has access to the same numbers. What the vendor does with those numbers, how they frame them in discovery, what they ask, how they read silence, is where the insight actually lives.

Everything above is the public data and the framework for reading it: what the numbers show, what they confirm about how plans handled the January deadline, and the four buyer patterns worth recognizing. Below is what I actually use with clients: discovery language for a high-denial plan, an operationally mature plan, and a non-publisher, plus the one-page champion brief that turns the plan’s own numbers into an executive conversation.

Paid subscribers get this section plus the full archive of frameworks, scripts, and deep dives.

🔒 Upgrade to a paid subscription to keep reading.

Read more

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

🎁 Unlocked: This post includes the full deep dive
Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

The Centers for Medicare & Medicaid Services (CMS) issued two massive documents to the payor market in the span of five days. On Thursday, April 2, the Final Rule landed, and I covered what it means for selling into payers. Then on Monday, April 6, CMS released the CY 2027 Rate Announcement, and this one deserves its own article because the Final Rule is about policy while the Rate Announcement is about money, and money is what changes how your buyer behaves.

Here’s the headline: CMS is sending $13 billion more to Medicare Advantage (MA) plans in 2027 than in 2026, a 2.48% net average increase that’s a dramatic reversal from the 0.09% CMS proposed in January 2026. When that January number dropped, health insurer stocks cratered. Humana fell over 20%. UnitedHealth lost 19%. Plans started modeling benefit cuts, market exits, and vendor contract reductions. On April 6, the mood flipped: UnitedHealth jumped 11%, Humana climbed 9%, and CVS gained nearly 9%.

The rate bump does not mean stalled deals are about to start moving again, and most vendors I’m hearing from are wrong about the timeline. What follows is a breakdown of what the Rate Announcement actually changes about your health plan buyer’s behavior over the next 12 months, where it creates real urgency to buy, and why the single most important number in this announcement isn’t the 2.48%.

Subscribe now

The $13 Billion Swing

In January, CMS proposed a 0.09% rate increase for CY 2027. To put that in context, plans received a 5.06% increase for CY 2026, so the January proposal represented a near-5-point year-over-year drop, the smallest proposed increase in recent memory. CMS estimated it would deliver roughly $700 million in additional MA payments, but compared to the billions in additional funding plans had received in prior years, the number landed as a de facto cut, and the industry sentiment treated it that way.

On April 6, CMS finalized a 2.48% increase, translating to over $13 billion in additional payments and representing a swing of roughly $12 billion between what January proposed and what April delivered.

Here’s the CMS table that tells the story:

Look at the Risk Model Revision and Normalization line. It moved from -3.32% to -1.12%, and that single row explains almost the entire $13 billion swing. CMS also updated the effective growth rate from 4.97% to 5.33% after incorporating Q4 2025 fee-for-service cost data, which added real dollars. But even at 2.48%, the increase doesn’t keep pace with the utilization trends plans are reporting: inpatient costs, Part B drugs, post-acute care, and behavioral health are all running hot, and plans heading into bid season know their cost pressures are growing faster than their revenue. The risk model row is where the real story lives, and understanding why it moved tells you more about the next 12 months than the 2.48% headline does.

The Risk Model Freeze Is the Real Story

This is the part of the announcement that matters most, and it requires some context to understand.

CMS uses a risk adjustment (RA) model to determine how much it pays MA plans for each enrolled member. The model assigns a risk score based on the member’s diagnosed conditions, and that score drives the per-member payment. When CMS updates the model, the math behind every plan’s revenue changes.

The current RA model, known as the 2024 model, was built on 2018 diagnosis data and 2019 spending data. It went through a three-year phase-in: one-third of risk scores were calculated under the new model in 2024, two-thirds in 2025, and full implementation arrived in 2026. Plans spent three years absorbing those changes.

In January 2026, CMS proposed replacing this model for CY 2027 with a recalibrated version using 2023 diagnoses and 2024 expenditures. That proposed recalibration was the -3.32% line in the table above, and it was the single biggest reason the January 2026 Advance Notice landed at 0.09%.

CMS pulled the update entirely, so the current model stays in place for CY 2027.

Two things drove this decision. First, the 2024 expenditure data contained a spending anomaly tied to skin substitute products that would have distorted the model’s coefficients, effectively building the new model on flawed inputs. Second, CMS acknowledged that plans had just finished absorbing the V28 RA model phase-in and needed those changes to settle before another recalibration layered on top. On the CMS press call, Director of Medicare Chris Klomp framed it as giving plans time to adjust, while stressing that CMS has not abandoned the recalibration and will keep a “careful eye” on insurer practices.

Here’s why this matters more than the 2.48% headline. The 0.09% that terrified the industry in January 2026 wasn’t a hypothetical. It was the actual rate CMS proposed, including the recalibration. The only reason April 2026’s number landed at 2.48% is because CMS removed the recalibration from the equation. When CMS reintroduces the updated model (and they’ve said they will), the math reverts to something that looks a lot more like the January 2026 Advance Notice. Essentially, the Advance Notice is a preview of the next cycle.

Anyone building a strategy or a pipeline around 2.48% as a new baseline is mispricing what’s ahead. CMS described its vision for risk adjustment in terms of three guiding principles: simplicity, competition regardless of plan size, and payments that accurately reflect beneficiary health risk. That language signals an agency that simply paused, not one that backed down.

For vendors, this changes how you position multi-year contracts. If your deal is structured around a two- or three-year commitment, your buyer is already thinking about what happens when the freeze lifts, and you should be too. The rate announcement shifted plans from surviving the rules to winning the bid, and the vendors who can quantify their value under both the current model and a recalibrated one have a positioning advantage over competitors selling as if the current rate environment is permanent.

The risk model freeze also sets the context for the next big operational change in the Rate Announcement: what CMS did with chart review.

Subscribe now

What the Chart Review Exclusion Actually Changed

If you don’t sell risk adjustment tools, you might be tempted to skip this section. Don’t. The chart review exclusion in this Rate Announcement is going to affect your buyer’s financial position, their budget priorities, and the competitive dynamics between the plans you’re selling to, regardless of what you sell. Understanding why starts with how health plan revenue actually works.

MA plans are paid based on the health risk of their enrolled members: the sicker the population, the higher the CMS payment. Plans submit diagnosis codes for each member, CMS converts those codes into a risk score, and the risk score determines the per-member payment. If a member has diabetes, heart failure, and depression, but only diabetes is coded and submitted, the plan gets paid for a diabetic, not for someone with three chronic conditions. Revenue for an MA plan is directly tied to how completely those submissions reflect the actual health of their population.

Chart review is one of the primary ways plans close that gap. A chart review vendor reviews medical records, identifies conditions that were diagnosed but never properly coded or submitted, and sends those additional diagnoses to CMS for risk score calculation. Some of those chart review records are “linked” to a specific clinical encounter, such as an office visit or a procedure, and those records are unaffected by this rule change. Others are “unlinked,” meaning the diagnosis was found in a medical record but can’t be tied to a specific dated encounter. That’s the category CMS just excluded.

For years, CMS allowed unlinked chart review submissions. Plans built significant portions of their risk-adjusted revenue around this practice, particularly through in-home health risk assessments and third-party retrospective chart review vendors. Plans optimized around what was permitted, which is exactly what you’d expect them to do.

Starting in CY 2027, CMS changed the rules: diagnoses from unlinked chart review records no longer count for risk score calculation. If a diagnosis can’t be tied to a documented clinical encounter, it doesn’t affect payment.

According to CMS, 85% of the 88.8 million unlinked chart review records submitted in 2023 for 2024 payment couldn’t be matched to any encounter data record. Average payment impact of the exclusion: -1.53%. CMS carved out an exception for beneficiaries who switch between MA organizations (the “switcher exception”), without which the impact would have been -1.78%.

That -1.53% is an average. The variation across plans is enormous. Plans that built their risk adjustment strategy around unlinked chart reviews are absorbing a much larger hit, while plans that relied primarily on encounter-based documentation are barely affected. An important note on framing: plans didn’t do anything improper here. CMS allowed this practice, plans optimized within the rules, and CMS changed the rules. If you sell to plans, that distinction matters in every conversation you have about this topic.

Subscribe now

How the Chart Review Exclusion Hits Every Vendor’s Budget

Here’s why this matters even if you don’t sell risk adjustment tools. When a plan loses meaningful revenue due to the chart review exclusion, that financial pressure doesn’t stay within the risk adjustment department. It shows up in budget decisions across every vendor category. A plan absorbing a -2% or -3% revenue hit is going to scrutinize every line item, including your care management contract, your quality reporting platform, and your member engagement tool.

This creates a paradox worth watching. The same exclusion that pressures some buyers’ budgets also creates emergency-level procurement urgency for others. Plans that lost revenue need to shift from retrospective documentation to prospective risk capture, meaning they need to start documenting diagnoses during actual clinical encounters rather than finding them after the fact in medical records. That shift requires encounter data remediation tools, prospective coding workflow platforms, and better linking between chart review submissions and encounter records.

If you sell in that space, some of your prospects are moving faster than they’ve ever moved. But if the exposure is severe enough at a given plan, the budget cuts from lost revenue could stall your deal before the urgency translates into a purchase order. Which dynamic dominates depends on how exposed your specific buyer is, and that’s a question you need to answer before you forecast.

Also, note this policy is part of a multi-year CMS trajectory to tighten how diagnoses translate into payments, meaning the financial pressure on heavily exposed plans is structural, not a one-time adjustment. That structural pressure shapes how the rate announcement actually hits vendor procurement budgets, and it’s the question most vendors are getting wrong right now.

When the Rate Announcement Actually Shows Up in Your Deal

Sure, the 2.48% improved the mood, but unfortunately, it won't loosen budgets on the timeline most vendors are expecting.

Health plans are heading into bid season right now, with bids due to CMS in June 2026. Those bids determine what each plan offers members in CY 2027: the benefits, the premiums, the provider networks. Vendor budgets for CY 2027 are largely set as part of that process. The rate announcement confirms what plans have to work with, but it doesn’t create new vendor spend for the current cycle. For most vendors, the financial relief from the 2.48% increase won’t show up in procurement budgets until CY 2028. It will improve your buyer’s willingness to start conversations for next year’s implementation, but it won’t accelerate a deal this quarter.

One exception, and it’s specific: vendors selling solutions to problems the Rate Announcement just created. Encounter data remediation, prospective risk capture, and chart review linking. When a plan’s CFO realizes that unlinked chart review diagnoses are being excluded from risk scores starting CY 2027, procurement shifts from “next year’s budget” to “we need this before our next submission window.” Those purchases break the normal budget cycle because they address an immediate revenue protection problem.

For everyone else, patience is the right posture. Internal health plan forces drive deal timing: budget cycles, bid timelines, steering committee approvals, and procurement queues all operate on their own calendar, and a favorable rate announcement doesn’t override those mechanics.

And the 2.48% itself deserves scrutiny at the local level. Health policy research firm Avalere Health published a county-level analysis showing that the national average masks enormous geographic variation, with county-level benchmark changes ranging from -4.5% to +19.8%.

Before your next pipeline review, look at the map above. If your prospects operate primarily in counties that saw decreases or flat benchmarks, the 2.48% headline isn’t their reality, and your deal assumptions need to reflect that. If they’re in counties with above-average increases, the relief is real…but so is the increased competition from other vendors who see the same opening.

For context on how much local variation matters: even in CY 2026, when plans received a 5.06% increase (more than double what they’re getting for CY 2027), nearly 50% of counties saw at least one plan terminate, and in 21 counties every MA plan was terminated.

Your buyer’s emotional state changed, but their budget math may not have changed as much as you think. That’s why, when your buyer brings up the rate announcement, the right response is demonstrating that you understand 2.48% is breathing room in the aggregate and that the math looks different depending on where they operate.

Subscribe now

Final Thought

The risk model freeze is the reason the 2.48% landed where it did, and the freeze is temporary. CMS said so on the record.

Health plans are building bids right now with a 12-month window of stability that closes as early as January 2027 when the next Advance Notice drops. Your buyer’s emotional state changed. Their budget math may not have changed as much as you think.

Vendors who use this window to get in front of buyers while the mood is favorable, position around the operational problems the announcement created, and build relationships before the next regulatory cycle resets the board will have pipeline built when the next Advance Notice lands. Vendors who wait for the budget environment to “fully improve” will find themselves starting conversations in late 2027 while everyone else is already in procurement.

If you're working through what this means for your positioning, your messaging, or your go-to-market strategy, Upward Growth is a health plan market advisory firm that works with health tech vendors, investors, provider organizations, and management consultancies to build strategy around how health plans actually buy, operate, and make decisions. Contact us here.

The weekly Upward Growth newsletter gives health tech vendors, investors, provider organizations, and management consultancies a clearer view of how the payor market actually works.

If your colleagues are making decisions in this market, they should be reading this too.

💰 Invest in your team with a paid subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.

🤝 Work with us on payor market strategy: Contact me

🟦 Connect with the author, Ryan Peterson, on LinkedIn.

🎧 Listen to the Upward Growth Podcast: Apple | Spotify

📰 Newsletter sponsorships: Learn More

🎁 Unlocked: This post includes the full deep dive
Most Tuesday articles start with a free section and then continue behind the paywall. Today’s post is left completely open so you can read the entire edition.

Paid subscribers get the full deep dive every week, plus playbooks, case breakdowns, and the ability to reply with their own questions.

Q1 is in the books, spring is here, and welcome to that stretch of the regulatory calendar where the final rule and final rate announcement land in the same week, giving everyone who touches the payor market something to stress about. To that end, CMS dropped the CY 2027 Medicare Advantage and Part D final rule on April 2.

Within hours of its release last Thursday, LinkedIn was full of final rule summaries. Most of them were good, and most of them told you what changed. This article explains why it matters and is written for anyone who sells to health plans, invests in companies that do, advises provider organizations that depend on payor contracts, or helps clients make sense of the payor market. The goal is to give you a point of view you can bring into your next meeting without having read the full document (though I still recommend you do).

When the proposed rule came out in December 2025, I broke down six signals that would change how health plans buy. Now we know which ones held. Most of the proposed rule survived intact, but what changed between proposed and final, and what CMS added that wasn’t in the original document, tells you more about the agency’s direction than what stayed the same.

Two surprises worth flagging upfront. The health equity rollback goes further than anyone expected. CMS didn’t just kill the Health Equity Index (HEI) reward. They eliminated four distinct sets of health equity requirements in a single rule. And CMS finalized supplemental benefit and debit card provisions that came from the CY 2026 proposed rule, not the CY 2027 document, so most vendors who tracked the November release have no idea these are coming.

The throughline from CMS is pretty clear: fewer rules, higher stakes, and a smaller set of requirements they fully intend to back up with enforcement. Let’s get into it.

Subscribe now

What Changed Between Proposed and Final (And Why the Delta Matters More Than the Rule Itself)

CMS received over 42,000 comments on the proposed rule. What survived the comment period and what didn’t reveals where CMS has conviction and where it backed down under pressure.

Let’s start with Stars. CMS proposed removing 12 measures and finalized 11. The diabetes care eye exam measure survived after pushback from plans and provider groups who argued it drives meaningful clinical action and still shows variation across contracts. One measure out of twelve doesn’t sound like much, but it tells you something worth paying attention to: CMS listens when the clinical case is specific, evidence-backed, and tied to real outcomes. Vague objections about “administrative burden” didn’t move the needle, but targeted clinical arguments did.

CMS also proposed a “provider termination” Special Enrollment Period (SEP) that would have allowed members to switch plans when their provider left the network, but that provision was not finalized. CMS pulled it back entirely, stating it will consider future rulemaking. Withdrawing one of the bigger proposals in the original document signals caution about disrupting plan stability while plans are already dealing with benefit cuts, market exits, and over 1.8 million members forced to choose new plans.

Here’s the overall pattern: all deregulation provisions finalized, all Inflation Reduction Act (IRA) codification finalized, 11 of 12 Stars measure removals finalized, and every health equity rollback finalized. The Requests for Information (RFIs) on risk adjustment modernization, Chronic Condition Special Needs Plan (C-SNP) dual enrollment, and wellness/nutrition policy didn’t produce rule changes (CMS said it will consider comments for future rulemaking), but the provisions that were on the table moved forward with almost everything intact. CMS had the estimated spending impact from the Stars changes alone modeled at nearly $14 billion in additional Medicare spending over the next decade, and they didn’t blink.

For companies selling into payors, this matters because it shows you where objections work and where they don’t. If you’re trying to make a case to a buyer that a certain capability still matters, your argument needs to look like the eye exam defense (specific, clinical, evidence-backed) rather than the provider termination SEP (broad, structural, politically complicated).

That delta between proposed and final also tells you something about CMS’s broader direction, which becomes clearer when you look at what they did with health equity.

The Health Equity Rollback Is Bigger Than the Headline

Most coverage of this rule will report that CMS killed the HEI reward and leave it at that. That’s the headline, but it’s only one piece of a much larger shift. CMS finalized four distinct health equity rollbacks in a single rule: they eliminated the requirement for MA quality improvement programs to include health disparities reduction activities, removed health equity requirements for MA Utilization Management (UM) committees (including the health equity expert member requirement), killed the annual health equity analysis and its public posting obligation, and rescinded the requirement for plans to send mid-year notices about unused supplemental benefits.

None of these is surprising on its own. Industry observers like Crowell & Moring noted these rollbacks were expected, given the administration’s position on DEI-related requirements. But most vendors are processing them one at a time instead of recognizing what they add up to: the compliance infrastructure that justified an entire category of vendor purchases just got dismantled.

If you sell health equity analytics, social determinants of health (SDOH) solutions, or population health tools, the buying signal just changed. When your pitch relied on “plans are required to do this,” the mandate was doing a lot of the selling for you. That mandate is gone. Plans serving dually eligible populations, plans in markets with significant disparities, and plans competing on quality where outcomes vary widely still need this work. But the conversation shifts from “we have to” to “we choose to,” and “we choose to” requires a much stronger ROI case than a regulatory citation ever did.

If your value proposition still leads with requirements CMS just eliminated, you have a positioning problem to fix before your next buyer call. That means rebuilding around financial outcomes a CFO can defend in a budget meeting: cost avoided per member, gaps closed per quarter, readmission reductions that show up in the medical loss ratio (MLR). The buyers still funding vendors right now are the ones whose CFOs can stress-test the ROI at 70% of projected performance and still see the math work.

One more thing worth noting here: even as CMS rolls back requirements, enforcement hasn’t relaxed. The Office of Inspector General (OIG) released its first MA-specific compliance guidance since 1999 in February 2026, the Department of Justice (DOJ) recovered $6.8 billion through False Claims Act (FCA) cases in FY 2025, and risk adjustment remains a top enforcement priority. Fewer reporting requirements doesn’t mean less exposure, but it does mean plans have fewer internal checkpoints catching problems before a regulator does.

The health equity rollback reshapes who buys and why, but the Stars overhaul reshapes what every plan gets measured on.

Subscribe now

11 Measures Removed, One Added. The One They Added Is the One to Watch.

CMS confirmed the removal of 11 measures from the Stars program, mostly administrative and process measures where plans were scoring high with little variation between contracts, and refocused the program on clinical care, outcomes, and member experience where meaningful performance differences actually exist.

To understand the magnitude: CMS estimates these Stars changes will produce a net impact of $18.6 billion on the Medicare Trust Fund from 2027 through 2036 (a separate and larger figure than the $14 billion in additional Medicare spending from the overall policy changes, because the Trust Fund estimate captures the downstream effects on Quality Bonus Payments (QBPs) and plan rebates). Press Ganey’s modeling, which was based on the proposed rule’s 12 measure removals with 11 ultimately finalized, projected $1.3 billion in QBP losses and estimated that roughly a quarter of MA contracts could lose half a Star.

Those administrative measures weren’t just easy points, they were also a buffer. Plans that scored well on them could absorb a weak year on a clinical measure without losing their overall Star rating. Now that some of that buffer is gone, the math gets harder in two ways: the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey and Health Outcomes Survey (HOS) will account for nearly 40% of total Star weight by 2029, and each remaining measure now carries more relative weight, which means a single bad performance year does more damage than it used to. For plans that treated member experience as a secondary priority behind clinical gap closure, that calculus just flipped.

CMS described this as “fundamentally shifting our approach to quality” and “moving away from administrative box-checking.” Adding a new clinical measure in the same rule that removes 11 administrative ones makes that statement hard to misread.

And that new measure is the sleeper. CMS added Depression Screening and Follow-Up, effective for the 2027 measurement year and reflected in 2029 Star Ratings. Behavioral health vendors now have something they’ve rarely had in Stars conversations: a discrete, measurable quality hook tied to a specific measure with a defined timeline. “We directly impact your Depression Screening and Follow-Up score” is a materially sharper pitch than “we improve behavioral health outcomes,” and it gives the health plan Stars team something concrete to model.

There’s a second financial angle that goes beyond Stars. Better depression screening produces better behavioral health documentation, which flows into risk adjustment. A plan that identifies and documents a previously undiagnosed major depressive disorder isn’t just closing a Stars gap; they’re potentially capturing a Hierarchical Condition Category (HCC) code that improves their risk-adjusted revenue. Behavioral health vendors who can quantify both the Stars impact and the risk adjustment lift have a dual financial hook that most competitors aren’t connecting yet.

For member experience and CAHPS-focused solutions, the relative weight increase means every percentage point of CAHPS improvement now carries more financial weight than it did under the old measure set. And if your value proposition was tied to any of the removed measures, the repositioning window is narrow, since CY 2027 bids are being built right now.

What plans get measured on is only half the story. The next set of provisions covers operational requirements that most vendors tracking the 2027 regulatory cycle haven't even seen yet.

The Supplemental Benefit Rules Nobody Saw Coming

If you followed the CY 2027 proposed rule closely (or read my article covering it), these provisions weren’t in it. CMS finalized two supplemental benefit policies from the CY 2026 proposed rule, and they landed in this final rule without the advance notice that vendors tracking the 2027 regulatory cycle would have expected.

Two provisions, both operational, both worth understanding even if you don’t sell supplemental benefits directly.

First, plans must now publicly post the eligibility criteria they use to determine which chronically ill members qualify for Special Supplemental Benefits for the Chronically Ill (SSBCI). That means the internal criteria that used to live inside the plan’s operations are now visible to competitors, regulators, members, and advocacy groups.

Second, supplemental benefit debit cards must now be electronically linked to plan-covered items through a real-time point-of-sale (POS) verification system that confirms eligibility at the time of purchase, and cards are limited to the specific plan year. No more carrying balances or using cards for items outside the benefit design.

These rules land in a market that’s already under pressure. Roughly 30% of Medicare Advantage Organizations (MAOs) now offer flex cards with at least one nonmedical supplemental benefit, with average annual values reaching $1,430, and the flex card market is still growing. But plans have also been pulling back supplemental benefits broadly: OTC allowances dropped from 73% to 66% of plans, meals from 65% to 57%, and transportation from 30% to 24% between 2025 and 2026. Plans are cutting benefits and being told to tighten controls on the ones that remain, and that squeeze is going to force hard conversations between plans and their supplemental benefit vendors over the next 60 days.

If you sell benefits administration platforms, card technology, or supplemental benefit solutions, the real-time POS verification requirement is a technology mandate, and plans will surface whether your platform supports it during CY 2027 bid preparation. If you're a plan evaluating your current card vendor, this is the question that tells you whether your partner saw this coming or got caught flat-footed.

This SSBCI transparency requirement is part of a broader pattern. Plans were already required to post prior authorization metrics on their public websites as of March 31, including denial rates, turnaround times, and appeals outcomes. Now, SSBCI eligibility criteria join that list. For the first time, regulators, competitors, advocacy groups, and anyone selling into health plans can see how a plan operationalizes its supplemental benefits and how it handles prior auth without ever getting on a call with anyone at the plan.

This is pre-call intelligence that didn’t exist a year ago. You can see a plan’s SSBCI criteria before your first meeting and reference their prior auth metrics in a discovery call. And as I wrote in January when the prior auth deadlines hit, plans that met the deadline by speeding up denials didn’t eliminate friction, they relocated it into appeals, provider relations, and member experience. Now those relocated problems are visible in the public metrics. Plans know this information is out there, which means they’re more receptive to vendors who can help them make those numbers defensible.

CMS tightened controls on supplemental benefits in the same rule where it loosened requirements on nearly everything else, and that tension is the story of this entire rule. It's also where the budget opportunity lives.

Subscribe now

The Deregulation Pattern (And Where the Freed-Up Budget Goes)

CMS explicitly cited Executive Order 14192 across multiple provisions in this rule. Health equity requirements, mid-year supplemental benefit notices, UM committee mandates, agent and broker restrictions, call center requirements, and creditable coverage disclosures. All of these rolled back in a single document.

For enrollment and distribution tech companies, the agent and broker changes deserve a closer look. CMS removed the 48-hour Scope of Appointment (SOA) waiting period, allowed marketing events to immediately follow educational events, and removed restrictions on how licensed agents interact with beneficiaries. That opens up the agent sales motion considerably.

But here’s what makes it interesting: plans have been cutting supplemental benefits (things like over-the-counter allowances, meal delivery, transportation to appointments, and the flex cards that pay for them) for two years running. So you have more agents selling more aggressively into thinner benefit packages, which means agents will naturally gravitate toward plans that kept their supplemental benefits, because those plans have something compelling to actually offer. If you help plans with enrollment, distribution, or member acquisition, plans with the strongest remaining benefit packages now have a distribution advantage they didn’t have six months ago, and they need the technology to act on it.

The bigger story in this section is about where the freed-up money goes. Health equity analysis staff, UM committee health equity expert roles, mid-year notice production, annual health equity analysis creation and public posting. All of those activities required budget, people, and vendor support. When plans no longer need to fund them, that budget migrates somewhere. Some gets banked as savings by plans under margin pressure. Some shifts toward areas where CMS is increasing scrutiny, like supplemental benefit compliance and Stars measure performance. If you can connect your solution to where that budget is heading, you have a timing advantage over competitors still pitching into compliance categories that no longer exist.

Here’s the tension that runs through the entire rule: CMS simplified the requirements, but the consequences for getting them wrong haven’t changed. Medicare Advantage fraud remains a top enforcement priority for both DOJ and OIG, and several of the removed Stars measures (timely claims processing, call center responsiveness, enrollment and disenrollment processing) served as built-in operational checkpoints. Plans reported on them because they had to, and in doing so, they caught problems early. With those measures gone, plans lose the internal early warning systems they’ve relied on for years. For compliance, documentation integrity, and audit-readiness vendors, the pitch isn’t “enforcement hasn’t relaxed.” The pitch is “the safety nets your buyer relied on are gone, and they need something to replace them.”

What This Rule Means for Each Vendor Category

The scorecard above maps where each vendor category lands after this rule. But the more useful takeaway isn’t which column you’re in. It’s what the rule tells you about how your buyer’s internal priorities just shifted. Plans that used to spend budget and staff time on health equity reporting, UM committee compliance, and administrative measure tracking now have capacity and dollars that need to go somewhere. The vendors who win CY 2027 deals are the ones who can credibly say “that budget should come to us, and here’s the financial case for why.” If you can’t make that case in language a CFO would defend in a budget meeting, the budget gets banked as savings or goes to a competitor who can.

SDOH, enrollment tech, and population health platforms are the ones to watch here. The mandate is gone, but the operational need remains, and the buyers who still invest will do so because someone made the outcomes and ROI case clearly enough that “we choose to” felt like an obvious decision.

Part D Is Now Permanent. Your Financial Models Should Be Too.

And finally, CMS codified the IRA-driven Part D redesign into permanent regulation, locking in the $2,000 out-of-pocket cap (adjusted to $2,100 for 2026), the elimination of the coverage gap, catastrophic phase changes, and the Manufacturer Discount Program. These changes were already in effect through program instructions, but with that authority expiring, CMS wrote them into the permanent rules, which means plans can stop wondering whether any of this might reverse and instead they can start treating these economics as the baseline for every financial model going forward. If your solution touches pharmacy costs, medication adherence, or Part D plan economics, your ROI projections can now assume these margin pressures are permanent.

Final Thought

Four months ago, I wrote about six signals from the proposed rule and said the theme was uncertainty. CMS has now answered most of those questions, and the answer across nearly every provision was: we meant it.

The direction is consistent enough to build a strategy around: Clinical outcomes over administrative process. Tighter controls where CMS sees abuse, lighter requirements where it sees unnecessary burden. Permanent Part D economics. Enforcement that hasn’t blinked even as the rule set shrinks.

CMS wants fewer rules that matter more, and this rule is the clearest signal yet of what “matters more” actually looks like.

The frameworks in the weekly Upward Growth newsletter help health tech sales and marketing teams navigate payor conversations as the market continues to shift.

If your colleagues are in those conversations, they should be reading this too.

💰 Invest In Your Team with a Paid Subscription.

Get a group subscription

Give a gift subscription

💡 Pro tip: Many subscribers expense Upward Growth through their company’s professional development, training, or learning budget. Here’s a one-minute email template to get your manager to approve expensing your subscription.