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Blog

Outlook 2026: What CMS鈥檚 Proposed 2027 NBPP Signals for ACA Marketplaces, States, and Consumers

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The Centers for Medicare & Medicaid Services (CMS) proposed  marks a notable shift in Marketplace policy, expanding lower premium plan options, relaxing certain federal standards, and moving more implementation and oversight responsibility to states and Marketplaces. It also introduces eligibility and verification policies that could significantly affect enrollment, operations, and market stability. 

To unpack what this could mean for plan year 2027 and beyond, Andrea Maresca spoke with Zach Sherman, Managing Director for Coverage Policy and Program Design at 量子资源网 (量子资源网); Lina Rashid, Principal at 量子资源网; and , PhD, Principal at Wakely, an 量子资源网 company, who, alongside colleagues, published a Policy Brief on state-level and consumer impacts, as well as a Wakely  on the proposed rule. 

 Q: When you zoom out from the technical details, what are the big takeaways from the proposed 2027 NBPP for states, consumers, and issuers? 

Lina Rashid: At a high level, the proposal reallocates risk and responsibility across the system. Consumers may see more lower premium options through expanded catastrophic plan eligibility and more flexible bronze plan design, but often with more cost-sharing, higher deductibles, or greater complexity. For consumers, affordability is about more than just premiums; it鈥檚 about how much healthcare costs for individuals and their families overall and the cost of care when they need it. 

States are being given options to take on more oversight and operational responsibility but without additional federal funding. And issuers are being given more flexibility, but it comes with uncertainty regarding enrollment and risk mix. 

Zach Sherman: The rule鈥檚 cumulative effect matters more than any one policy. Expanded catastrophic eligibility, higher out-of-pocket exposure, relaxed network standards, and tighter verification requirements all interact. Together, they raise questions about access, affordability, and whether Marketplaces are equipped to manage administrative and enrollment disruption. 

Q: The paper highlights potentially significant enrollment effects. What鈥檚 driving that dynamic? 

Michael: Two things stand out. First, the proposal implements statutory changes that remove advance premium tax credit (APTC) eligibility for certain lawfully present immigrants beginning in 2027. CMS estimates more than a million people could lose eligibility, and it鈥檚 reasonable to expect most of them will exit the individual market. 

Second, the proposed income verification changes could generate millions of data matching issues (DMIs) that temporarily or permanently cut off access to advance premium tax credits. While CMS projects a relatively modest disenrollment effect, our analysis suggests losses could be meaningfully higher depending on how quickly issues are resolved. We estimate that approximately 4.7 million enrollees could receive DMIs under the proposal, and upward of 80 percent of them could temporarily or permanently lose access to APTCs, putting coverage at risk. 

Zach: If consumers can鈥檛 afford the full premiums while resolving a data issue, many will drop coverage. That creates churn and administrative strain that Marketplaces must manage. 

Q: How do these policies affect state Marketplaces and regulators specifically? 

Zach: States are being asked to do more across multiple fronts. Network adequacy oversight is shifting toward states that conduct effective rate review. States may also choose or feel pressure to take on Essential Community Provider (ECP) review authority, including for new non-network plans. Accepting that responsibility requires legal authority, staff capacity, and technical infrastructure. 

At the same time, states may need to stand up the State Exchange Improper Payment Measurement (SEIPM) program, which CMS acknowledges will increase administrative burden. 

The proposed State Exchange Enhanced Direct Enrollment (SBE-EDE) option is also a significant shift. Rather than operating a centralized consumer enrollment platform, Marketplaces would focus on certifying, overseeing, and monitoring multiple third-party entities. As a former director of a state-based Marketplace program, I know this is a fundamentally different operational posture that comes with oversight and compliance costs. 

Q: The proposal also introduces non-network plans. What should stakeholders be watching here? 

Michael:  may offer lower premiums, but they change how access works. Provider participation depends on the willingness to accept the plan鈥檚 payment as payment in full. On paper a plan may meet access standards, but in practice consumers could face difficulty finding care. That places additional oversight responsibility on states to determine whether access is sufficient in practice. If aggressively priced non-network plans disproportionately attract healthier enrollees, it can create financial risk for issuers and for the broader market. 

Q: What does this mean for market stability going forward? 

Zach: Stability will vary by state. States that invest in oversight, consumer assistance, and operational readiness鈥攐ften a state-based Marketplace鈥攎ay be better positioned to manage these changes. Others may see sharper enrollment declines or access issues. That divergence across states is an important signal from this proposal. 

Q: What should states and stakeholders be doing right now? 

Zach: States should be doing scenario planning, assessing which flexibilities to adopt, where to maintain higher standards, and whether they have the capacity to take on expanded responsibilities. These decisions will shape how the rule plays out on the ground. 

Michael: Issuers should be , risk adjustment exposure, and operational readiness. All stakeholders should remember that comments on the proposed rule are due March 13, 2026. 

尝颈苍补:听Notably, CMS聽is not done with聽regulatory reforms.聽The聽agency solicited聽comment聽on聽medical聽loss聽ratio (MLR)听policies听补苍诲听paused聽Essential Health Benefit聽benchmark updates,聽as well as issues not covered in this proposed rule, such as revisions to the Section 1332 waiver and聽Section聽1333 interstate compacts.聽States and issuers should be tracking what may come next, not just what鈥檚 in this proposal.

Blog

Strategies to Address Fraud, Waste, and Abuse in Non-Emergency Medical Transportation

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Fraud, waste, and abuse (FWA) in Medicaid non-emergency transportation (NEMT) remain a persistent challenge for state Medicaid programs and health plans because of the scale and complexity of the benefit. NEMT is a critical, mandatory benefit intended to ensure eligible Medicaid beneficiaries without reliable transportation can get to necessary medical appointments. Numerous investigations and audits, however, have revealed that some transportation providers bill for trips that never occurred, inflate mileage, fabricate tolls, or even recruit patients with kickbacks to generate fraudulent claims, diverting limited program funding away from legitimate care needs.

The NEMT benefit represents a small share of Medicaid costs鈥攅stimated at around 1 percent of total Medicaid spending. With the codification of NEMT as a required benefit in 2020, market analysts forecast NEMT will grow considerably, nearly doubling in market size from 2021 to 2028.

Comprehensive, nationwide estimates specific to NEMT FWA are limited. Federal and state audits like those in , , and , however, have uncovered millions of dollars in claims that did not comply with federal and state requirements, underscoring systemic vulnerabilities in oversight and documentation. For example, a 2022 federal audit of New York Medicaid NEMT found an estimated $84 million in unallowable federal reimbursements and another ~$112 million that may not have complied with requirements over two years.[1]

Furthermore, individual criminal cases have involved schemes of $1 million to more than $2 million in falsely billed transportation services. Isolated settlements and audits indicate that fraud and abuse can be substantial locally even if we lack a clear, reliable national aggregate estimate.

A 2025 report by 量子资源网 (量子资源网) about NEMT contracting approaches found an opportunity for states and health plans that administer non-emergency transportation to leverage technology and require or incentivize new strategies to improve program integrity and quality in NEMT going forward. Some of the identified strategies to address FWA include:

  • Adopting or requiring digital solutions鈥攕uch as GPS trip verification, electronic visit logs, and real-time data analytics鈥攖o detect irregular billing patterns before claims are paid, replacing outdated paper logs and manual reconciliations that were prone to error and exploitation.
  • Focusing trip verification efforts on standing orders (pre-approved authorizations often for repeated treatments), given that they comprise the largest share of trips and are often vulnerable to fraud.
  • Positioning and educating medical facilities to be critical partners in preventing FWA by confirming appointment attendance, either via phone or signature on the trip log.
  • Automating mileage reimbursement (for enrollees who drive themselves or are driven by family members or friends) through a mobile app, which enabling riders to schedule and track their trips and submit claims quickly while allowing NEMT brokers to verify the mileage using GPS. This system would also allow brokers to better target their anti-fraud efforts, such as requiring additional documentation only for higher reimbursement amounts.

Since the publication of that report, several state Medicaid programs have issued NEMT procurements that maintain a strong emphasis on preventing FWA. For example, the 2025 Wisconsin NEMT RFP included provisions to promote greater collaboration between the Wisconsin Department of Health Services (DHS) Office of Inspector General (OIG) and NEMT broker, including 鈥渜uarterly and ad hoc meetings to discuss open complaint investigations, red flag patterns, and establish safeguards for ongoing or suspected fraud, waste, and abuse鈥� and imposed penalties for fraud incidents that go undetected by the broker.

FWA in Medicaid NEMT may represent a fraction of overall program spending, but the consequences are outsized: Every improper payment diverts resources away from beneficiaries who depend on transportation to access essential care. As states, health plans, and NEMT brokers modernize contract requirements, strengthen oversight, and embed technology-driven verification into their contracts and operations, the focus is shifting from retrospective recovery to proactive prevention, transparency, and accountability in transportation services.

Continued collaboration among Medicaid agencies, brokers, medical providers, and oversight entities will be critical for sustained progress. By pairing smarter contracting with real-time data tools and clear accountability, states and Medicaid health plans can better safeguard public dollars while ensuring that NEMT remains a reliable lifeline for the people it is designed to serve.

Learn more about how 量子资源网 Helps NEMT Stakeholders Overcome Challenges. If your organization is ready to talk about how 量子资源网 can help advance your NEMT goals, please contact one of our experts below.

Related Resources:

[1] US Department of Health and Human Services, Office of Inspector General. New York Claimed $196 Million, Over 72 Percent of the Audited Amount, in Federal Reimbursement for NEMT Payments to New York City Transportation Providers That Did Not Meet or May Not Have Met Medicaid Requirements. September 12, 2022. Available at: .

Blog

2027 NBPP Proposed Rule Signals Further Marketplace Changes

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

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

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

颁惭厂鈥檚&苍产蝉辫;笔谤辞辫辞蝉补濒蝉&苍产蝉辫;

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

Expanded Plan Design Flexibility 

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

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

Certification of Non-Network QHPs 

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

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

Changes in Catastrophic and Bronze Cost Sharing 

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

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

Network Adequacy and Essential Community Providers 

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

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

Essential Health Benefits and State Mandates 

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

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

Program Integrity and Increased Eligibility Verification 

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

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

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

Preparing for Policy Driven Changes in ACA Marketplaces 

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

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

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

Blog

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

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

CBO鈥檚 baseline serves many functions, including serving as the official 鈥渟corekeeping鈥� benchmark used for cost estimates of proposed legislation under consideration in Congress.

Changes to CBO鈥檚 Medicaid Baseline

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

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

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

Source: 量子资源网 analysis of CBO鈥檚  and F reports.

Changes to CBO鈥檚 Medicare Baseline

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

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

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

Source: 量子资源网 analysis of CBO鈥檚  and  reports.
Source: 量子资源网 analysis of CBO鈥檚  and  reports.
Source: 量子资源网 analysis of CBO鈥檚  and  reports

Contact an 量子资源网 Expert Today

Interested in understanding how CBO鈥檚 latest baseline update affects the federal budgetary implications of certain Medicare or Medicaid policy topics or proposals? Contact our experts, Mark Desmaris and Rachel Matthews, to learn more about 量子资源网鈥檚 鈥淐BO-style鈥� federal budgetary scoring work, which relies on The Moran Company鈥檚 long-standing methodology. [1]

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

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

Brief & Report

Case Study Report: Lessons Learned from HealthySteps Technical Assistance in California

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This report synthesizes insights from multiple efforts to support the financial sustainability of HealthySteps sites in California, including federally qualified health centers (FQHCs), community clinics (non-FQHCs), private practices, and other settings. Led by the HealthySteps National Office and 量子资源网 (量子资源网), the technical assistance (TA) elevated challenges, strategies and best practices to achieve sustainability informed by learning collaboratives, individualized TA sessions, and financial modeling exercises. This report complements additional resources that the HS National Office and 量子资源网 developed which are available via the HealthySteps (HS) Sustainability website.

Blog

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

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

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

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

HHS Funding Levels and Direction 

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

Table 1. HHS Agency Funding Highlights, FY 2026 

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

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

PBM Reforms in the Package 

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

The legislation contains the following PBM reforms: 

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

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

Healthcare Extenders and Program Reauthorizations 

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

Medicaid 

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

Medicare 

Congress extends several key programs and payment provisions, including: 

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

Behavioral Health Policy 

The appropriations bill聽was聽finalized聽as the聽administration聽聽new funding and policy initiatives聽to聽support behavioral health, crisis services, workforce expansion, and youth mental health鈥攅fforts mirrored in SAMHSA鈥檚 increased appropriations.聽

SAMHSA鈥檚 $7.4 billion budget includes: 

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

Considerations for Stakeholders 

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

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

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

Connect with Us 

If you would like deeper analysis or state and stakeholder-specific effects, 量子资源网鈥檚 policy experts are available to assist. 

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2026 Marketplace Open Enrollment: Where the Numbers Currently Stand

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

Table 1. Comparison of 2026 and 2025 Open Enrollment

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

A summary of our analysis on these 2026 OE results and how they compare with 2025 data can be found below. This analysis builds on the findings in Wakely鈥檚 from January 2026.

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

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

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

Related Resources:

Brief & Report

Medicaid Changes in the OBBBA and Implications for the Marketplace and Individual Market in 2027

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In recent years, the individual market has undergone significant disruption. The expiration of enhanced premium tax credits (ePTC) at the end of 2025 and sweeping eligibility changes under the 2025 Budget Reconciliation Act (OBBBA) have reshaped鈥攁nd will continue to reshape鈥攖he individual market.

The number of changes facing states and issuers in coming years are significant. As a result, it is unsurprising that discussion and analysis on the individual market impacts of the new Medicaid requirements is limited and expected to result in large numbers of Medicaid beneficiaries being disenrolled. Between community engagement requirements (i.e., work requirements), increases in eligibility checks, and loss of eligibility for certain immigrant population, the expectation is that millions of people will leave Medicaid in 2027.

This brief explores how these coming changes will reshape coverage pathways and costs, and examines implications for consumer affordability and churn, issuer pricing and risk pools, and state administrative burdens鈥攁longside strategies for states, issuers, and policymakers to mitigate adverse effects.

Blog

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

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

Today, 量子资源网 Information Services (量子资源网IS) published its first preliminary review of proposed SFY 2027 budget proposals. The initial installment includes budgets from Alaska, Colorado, Florida, Mississippi, New Mexico, South Dakota, Utah, Virginia, and Wyoming, with the latter two proposals covering the fiscal 2026鈥�28 biennium. 

量子资源网IS will release periodic updates as additional governors publish their budget proposals鈥攖he same rolling approach we used in 2025 (here and here). Because 15 states enacted 2025鈥�27 biennial budgets last year, 量子资源网IS also might review substantial mid-biennium health-related adjustments or supplemental funding. 

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

Implementation of New Federal Requirements 

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

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

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

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

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

Strategic Cost Containment 

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

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

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

Former Virginia Gov. Glenn Youngkin鈥檚 budget鈥攏ow inherited by Abilgail Spanberger following her inauguration January 17, 2026鈥攊ncludes multiple cost-containment proposals, such as: 

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

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

What to Watch 

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

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

Connect with Us 

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

The full state of the states and governor budget report is available to 量子资源网IS subscribers. In addition, 量子资源网IS maintains a  that incorporates details of each initiative and the first year award.  

Brief & Report

Analysis of the Costs and Medicaid Payment Adequacy for Ground Ambulance Services in New York State

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Survey data from fiscal year (FY) 2022 suggest that entities that provide ground ambulance services in the State of New York are experiencing reimbursement challenges. 量子资源网, Inc. (量子资源网), contracted with the United New York Ambulance Network (UNYAN) to conduct an independent study of the costs of delivering ground ambulance services in the state and the adequacy of payment for these critical services. The 量子资源网-UNYAN survey data highlight the wide variation in costs within the ground ambulance industry in New York and the negative Medicaid margins the industry experiences. These data demonstrate that although ambulance entities of all sizes in New York have negative Medicaid margins, these margins worsen as entity size decreases and entities become more rural. Trends in negative margins appear to be linked to some degree to entities鈥� relative share of 鈥渞esponses without transport鈥� or uncompensated transports. This white paper poses important considerations for policymakers.

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Outlook 2026: Rural Health Transformation Program

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As we kick off the new year,聽量子资源网聽(量子资源网)听is launching a new series of brief,聽insightful聽interviews聽with our policy experts聽on issues聽that will define聽2026鈥攚hat鈥檚 changing, why it matters, and how federal, state, and industry decisions will shape what happens next.聽Building on聽our earlier analysis of聽the Rural Health Transformation Program聽((RHTP),聽here听补苍诲听here), this week, we聽start聽with a聽pointed聽look at聽the Centers for Medicare & Medicaid聽Services鈥檚聽(CMS)听first year of RHTP awards.聽

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

An interview with Kathleen Nolan, Senior Advisor, 量子资源网, and , Principal, Leavitt Partners, an 量子资源网 Company. 

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

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

Sara Singleton: Exactly, and CMS is using this investment to reinforce some of the administration鈥檚 broader policy goals. Many state proposals leaned heavily into chronic disease prevention, chronic care management, and expanding supports that promote healthier lifestyles. That alignment isn鈥檛 accidental. The Administration is looking for real traction on these priorities, and RHTP gives states both the resources and the accountability framework to make progress. So, the message from CMS is clear: Move quickly, implement strategically, and show early gains in the areas that matter for long-term population health. 

Q: Was anything in the awards themselves surprising? 

Singleton: There was a lot of speculation about how wide the spread in funding levels might be, particularly for states鈥� discretionary initiatives. But the distribution was relatively tight; 32 states fell in the 鈥渁verage鈥� range of $190鈥�$230 million, with only four states above $230 million and 13 below $190 million. That suggests CMS isn鈥檛 signaling dramatic differences in expected performance or ambition. 

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

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

Nolan: Accountability. CMS has made it clear they will adjust budgets in later years if states don鈥檛 meet expectations on reporting and evaluation. That also means states need to know where the dollars are going and what they are getting for the investment. Year one performance really matters. 

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

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

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

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Tracking Medicaid鈥檚 Growth: FFY 2025 Spending and T-MSIS Data Provide Insights on Managed Care Spending

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This week, our鈥�In Focus鈥痵ection highlights findings from a 量子资源网 Information Services (量子资源网IS) analysis of the Centers for Medicare & Medicaid Services (CMS) preliminary CMS-64 Medicaid expenditure report for federal fiscal year (FFY) 2025. The data show total medical services expenditures reached $971.4 billion across all states and territories, up 6.9 percent from FFY 2024. 

This CMS-64 spending detail provides important context as states prepare for their upcoming legislative sessions and begin implementing changes required under the 2025 budget reconciliation act (P.L. 119-21, OBBBA). Early fiscal and operational pressures will stem from changes to the Supplemental Nutrition Assistance Program (SNAP) and preparations for community engagement requirements for Affordable Care Act (ACA) Medicaid expansion enrollees. In subsequent years, pressures will intensify because of major changes to provider tax financing and new federal limits on state directed payments in 2027 and early 2028. 

In this article, we provide a deeper review of Medicaid spending, including the federal-state financing split. As Medicaid agencies prepare for upcoming spring sessions and anticipate potential program changes under OBBBA, it is notable that  report an at least fifty percent likelihood of a Medicaid budget shortfall in FFY 2026. 

Growth and Drivers in Medicaid Managed Care Spending 

The 量子资源网IS analysis looks at CMS-64 preliminary estimates of Medicaid spending by state for FFY 2025. CMS  state expenditures through the automated Medicaid Budget and Expenditure System/State Children鈥檚 Health Insurance Budget and Expenditure System (MBES/CBES). 

While enrollment decreased for most states following the COVID-19 public health emergency unwinding, states saw an uptick in expenditures due to increased state directed payments, greater utilization and sicker populations, higher drug costs, increased provider rates, and greater use of long-term services and supports and behavioral health. 

Key findings from 量子资源网IS鈥� analysis (see Table 1), include: 

  • Total Medicaid managed care spending (federal and state share聽combined)听reached聽$550.5聽billion聽in聽FFY 2025,聽up from聽$517.5聽billion聽in聽FFY 2024.聽
  • This聽amount聽represents聽a聽6.4聽percent聽year-over-year increase from聽FFY 2024聽to聽FFY 2025.聽
  • Managed聽care聽accounted for 56.7聽percent聽of total Medicaid spending in聽FFY 2025, down聽0.3聽percentage points聽from the previous聽year.聽
  • The聽$33 billion聽increase from FFY 2024 to FFY 2025 exceeds the聽$9.4 billion聽increase seen the year prior, reflecting renewed growth following the unwinding transition period.聽

These figures include spending on comprehensive risk-based managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs refer to prepaid health plans that provide a subset of services, such as dental or behavioral health care. This total is exclusive of fee-based programs such as primary care case management models. 

Table 1. Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures, FFY 2020鈥�2025 (in millions) 

Annual Medicaid managed care expenditures have grown consistently with total Medicaid expenditures. After slower growth in FFY 2024鈥攚hich aligned with the post-COVID-19 policy unwinding period when many states completed eligibility redeterminations鈥擣FY 2025 again experienced an uptick in managed care growth (see Figure 1). 

Figure 1. Total and MCO Medicaid Expenditures, FFY 2020鈥�2025 ($M)

Federal versus State Share Spending 

The preliminary FFY 2025 expenditure data provides a baseline before OBBBA鈥檚 changes are scheduled for implementation and as states continue to face Medicaid funding challenges. In FFY 2025, federal funding accounted for 64.2 percent of FFY 2025 spending, and non-federal matching funds accounted for 35.8 percent (see Table 2). Particularly later in 2027, 2028, and subsequent years, Medicaid expansion states stand to see disproportionally larger increases in their share of spending. 

Table 2. Federal versus State Share of Medicaid Expenditures, FFY 2020鈥�2025 (in millions)

T-MSIS Data Adds Detail to CMS-64 MCO Spending 

To complement CMS-64 macro-spending trends, 量子资源网 developed a methodology allowing us to use Transformed Medicaid Statistical Information System (T-MSIS) data to approximate managed care spending by service category. Although T-MSIS enables more granular views (e.g., professional services, inpatient/outpatient hospital services, skilled nursing facilities (SNFs), HCBS, clinics, pharmaceuticals), the most recent dataset typically lags one to two years behind CMS-64 totals. 

量子资源网鈥檚 analysis of the T-MSIS data shows that while managed care remains the dominant delivery system model for Medicaid, spending by provider types helps contextualize the CMS-64 report. Notably, the CMS-64 reports FFY25 data and our report below on T-MSIS disaggregation uses 2023 data. Although the T-MSIS and CMS-64 data are for different years, it still highlights the main components of the largest spending component of the CMS-64 with more recent data. 

The 2023 T-MSIS analysis shows the following: 

  • Professional fees are the lead spending category, with聽nearly聽30聽percent聽of spending directed聽toward聽payments to physicians and other practitioners (e.g., physician assistants, nurse practitioners). Given that T-MSIS data are built around billing codes, services that traditionally may be considered part of a bundled rate (i.e.,聽a large portion聽of physician services delivered in hospitals and clinics) are聽essentially unbundled聽and considered professional fees.聽
  • Hospital spending聽(inpatient plus outpatient), SNF聽costs, and professional fees聽together聽account for close to 75聽percent of spending in聽CY 2023.聽

Figure 2. T-MSIS Medicaid Spending by Service Category 2023 (MCO disaggregated plus FFS)

What to Watch 

Because Medicaid is such a big part of state government spending, outlays for Medicaid will always be a focus and challenge for states. Upcoming state legislative sessions and OBBBA driven changes will begin in 2026 with SNAP pressures and major operational preparations for community engagement requirements for expansion states. Preparations for new limits on provider taxes and state directed payments will likely begin immediately, but the true impacts will occur in 2027 and early 2028. States will need to tailor their programs under funding constraints. 

Connect with Us 

量子资源网IS, a subscription-based tool that 量子资源网 offers, provides state-by-state analysis of the CMS-64 data, Medicaid managed care enrollment trends, and state budget reporting. For more information about an 量子资源网IS subscription, contact Andrea Maresca and Alona Nenko. For details on T-MSIS data, contact Matt Powers and Shreyas Ramani. 

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