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红领巾瓜报鈥檚 Take on 2026 ACA Marketplace Open Enrollment Snapshot

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On January 28, 2026, the Centers for Medicaid & Medicare Services (CMS) released its second 鈥痮f 2026 Affordable Care Act (ACA) Marketplace Open Enrollment (OE) activity. While this update is not a final accounting of enrollment activity, it is likely to be the last OE federal data release for some time and offers an early look at how enrollment trends are shifting in the wake of expired enhanced premium tax credits and new eligibility standards under the 2025 budget reconciliation act (P.L. 119-21, OBBBA). 

In this article, 红领巾瓜报 (红领巾瓜报) and Wakely, an 红领巾瓜报 company, highlight findings from their analysis of the 2026 OE activity and compare this activity with 2025 data. This analysis builds on the findings in their January 2026 analysis () and will provide important context for the 2027 plan year. 

Overall Enrollment Trends 

CMS reports that 2026 plan selections decreased by 5 percent from 2025, with enrollment declining across both new and returning consumers. New sign-ups dropped by 14 percent and renewals fell by 3 percent (Table 1). State-based Marketplace (SBM) enrollment dipped modestly, though many SBMs were still enrolling consumers in late January. 

Table 1. Comparison of 2026 and 2025 Open Enrollment 

 2026 2025 Net Change 
Total 22,973,219 24,166,491 (1,193,272) 
New Consumers 3,382,189 3,938,907 (556,718) 
Returning Consumers 19,591,030 20,227,584 (636,554) 

Variation Across State-Based and Federally Facilitated Marketplaces 

Enrollment patterns varied substantially across states. 

SBMs: 

  • New Mexico听saw the听largest听year-over-year听increase听(14%), attributed to听state-funded subsidies听designed to听offset the loss of听enhanced premium tax credits (ePTCs).听
  • Georgia听experienced a听14听percent decline,听the听steepest drop among听SBMs.听

Federally Facilitated Marketplace (FFM) States: 

  • Overall, FFM enrollment fell听5听percent.听
  • Texas led听FFM states听with a听5听percent increase in听plan selections.听
  • Ohio and North Carolina experienced听substantial enrollment declines,听20听percent听and听22听percent听respectively.听

What This Tells Us鈥攁nd What It Doesn鈥檛 Tell Us Yet 

FFM data are as of January 15, 2026, and measure plan selections after the OE period ended. Within the FFM, state-by-state enrollment activity varied significantly. Some of this variation is surprising and not readily explainable from the available data and will be a focus of future 红领巾瓜报 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 OBBBA. 

 suggest significantly higher cancellation and disenrollment rates than in previous years. 

SBMs are sharing that they expect substantial affordability-driven voluntary and nonpayment terminations over 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. 

Connect with Us 

红领巾瓜报 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 shape federal policies and conduct impact analyses on pricing, enrollment, administration, and operations. 红领巾瓜报 also provides strategic and project management support for the implementation of finalized policies. 

Please contact Michael Cohen, Taylor Gehrke, or Zachary Sherman鈥痺ith questions, follow-up, or if you would like expert assistance exploring any of the issues discussed in this post.

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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 红领巾瓜报 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.

红领巾瓜报 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. 红领巾瓜报 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.

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

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

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

What the ACCESS Model Is Testing 

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

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

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

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

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

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

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

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

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

Key Considerations for Applicants 

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

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

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

翱耻迟肠辞尘别蝉听辫别谤蹿辞谤尘补苍肠别.听The听ACCESS Model places substantial听emphasis on clinical听performance听and care coordination. Participants听are paid in full only if enough patients hit outcomes targets.听Early cohorts will听likely skew听toward organizations with mature clinical protocols, robust engagement models, and demonstrated outcomes.听Applicants should听be听financially听prepared听to听tolerate withholds, beneficiary switching, and听follow-on听period payment reductions after year one.听

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

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

Connect with Us 

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

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

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

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

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The Centers for Medicare & Medicaid Services (CMS) released the  on January 26, 2026. The Advance Notice begins CMS鈥檚 annual rate-setting cycle and describes proposed updates to Medicare Advantage (MA) growth rates, benchmark rebasing, risk adjustment, Star Ratings, and Part D payment parameters. CMS previously released a鈥�痠n November 2025 that included policy changes to the Star Ratings system and enrollment policies for MA and Part D starting in contract year 2027. (Read the 红领巾瓜报 (红领巾瓜报) summary here.) 

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

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

Payment Impact on Medicare Advantage Organizations 

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

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

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

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

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

Medicare Advantage Benchmarks, Rebasing, and Risk Adjustment 

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

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

Quality Bonus Payments, Star Ratings, and Part D Updates 

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

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

Connect with Us 

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

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

For details about the finalized payment and policy rules,听contact our featured experts,鈥� and听.听

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

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

Today, 红领巾瓜报 Information Services (红领巾瓜报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. 

红领巾瓜报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, 红领巾瓜报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听
  • Establishing limits on Community First Choice services听
  • Adjusting听the听home health nursing and therapy services payment听methodology听
  • Introducing cost controls for Medicaid benefit categories that have shown disproportionate growth听
  • Implementing听a听$3,000 annual cap on adult Medicaid dental benefits听and a听$750 annual cap on dental benefits for individuals in the Cover All Coloradans program听
  • Changing听the听Cover All Coloradans behavioral health program from managed care to fee for service听
  • Reviewing provider fees听in anticipation of听possible State听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听
  • A $2,000 annual limit on adult dental services Medicaid coverage听
  • Elimination of听both听automatic rate increases for psychiatric residential treatment facilities and qualifying听addiction听and recovery treatment services providers听and听automatic biennial inflation increases for听medical听assistance听providers听
  • Restrictions on听emergency听maternity services to Medicaid听enrollees听who听are ineligible听for Medicaid听because听of their citizenship status听
  • Standardized听hourly limits across home and community-based听services听waivers听
  • Actions听related to听鈥渆nsuring appropriate utilization鈥� of services,听such as听applied听behavioral听analysis and crisis services听

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. 红领巾瓜报 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 红领巾瓜报IS subscribers. In addition, 红领巾瓜报IS maintains a  that incorporates details of each initiative and the first year award.  

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Outlook 2026: ACA Marketplace Trends鈥揂 Conversation with Michael Cohen and Zach Sherman

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As the 2026 Affordable Care Act (ACA) Marketplace open enrollment period nears its close鈥攁nd with enhanced subsidies expiring, rates shifting, and consumer behavior evolving鈥攓uestions about enrollment stability, affordability, and operational readiness have rapidly moved to the forefront. Andrea Maresca, Senior Principal, at 红领巾瓜报, caught up with Zach Sherman, Managing Director for Coverage Policy and Program Design at 红领巾瓜报, and , PhD, who leads much of the federal policy analysis advanced by Wakely, an 红领巾瓜报 company, to unpack what they鈥檙e seeing so far.

Q: This year鈥檚 open enrollment period has been unusually complex. At the federal level, what stands out most so far? 

Michael: The headline is that new enrollment is down sharply, while returning consumers have held steadier than expected. That reflects the reality that the enhanced subsidies are gone, premiums have risen, and consumers are facing higher net costs across nearly every market. 

But nuance matters: The real question now is how many of these plan selections will effectuate鈥攎eaning consumers pay their first month premium, and how many will stay enrolled the entire year? Average effectuated enrollment throughout the year is what truly determines 2026 risk mix and market stability. 

Q: Enrollment appears to vary considerably from state to state. What are you hearing from state partners? 

Zach: It鈥檚 a tale of two markets. StateBased Exchanges (SBEs) are generally seeing less attrition and, in some cases, even modest increases in plan selections. The reason is simple: Many states are doing a lot of heavy lifting to offset the loss of federal support. 

For example, SBEs perform earlier and have more customized outreach. We鈥檝e also seen some states step in and offer state-funded subsidies, which are cushioning the affordability loss in places like New Mexico, Maryland, and California. 

While still early, the data suggest that states with heavy investment in awareness and enrollment assistance, operational support, and affordability are weathering the transition better because they have more tools to stabilize the consumer experience. 

Q: There鈥檚 been a lot of speculation about how consumers are responding to the end of enhanced subsidies. What are the early signs? 

Michael: Consumers appear to be buying leaner benefits or different metal tiers to manage premium increases. 

Another underrecognized but incredibly important dynamic is that autoreenrolled consumers may not effectuate coverage once they see the final outofpocket premium. That dynamic won鈥檛 be fully understood until March, April, and even May. 

Q: Idaho is a particularly interesting early case study. What are you learning from the first state to complete enrollment? 

Zach: Your Health Idaho鈥檚 open enrollment finished on December 15, and while they saw a slight increase in plan selections, state officials are not celebrating as they expect a large wave of cancellations鈥攗p to 20,000鈥攄ue to the expiring subsidies. 

That鈥檚 the clearest early indication that affordability is the defining issue of 2026. States are preparing for higher-than-usual enrollment attrition in quarters one and two (Q1 and Q2), and they鈥檙e thinking hard about customer service capacity as consumers navigate changing net premiums, increased deductibles and out-of-pocket costs, and nonpayment grace periods. 

Q: Are there policy levers states can still pull to mitigate affordability challenges going forward? 

Zach: We鈥檙e seeing states explore options for mitigating affordability gaps and enrollment losses, including through state subsidy programs and increased investment in existing reinsurance programs. SBEs are also leaning on their core competencies鈥攖ailored and specific education campaigns and enrollment and plan comparison tools鈥攖o help their customers cut through the noise and navigate to the best option within their budget.  

These aren鈥檛 perfect or quick fixes and most states don鈥檛 have the resources necessary to backstop the expiring subsidies, but state leaders increasingly view doing something as necessary to stabilize their markets. 

Q: What should health plans, exchanges, and policymakers watch most closely over the next three months? 

Michael: Effectuation, effectuation, effectuation. The composition of the effectuated population will define 2026 risk. 

Zach: Agree. In addition, future regulatory action on affordability, eligibility and enrollment processes, and program integrity. The federal government is expected to issue its annual payment notice, the proposed 2027 Notice of Benefits and Payment Parameters, in the near future. 

You can find more insights on the initial enrollment patterns to date in this 红领巾瓜报-Wakely paper,  and register for the 2027 ACA Considerations: Proposed NBPP and Other Key Changes and Trends.  

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Outlook 2026: Rural Health Transformation Program

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As we kick off the new year,听红领巾瓜报听(红领巾瓜报)听is launching a new series of brief,听insightful听interviews听with our policy experts听on issues听that will define听2026鈥攚hat鈥檚 changing, why it matters, and how federal, state, and industry decisions will shape what happens next.听Building on听our earlier analysis of听the Rural Health Transformation Program听((RHTP),听here听and听here), this week, we听start听with a听pointed听look at听the Centers for Medicare & Medicaid听Services鈥檚听(CMS)听first year of RHTP awards.听

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

An interview with Kathleen Nolan, Senior Advisor, 红领巾瓜报, and , Principal, Leavitt Partners, an 红领巾瓜报 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 红领巾瓜报 Information Services (红领巾瓜报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 红领巾瓜报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 红领巾瓜报IS鈥� analysis (see Table 1), include: 

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

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, 红领巾瓜报 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. 

红领巾瓜报鈥檚 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听nearly听30听percent听of spending directed听toward听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.,听a large portion听of physician services delivered in hospitals and clinics) are听essentially unbundled听and considered professional fees.听
  • Hospital spending听(inpatient plus outpatient), SNF听costs, and professional fees听together听account for close to 75听percent of spending in听CY 2023.听

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 

红领巾瓜报IS, a subscription-based tool that 红领巾瓜报 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 红领巾瓜报IS subscription, contact Andrea Maresca and Alona Nenko. For details on T-MSIS data, contact Matt Powers and Shreyas Ramani. 

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Executive Branch Actions Target Drug Affordability in New Pricing Models

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

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

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

Executive Branch Negotiations Seek to Drive Access to MFN Discounts 

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

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

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

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

MFNLinked Models Designed to Lower Drug Costs Across Medicare and Medicaid 

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

New Models Test Alternatives to Inflation Rebates 

Announced in December 2025, the  and the  are designed to test alternative approaches to the Inflation Reduction Act鈥檚 (IRA)  policies. CMS plans to test the models鈥� potential for market driven price reductions if manufacturers choose to lower list prices instead of paying MFN-based rebates. 

Key features of the GLOBE Model are as follows: 

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

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

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

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

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

GENErating cost Reductions fOr US Medicaid (GENEROUS) Model 

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

Key Considerations and Potential Impacts 

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

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

Connect with Us 

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

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

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CMS Announces Rural Health Transformation Program Awardees

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On December 29, 2025, the Centers for Medicare & Medicaid Services (CMS)  the state awards for the Rural Health Transformation Program (RHTP), a $50 billion federal initiative intended to stabilize rural health systems and support transformation. CMS stated that $10 billion will be available each year from 2026 to 2030, and that first-year (2026) state awards average $200 million, with totals ranging from $147 million to $281 million. 

This announcement marks a pivot from planning to execution. In the coming months, states will move rapidly to finalize governance structures, confirm partners, and translate proposed initiatives into operational workplans and measurable outcomes. 

Although CMS announced the overall awards for the first budget year, some states have signaled they continue to work with CMS on initiative-specific budgets and planning. In this article, 红领巾瓜报 (红领巾瓜报) reviews key themes and early trends based on the application initiatives and what is known about the budgets. 

What the Awards Suggest About State Priorities 

Although each state鈥檚 awarded approach reflects local realities, early patterns across awardees鈥� project abstracts suggest several recurring priorities that may shape implementation activity in 2026. 

1) Building the Data, Analytics, and Interoperability Backbone
A number of awardees prioritized shared infrastructure for interoperability, analytics, performance monitoring, and operational backbone capabilities. Examples include: 

  • Arizona described plans to secure vendors to build secure data pipelines, dashboards, and fiscal tracking tools that meet federal audit standards to support rural transformation. 
  • New Mexico proposed a Rural Health Data Hub to build a statewide health analytics platform that integrates siloed data sources and expands access to timely, actionable information for providers. 
  • Alaska described technology-focused investments to strengthen cybersecurity, facilitate data sharing and interoperability, and expand digital tools (including consumer-facing tools and remote modalities). 

2) Strengthening Maternal Health and Perinatal Care
Many awardees emphasized stabilizing rural maternity access and strengthening perinatal supports through strategies, such as: 

  • Alabama proposed a Maternal and Fetal Health initiative featuring digital obstetric regionalization and telerobotic ultrasound to extend specialty access in rural settings. 
  • Kentucky prioritized maternal and infant health by addressing maternity care deserts, including telehealth-enabled community-based maternal/infant support teams and expanded perinatal care access. 
  • Ohio proposed legislative reforms to allow low-risk birthing centers in rural hospitals as part of its broader strategy to address maternity care deserts and improve rural access to care. 

Why it matters: Rural maternity deserts and workforce constraints remain critical drivers of avoidable complications and adverse outcomes. Approaches piloted in rural settings may inform broader statewide maternity care strategies. 

3) Modernizing Emergency Medical Services and Mobile Care
Several awardees included investments intended to strengthen emergency response and build more reliable rural stabilization capacity. 

  • Alabama proposed statewide emergency medical services (EMS) initiatives, including trauma and stroke routing/diversion improvements and an EMS treat-in-place model for low-acuity patients. 
  • Wyoming emphasized access to 鈥渢he basics,鈥� including improvements in the ability of hospitals to effectively treat emergencies and ambulance response, alongside incentives for small ambulance services to consolidate around more sustainable regional funding bases. 

Why it matters: EMS and mobile response models can function as connective tissue in rural systems with limited traditional access points. 

Why it matters: Data-sharing infrastructure can enable multi-provider coordination, performance tracking, and the operational foundations needed for sustainable transformation. 

4) Integrating Behavioral Health and Community-Based Supports
Awards also reflected ongoing efforts to expand behavioral health access and improve integration with physical health and community supports. For example: 

  • Alabama proposed to improve behavioral health access by converting Community Mental Health Centers into Certified Community Behavioral Health Clinics (CCBHCs). 
  • Arizona proposed to invest in behavioral health and substance use disorder treatment expansion as part of its Priority Health Initiatives portfolio. 
  • Wyoming included statewide telepsychiatry and crisis intervention services as part of its health outcomes priorities. 

Why it matters: Behavioral health capacity constraints are frequently more acute in rural areas, and integration strategies often require both reliable workforce and technology supports. 

What to Watch Next 

With awards announced, attention will quickly turn to implementation. Stakeholders should have processes to track the following: 

  • State governance decisions (including lead agencies, subawards, and regional structures) and funding opportunities 
  • State partner selection processes (through requests for proposals, vendor onboarding, or other contracting pathways) 
  • Performance measurement and reporting expectations (including metrics and evaluation approaches) 
  • Sequencing of the initiatives and where near-term operational activity is most likely to concentrate 

CMS also signaled near-term oversight and engagement mechanisms, state-assigned CMS project officers, kickoff meetings, ongoing technical assistance, and regular progress updates, along with a planned annual CMS Rural Health Summit. 

Tracking State RHTP Implementation 

The 红领巾瓜报IS team developed a resource to capture available information about state RHTP activities, applications, and initiatives and provide a road map for identifying state-specific proposals, requested funding, governance structures, and other key aspects of state RHTP initiatives. 

Following CMS鈥檚 award announcement, 红领巾瓜报IS is updating this Rural Health Transformation Program (RHTP) Tracker to incorporate award-specific details as they become publicly available. The resource includes information about FY26 awards by state and initiatives, links to CMS materials and state-posted implementation documentation, and a consolidated view of emerging themes and trends as implementation accelerates in 2026. 

Looking Ahead 

The award announcement is the beginning of implementation. As states operationalize initiatives in early 2026, organizations that align early to awarded priorities and implementation timelines will be best positioned to support rural-first efforts that deliver measurable and lasting results. 

For questions about the RHTP opportunities for your organization and the solutions 红领巾瓜报 can tailor to meet the needs of your state, contact Kathleen Nolan and Andrea Maresca.

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2025 Year-End Wrap-Up: ACA Subsidies and What to Expect in 2026

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As 2025 draws to a close, Congress finds itself at a crossroads on several critical health policy issues, with the fate of the Affordable Care Act (ACA) subsidies front and center. The year has been marked by intense negotiations and a flurry of proposals, many of which remain unresolved as lawmakers look ahead to a pivotal January 30 deadline for appropriations spending bills. In this article, policy experts from 红领巾瓜报 (红领巾瓜报)鈥攊ncluding Leavitt Partners, an 红领巾瓜报 company鈥攑rovide a comprehensive wrap-up of Congress鈥� work on ACA subsidies, executive agency actions, and what stakeholders should anticipate in early 2026. 

ACA Subsidies: A Year of Uncertainty and Political Maneuvering 

The expiration of enhanced ACA subsidies at the end of 2025 has been a focal point for congressional debate. Despite numerous bipartisan groups and a multitude of proposals circulating, consensus has proven elusive. The Senate voted on an ACA-related measure December 11, 2025, but neither the Democrats鈥� proposal for a three-year extension nor the Republican alternative to replace subsidies with health savings accounts advanced and revise certain other Medicaid policies. 

The situation in the House has been equally complex. House GOP leaders unveiled a healthcare package designed to lower costs, expand association health plans, and increase transparency for pharmacy benefit managers. The package would not extend the expiring enhanced ACA subsidies, and even if the House bill passes, the Senate is unlikely to consider it. In addition, on December 17, House Democrats secured enough support to force a vote on a bill that would provide a three-year extension of enhanced subsidies, although House rules preclude scheduling a vote on the bill until January.  

The听prevailing sentiment among policy experts is that no substantial action will be taken before year鈥檚 end.听

The White House briefly floated a two-year extension of the enhanced subsidies, but walked back the proposal, signaling fluidity in the policy discussions within the administration and among congressional Republicans. The absence of consensus on both policy and political ramifications has left the ACA subsidy issue in limbo. 

Looking Ahead: January鈥檚 Appropriations Deadline and ACA Options 

December 15, 2025, marked the last day for consumers to enroll in ACA coverage policies that take effect January 1, 2026, meaning that for many health insurance purchasers, choices for 2026 are already set. Policymakers are now focused on another deadline for potential ACA subsidy action鈥擩anuary 30, 2026, when temporary funding for the current federal fiscal year expires. It is possible that a solution could be attached to the spending package, potentially affecting 2026 premiums, although operational challenges abound. The most feasible option at this stage would be a premium rebate, which would avoid reopening enrollment but require complex rate adjustments. Any substantive changes to the subsidy structure would demand significant actuarial analysis and could disrupt both health plans and state activities. 

Congressional Dynamics: Appropriations, Extenders, and Policy Riders 

The appropriations process is center stage as Congress approaches the January 30, 2026, deadline. Lawmakers are seeking to continue passing 鈥渕inibus鈥� packages鈥攕mall groups of appropriations bills鈥攖o avoid another government shutdown. Most Medicare and Medicaid policy priorities, including must-pass extenders like telehealth flexibilities and the hospital at home program, are dependent on appropriations vehicles to advance. If Congress resorts to a stopgap continuing resolution, only the most essential extenders are likely to be included, with broader policy riders at risk of being sidelined. 

Policy Outlook 

Pharmacy benefit manager (PBM) reform stands out as a top bipartisan priority, with both House and Senate members eager to advance transparency and de-linking measures. Other lingering issues from the December 2024 healthcare package include Medicaid spread pricing prohibitions, streamlined enrollment for out-of-state providers, and targeted benefits for military service members. In Medicare, multi-cancer early detection screening and digital health policies may resurface, though larger reforms like Medicare physician fee schedule changes are likely to be deferred until later in 2026. 

Agency Developments: CMS Innovation and Regulatory Changes 

Beyond Congress, the Centers for Medicare & Medicaid Services (CMS) has been active, rolling out new models and rules that will shape the landscape in 2026 and beyond. Highlights include the 2027 Medicare Advantage Policy and Technical Changes Proposed Rule. Although it introduces no major policy shifts, the proposed rule addresses quality measurement, special needs plans, the Health Equity Index, and administrative burden reduction. It also codifies changes from the Inflation Reduction Act, such as cost-sharing and out-of-pocket limit reforms. The new ACCESS model (Advancing Chronic Care with Effective, Scalable Solutions) is intended to incentivize tech-enabled care for chronic conditions, with the model beginning July 2026. 

CMS also released updates to the outpatient, home health, and durable medical equipment rules, with a continued focus on site neutrality (aligning payments across settings) and removing barriers to beneficiary choice. The agency is placing ongoing emphasis on data collection, price transparency, and updated payment methodologies to reflect modern practice and technology. The  (GENErating cost Reductions fOr U.S. Medicaid)鈥疢odel introduces most favored nation pricing for Medicaid, while additional mandatory Medicare drug pricing models are under review. Rural health transformation remains a CMS priority, with expectations for further announcements and awards before the end of the year. 

We expect 2026 to be another busy year for CMS with more new models being announced, continued policy refinements in the fee-for-service payment systems, and changes in Medicare Advantage based on feedback from the requests for information. 

Connect with 红领巾瓜报 Policy Experts 

As the new year approaches, uncertainty remains the defining feature of federal health policy. The fate of ACA subsidies, the appropriations process, and a host of other reforms will hinge on negotiations in the coming weeks. For stakeholders navigating these complex dynamics, 红领巾瓜报鈥檚 team of policy experts stands ready to provide guidance, analysis, and support. 

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Preparing for Medicaid Community Engagement Requirements鈥擪ey Steps and Opportunities for States and Plans

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On December 8, 2025, the Centers for Medicare & Medicaid Services (CMS) issued anticipated  on Medicaid community engagement requirements, as established in the 2025 budget reconciliation legislation (P.L. 119-21, referred to as OBBBA). This guidance arrives at a pivotal moment, as states begin budget planning and legislative sessions. 

红领巾瓜报 (红领巾瓜报) reviewed the guidance in the context of other policy and financing shifts that are affecting the Medicaid program. This article highlights key takeaways, addresses considerations for implementation, and issues for policymakers and healthcare organizations to track. 

Brief Background 

Generally speaking, Section 71119 of OBBBA requires states to implement community engagement requirements as a condition of Medicaid eligibility for individuals in the expansion population ages 19鈭�64 who are neither pregnant nor enrolled in Medicare or any other mandatory Medicaid group. The guidance explains the statutory requirements related to how states verify community engagement, notify applicants and beneficiaries, ensure compliance with federal standards as the January 2027 deadline approaches, and other core components of the policy. 

Starting January 1, 2027, states must require certain Medicaid expansion applicants to demonstrate community engagement for at least one month and may require up to three consecutive months immediately prior to the month of application. If compliance or exemption status is unverifiable at the time of application, states must provide notice and an opportunity to respond. These enrollees will maintain coverage during the response period. States are also expected to establish clear documentation standards and proactive communication processes for applicants and enrollees. 

Three Key Takeaways from the Initial Guidance 

1. Organizations must understand the key dates leading up to January 1, 2027

Limited new funding and tight timelines make January 1, 2027, a critical deadline for implementation. Medicaid organizations need to consider, however, the full sequence of events leading up to that date, including providing required advance notification to individuals about the changes and their eligibility status. Documentation and progress tracking are essential, both for compliance and to demonstrate that CMS deadlines are being met. 

Although the guidance outlines notice and response requirements, it leaves open critical questions about how states will prevent procedural disenrollments, manage increased appeals volume, and mitigate due process legal risk if eligibility and verification systems fail at scale. 

2. Medicaid managed care organizations (MCOs) have a limited role in decision-making but are key to engagement

Medicaid managed care organizations are prohibited from making the determination that an individual has met the community engagement requirement; however, they have an opportunity to support individuals in a range of ways. Recent changes under OBBBA give plans clearer authority to conduct proactive outreach on eligibility and renewal requirements, which strengthens their ability to help members navigate deadlines, reporting expectations, and documentation needs. This capacity will be important because a lack of predictability in enrollment and churn can meaningfully affect the risk profile of plans and, as a result, increase volatility in provider negotiations. 

Plans, providers, community organizations, and state and local agencies can collaborate to develop effective engagement strategies, aligned messaging, and ongoing touch points. Helping members understand what is required鈥攁nd when鈥攁nd connecting them with resources to take action will be essential for successful implementation. 

3. States and partner organizations need a global view of IT changes and functionality

CMS emphasizes that the eligibility determinations for the community engagement requirements should function seamlessly with new and existing system functionality. Meeting this expectation requires states to have a deep understanding of whether and how policies can be operationalized in their systems without adding administrative burden for individuals and others that engage with the systems. 

Meeting federal expectations may be particularly challenging for states with county-based Medicaid systems, as implementing these requirements across multiple jurisdictions may necessitate a longer transition period. The OBBBA includes $200 million in total grant funding for implementation activities in 2026, and states can apply for enhanced federal IT funding at the 90/10 or 75/25 rates for certain costs and activities. Federal resources are otherwise limited, so it is critical that states and partner organizations establish a well-defined strategy to maximize available funding to support the system changes required to implement OBBBA eligibility requirements. 

What to Watch 

The guidance arrives as many governors begin releasing their budget proposals and planning for upcoming legislative sessions. Although the guidance provides clear information on the overarching parameters and a preliminary road map, certain critical details are forthcoming. State budgets should reflect the requirements and anticipate the need for rapid system and process development. 

CMS will issue an interim final rule by June 1, 2026, and states must implement the community engagement requirement no later than January 1, 2027. States must comply with these requirements and act quickly to develop, pay for, and implement new systems, policies, and processes鈥攊deally before the latter half of 2026. 

CMS is developing additional guidance in several areas, including: 

  • Use of reliable data sources听and听how to听satisfy听the definition of engagement听
  • Implementation of the requirement to conduct renewals every six months for certain individuals听
  • Specific documentation requirements for community engagement听
  • Potential role that managed care plans can play听unrelated to听determining听beneficiary compliance听

States and Medicaid organizations should closely monitor these developments and be prepared to adjust their strategies as new information becomes available. 

Connect with Us 

红领巾瓜报鈥檚 experts are trusted problem solvers, partnering with states to navigate the complexities of community engagement planning, even as requirements and details continue to evolve. Drawing on deep state and federal experience, as well as lessons learned from previous large-scale eligibility reforms, our team helps Medicaid-focused organizations quickly design and implement practical, context-specific strategies that align with OBBBA requirements. Whether it鈥檚 strategy development, system design, or crafting effective messages, 红领巾瓜报 brings a flexible, solutions-oriented approach to maximize continuity of coverage and meet each client鈥檚 unique needs. 

Contact听our featured experts below听to discuss how we can support your team in navigating these changes and building effective engagement strategies.听

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