Healthcare organizations are in a period of accelerated transformation. Evolving Medicare Advantage policies, mounting Medicaid funding pressures, pharmacy closures, and increased regulatory scrutiny are converging to create a more complex and challenging operating environment.
At the same time, this disruption is creating significant opportunities for transformation. As financial and operational pressures intensify, organizations are reevaluating traditional care models, pursuing strategic partnerships, and adopting more sustainable approaches to managing cost, quality, and access. For health plans, these changes create an opportunity to modernize core capabilities, strengthen strategic collaboration, accelerate innovation, and expand their role in shaping the future of healthcare delivery.
Organizations that invest in adaptability, disciplined execution, and long-term strategic focus will be best positioned to navigate uncertainty and drive meaningful transformation across the healthcare landscape.
Looking ahead to the remainder of 2026 and beyond, health plan success will depend on three strategic imperatives:
- Navigating the Policy Landscape
- Building Strategic and Financial Resilience
- Operational Agility Through Technology Modernization
Navigating the 2026 Policy Landscape
Health plans are preparing for a wave of policy and regulatory changes expected to reshape the healthcare landscape. Key areas of focus include evolving Medicare Advantage reimbursement models, Affordable Care Act (ACA) subsidy uncertainty, pharmacy benefit management (PBM) reform, and increased regulatory oversight across the industry.
These shifts will place additional financial and operational strain on both payers and providers. As reimbursement pressures grow and patient affordability challenges increase, organizations may face rising utilization, greater uncompensated care, and increased demand for operational efficiency.
Several broader market trends are expected to continue accelerating:
- Greater consolidation across health systems and insurance markets
- Expansion of ambulatory and lower-cost care delivery models
- Increased partnerships, joint ventures, and strategic affiliations
- Continued growth of provider-owned health plans in select markets
- Heightened scrutiny of vertically integrated healthcare organizations
Medicare Advantage at a Turning Point
Medicare Advantage (MA) remains one of the most closely watched areas. CMS finalized a 2.48% average payment increase for 2027, which translates to an estimated 4.98% effective increase after accounting for expected risk score trends and coding practices. While the final rate was significantly higher than the initially proposed 0.09% increase, rising utilization costs, evolving risk adjustment requirements, and continued regulatory scrutiny continue to create financial pressure for MA organizations.
Rising utilization costs are further compounding financial pressure for MA plans. Upcoming Medicare risk adjustment changes are expected to increase both administrative oversight and operational complexity. CMS plans to prohibit “unlinked” diagnosis codes, meaning diagnoses must be tied to a valid service or encounter to be submitted.
While organizations may still create additional encounters to appropriately document linked diagnoses, the changes are expected to require stronger documentation processes and tighter operational controls.
These evolving requirements may also have significant implications for long-term industry profitability.
Continued Insurance Market Consolidation
As of early 2026, consolidation continues across the commercial, Medicaid, and Medicare Advantage markets.
In the commercial market, Kaiser Permanente, UnitedHealthcare, and Elevance now control ~39% of the national market share. Blue Cross Blue Shield plans are facing increasing financial strain, with average operating margins declining from 0.3% in 2023 to -2.9% in 2024.
The Medicaid managed care market is also expected to face significant disruption. Industry projections estimate that the One Big Beautiful Bill Act (OBBBA), enacted in July 2025 and containing significant Medicaid eligibility, enrollment, and financing reforms, could reduce funding by nearly $990 billion and leave as many as 7.5 million people uninsured by 2034.
Meanwhile, the top five Medicare Advantage plans now account for ~68% of total enrollment:
- UnitedHealthcare
- Humana
- CVS Health/Aetna
- Elevance
- Centene
Increased utilization, evolving risk adjustment requirements, and growing regulatory scrutiny are creating new sustainability challenges. Several insurers are already exiting select markets for 2026.
PBM Reform and Pharmacy Closures
Pharmacy benefit management and retail pharmacy operations are also undergoing significant transformation as regulatory scrutiny and market disruption intensify. Under the February 2026 Appropriations Act, several major PBM reforms were introduced, including:
- 100% rebate pass-through requirements
- Greater transparency around PBM compensation
- Elimination of spread pricing in Medicare Part D
- Expanded “any willing pharmacy” participation requirements
States are also advancing their own PBM reforms. Arkansas has banned PBM ownership of pharmacies, while several other states, including California, Iowa, Idaho, Louisiana, Mississippi, and Colorado, have enacted additional transparency and pricing regulations.
At the same time, retail pharmacy closures continue to accelerate nationwide:
- Rite Aid filed for bankruptcy and announced more than 1,000 store closures
- CVS closed 900 stores between 2022 and 2024 and plans to close an additional 270 stores in 2025
- Walgreens plans to close an additional 1,200 stores by 2027
These closures raise growing concerns around medication access, continuity of care, and widening healthcare disparities, particularly in underserved communities.
Approximately one-third of medication-related emergency department visits are tied to medication underuse or noncompliance, highlighting the broader downstream impact of reduced pharmacy access.
Increasing Scrutiny of Healthcare Consolidation
Growing bipartisan scrutiny around healthcare consolidation and vertical integration may further reshape the industry. Proposed federal legislation, informally referred to as a “Glass-Steagall for Health,” would restrict common ownership between provider organizations and:
- Insurance companies
- PBMs
- Prescription drug or medical device wholesalers
Organizations impacted by the legislation would have one year to divest. If enacted, the proposal could significantly reshape payor-provider alignment strategies and disrupt vertically integrated healthcare models that have expanded over the past decade.
Building Strategic and Financial Resilience
Health plans should act now to strengthen financial resilience, protect vulnerable populations, and prepare for rising uninsured rates and reimbursement pressures.
1. Assess Exposure and Model Impact
- Quantify how much of your payer mix comes from Medicaid, ACA marketplace plans, and other subsidized coverage, and model revenue loss under different cut scenarios.
- Map which service lines, sites (e.g., ED, FQHC-like clinics), and geographies are most dependent on these payers and identify break-even thresholds for volume and reimbursement.
2. Tighten Operations and Revenue Cycle
- Improve efficiency in high-cost areas (ED throughput, inpatient bed management, avoidable admissions and readmissions, supply use) to preserve margins as reimbursement falls and uncompensated care grows.
- Strengthen clinical documentation and revenue cycle processes to reduce denials and delays, including coding accuracy, prior-authorization workflows, and timely appeals.
3. Proactively Support Patient Coverage and Navigation
- Build or expand outreach programs to help patients retain or transition coverage: text/phone campaigns before renewals, on-site enrollment assisters, and partnerships with navigators and community organizations.
- Educate front-line staff on changing eligibility rules (e.g., work requirements, shorter retroactive coverage, tighter renewal timelines) so they can guide patients and avoid surprise uncompensated encounters.
4. Reconfigure Services and Partnerships
- Reevaluate service lines for strategic fit and sustainability; consider consolidating low-margin services, integrating primary and behavioral health, and expanding lower-cost ambulatory and virtual care where feasible.
- Explore collaborations or affiliations (e.g., shared back-office functions, clinically integrated networks, or, where necessary, mergers) to maintain access for high-Medicaid communities.
5. Strengthen Safety-Net Strategy and Advocacy
- Formalize a safety-net plan: charity-care policy, financial-assistance screening at registration, and clear protocols for managing surges in uninsured patients.
- Engage in policy advocacy at state and federal levels (directly or via associations) around rate setting, state Medicaid responses to federal cuts, and protection of key programs (e.g., behavioral health, maternity, rural access).
6. Strengthen Value-Based Care Performance Fundamentals
- Strengthen quality improvement, care gap closure, and preventive care initiatives to maximize performance under value-based contracts and preserve incentive revenue.
- Enhance HCC capture, risk adjustment accuracy, and care management programs for high-risk populations to ensure appropriate reimbursement, improve patient outcomes, and reduce avoidable utilization.
Operational Agility Through Technology Modernization
As regulatory requirements and market expectations continue to evolve, technology modernization has become a strategic priority for health plans seeking to improve operational efficiency, clinical performance, and financial outcomes.
Organizations are increasingly investing in technologies that support key value-based care functions, including:
- Utilization Management (UM)
- Care Management (CM)
- Quality Improvement and Care Gap Closure
- HCC and Risk Adjustment Optimization
- Financial Reporting and Value-Based Care Modeling
- Population Health Analytics and Provider Performance Management
Rather than pursuing large-scale transformation initiatives all at once, many health plans are prioritizing targeted operational improvements that deliver measurable value while building a scalable foundation for long-term modernization and value-based care success.
Leveraging AI and Data
Data analytics and artificial intelligence are playing a growing role in enabling faster, more informed decision-making. These capabilities can help organizations:
- Identify emerging trends earlier
- Improve operational decision-making
- Forecast downstream impacts
- Respond more effectively to regulatory and market shifts
Technology investments are increasingly evaluated based on their ability to improve performance, reduce administrative burden, enhance member experience, and build long-term agility.
How COPE Health Solutions Supports Health Plan Modernization
COPE Health Solutions (CHS) partners with regional health plans, provider-sponsored organizations, and risk-bearing entities to operationalize exactly the capabilities described in this paper. Through our ARC platform and embedded managed care expertise, we support organizations across quality improvement and care gap closure, HCC and risk adjustment optimization, utilization and care management, and financial modeling for value-based contracts. Our approach is grounded in practical execution — not advisory recommendations that sit on a shelf. For health plans navigating reimbursement pressure, regulatory change, and the imperative to modernize, CHS serves as an operating partner that accelerates time-to-impact while building durable internal capability.
Looking Ahead
As healthcare policy, reimbursement structures, and market dynamics continue to shift, health plans will need to remain agile, disciplined, and forward-looking in how they operate and grow.
The policy and market forces reshaping healthcare in 2026 and beyond are not a temporary disruption — they are a structural reset. Health plans that treat this moment as a catalyst for deeper operational change, rather than a challenge to weather, will emerge in a stronger competitive position. The organizations best suited for what comes next will be those that have built the internal agility to absorb uncertainty, the data capabilities to act on it quickly, and the strategic clarity to make deliberate trade-offs. The fog won’t clear on its own — but plans that invest now in resilience, modernization, and purposeful partnership will be the ones defining what healthcare looks like on the other side.