What Providers & Payviders Must Do Now on Syam Adusumilli

The Provider's New Reality

Sun, 15 Mar 2026 00:00:00 +0000

The 2025 to 2027 policy cycle is restructuring the operating environment for Medicare providers along three axes simultaneously. Authorization, revenue, and accountability are each changing in ways that would be significant in isolation. Together, they constitute a structural shift in what it means to deliver care to Original Medicare beneficiaries.

The WISeR model brings prior authorization to fee-for-service Medicare for the first time since the program’s creation. The transition to encounter-based risk adjustment and the impending exclusion of unlinked chart review records from HCC calculations restructure how providers participate in plan revenue generation. ACO participation now encompasses 14.3 million Medicare beneficiaries, and CMMI has signaled clearly that mandatory accountable care participation is on the horizon. The TEAM model requires 741 hospitals in 188 markets to accept episode-based financial accountability for surgical care beginning in January 2026.

Summary: The Provider's New Reality

Sun, 15 Mar 2026 00:00:00 +0000

The 2025 to 2027 policy cycle is restructuring the Medicare provider operating environment along three simultaneous axes: authorization, revenue, and accountability. The WISeR model brings prior authorization to fee-for-service Medicare for the first time. The transition to encounter-based risk adjustment and the proposed exclusion of unlinked chart review records from HCC calculations alter how providers participate in plan revenue generation. ACO participation now covers 14.3 million Medicare beneficiaries, and CMMI has signaled that mandatory accountable care participation is coming. Treated individually, each change would be significant. Together, they constitute a single directional shift: Medicare is moving from paying for services delivered to holding providers accountable for cost, quality, and appropriateness at the point of care.

Becoming a Payvider

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The payvider model, in which a health system owns or operates a Medicare Advantage plan, is not new. Kaiser Permanente has operated this way since the managed care era began. What is new is the policy environment that has made the model structurally advantaged over traditional arrangements between independent insurers and independent delivery systems.

Rate compression, encounter-based risk adjustment, ACO maturation, and dual eligible integration requirements all converge to favor entities that control both the coverage mechanism and the care delivery apparatus. The CY 2027 MA rate announcement proposed a 0.09 percent growth rate, continuing the pressure on plan margins that began with the 2024 and 2025 rate cycles. The impending chart review exclusion removes revenue that payviders never depended on while eliminating a source of income that independent plans have built their risk adjustment strategies around.

Summary: Becoming a Payvider

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Rate compression, encounter-based risk adjustment, ACO maturation, and dual eligible integration requirements converge to favor entities that control both the coverage mechanism and the care delivery apparatus. The payvider model, in which a health system owns or operates a Medicare Advantage plan, is structurally advantaged under current policy conditions in ways that contractual arrangements between independent insurers and independent delivery systems cannot replicate. Approximately 300 health systems now operate their own health plans. The category is no longer a niche occupied by a handful of integrated systems; it is a growing segment of the MA market that includes Kaiser Permanente, UPMC, Geisinger (now part of Risant Health), Intermountain Health with SelectHealth, CareOregon, and Providence.

ACOs at Scale

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More than half of all Traditional Medicare beneficiaries now receive care coordinated through an accountable care organization. The 14.3 million beneficiaries attributed to ACOs as of January 2026 represent the largest ACO footprint since the Medicare Shared Savings Program launched in 2012. This is not incremental growth. It is a structural shift in how fee-for-service Medicare organizes care delivery.

The participation surge reflects multiple overlapping developments: steady MSSP expansion to 511 ACOs, the launch of ACO PC Flex as a primary care entry pathway, ACO REACH continuity under the new administration, and the announcement of the LEAD model as the decade-long successor to REACH beginning in 2027. For providers evaluating their strategic position, the question is no longer whether to participate in accountable care but which pathway to pursue and at what speed.

Summary: ACOs at Scale

Sun, 15 Mar 2026 00:00:00 +0000

More than half of all Traditional Medicare beneficiaries now receive care coordinated through an accountable care organization. The 14.3 million beneficiaries attributed to ACOs as of January 2026 represent the largest ACO footprint since MSSP launched in 2012. MSSP reached 511 ACOs with more than 700,000 providers serving 12.6 million beneficiaries, a 12.3 percent year-over-year growth in attributed beneficiaries. ACO REACH continues with 74 organizations covering 1.7 million beneficiaries and 614 federally qualified health centers, rural health clinics, and critical access hospitals. ACO PC Flex launched in January 2025 with 23 ACOs serving approximately 360,000 beneficiaries. The participation surge reflects steady MSSP expansion, PC Flex as a primary care entry pathway, ACO REACH continuity, and the announcement of the LEAD model as the decade-long successor to REACH beginning in 2027.

The ACO Financial Playbook

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ACOs that generate shared savings survive. ACOs that do not, exit. The financial mechanics that determine which category an organization falls into are not abstract policy details. They are the operational decisions that drive everything from care coordination staffing to specialist network design to the strategic question of when to pursue plan ownership.

Performance year 2024 results demonstrated that the program generates meaningful savings at scale: $4.1 billion in shared savings earned by participating ACOs, $2.4 billion in net savings to Medicare. Seventy-five percent of ACOs earned shared savings, the highest percentage in program history. But the distribution of that success is uneven. Two-sided risk ACOs in Level E and ENHANCED tracks generated more than two-thirds of all savings. Physician-led ACOs outperformed hospital-led ACOs on per capita savings. ACOs subject to the new benchmark methodology finalized in 2024 generated lower net savings per capita than those operating under prior rules.

Summary: The ACO Financial Playbook

Sun, 15 Mar 2026 00:00:00 +0000

ACOs that generate shared savings survive. ACOs that do not, exit. The financial mechanics that determine which category an organization falls into are the operational decisions that drive everything from care coordination staffing to specialist network design to the strategic question of when to pursue plan ownership. Performance year 2024 produced $4.1 billion in shared savings earned by participating ACOs and $2.4 billion in net savings to Medicare, with 75 percent of ACOs earning payments. But the distribution was uneven: two-sided risk ACOs in Level E and ENHANCED tracks generated more than two-thirds of all savings, physician-led ACOs outperformed hospital-led ACOs on per capita savings, and ACOs subject to the new benchmark methodology generated lower net savings per capita than those operating under prior rules.

ACOs and the Whole-Person Care Imperative

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The ACO shared savings model creates a financial incentive to manage the whole person. An ACO is accountable for total cost of care across all service categories, which means that avoidable hospitalizations driven by untreated behavioral health conditions, substance use disorders, or oral disease reduce shared savings whether or not the ACO directly provides those services. The logic is straightforward: conditions that drive emergency department visits, inpatient admissions, and post-acute care utilization generate spending that counts against the ACO’s benchmark.

Summary: ACOs and the Whole-Person Care Imperative

Sun, 15 Mar 2026 00:00:00 +0000

The ACO shared savings model creates a financial incentive to manage the whole person. An ACO accountable for total cost of care across all service categories bears the downstream spending from untreated behavioral health conditions, substance use disorders, and oral disease whether or not it directly provides those services. Beneficiaries with co-occurring mental health conditions have hospitalization rates roughly four times higher than those without. Periodontal disease is bidirectionally linked to diabetes management, cardiovascular disease, and stroke risk. An estimated 1.7 million Medicare beneficiaries live with a diagnosed substance use disorder, driving ED utilization, hospitalizations, and skilled nursing facility spending. Most ACOs have not invested in the capacity to address these conditions despite the financial case, reflecting behavioral health reimbursement rates that do not support embedded staffing, provider supply constraints, cultural separation between medical and behavioral health delivery, and the absence of a Medicare dental benefit.

Specialty Care Transformation

Sun, 15 Mar 2026 00:00:00 +0000

Specialists have been left behind in value-based payment design. The Medicare Shared Savings Program centers on primary care attribution and total cost of care. BPCI-Advanced focused on acute care episodes. Neither model created a pathway for specialists to participate in value-based payment on terms that fit how specialty care is organized and delivered. The Ambulatory Specialty Model, finalized in the CY 2026 Physician Fee Schedule and launching January 1, 2027, is CMMI’s first mandatory model designed specifically for specialists.

Summary: Specialty Care Transformation

Sun, 15 Mar 2026 00:00:00 +0000

Value-based payment design has left specialists behind. MSSP centers on primary care attribution and total cost of care. BPCI-Advanced focused on acute care episodes. Neither created a pathway for specialists to participate on terms that fit how specialty care is organized and delivered. The Ambulatory Specialty Model, finalized in the CY 2026 Physician Fee Schedule and launching January 1, 2027, is CMMI’s first mandatory model designed specifically for specialists. ASM targets cardiologists treating heart failure and specialists treating low back pain, including anesthesiologists, pain management physicians, neurosurgeons, orthopedic surgeons, and physical medicine and rehabilitation physicians. Approximately 8,600 physicians in selected geographic regions will be required to participate, managing roughly 600,000 episodes annually for about 550,000 beneficiaries with approximately $2.8 billion in episode spending.

AHEAD States

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AHEAD replaces fee-for-service hospital payment with a fixed annual revenue target. For hospitals in participating states, this is a fundamental restructuring of the financial model. Under fee-for-service, revenue increases with volume: more admissions, more procedures, more services generate more payment. Under a global budget, revenue is fixed in advance. The hospital receives the same amount whether utilization increases or decreases. The financial incentive inverts: eliminating avoidable hospitalizations, reducing readmissions, and managing chronic disease in the community protect revenue that would otherwise be consumed by the cost of delivering unnecessary care.

Summary: AHEAD States

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AHEAD replaces fee-for-service hospital payment with a fixed annual revenue target. Under fee-for-service, revenue increases with volume. Under a global budget, the hospital receives the same amount whether utilization increases or decreases. The financial incentive inverts: eliminating avoidable hospitalizations, reducing readmissions, and managing chronic disease in the community protect revenue that would otherwise be consumed by the cost of delivering unnecessary care. Six states have signed on. Maryland began its performance period in January 2026. Connecticut, Hawaii, Vermont, Rhode Island, and specific New York counties are preparing for performance periods beginning in 2027 or 2028. CMS has extended the model through December 31, 2035, and will offer the opportunity for up to two additional states to join.

The Dual Eligible Provider Opportunity and Risk

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The dual eligible population represents the highest-acuity, highest-complexity patient population in the country. More than 12 million Americans are enrolled in both Medicare and Medicaid, qualifying for Medicare through age or disability and for Medicaid through income or disability-related need. This population accounts for a disproportionate share of spending in both programs while experiencing care that is fragmented between two payers with different coverage rules, provider networks, and administrative structures.

Summary: The Dual Eligible Provider Opportunity and Risk

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More than 12 million Americans are enrolled in both Medicare and Medicaid. This population accounts for roughly 20 percent of Medicare enrollment but approximately 35 percent of Medicare spending. On the Medicaid side, the disproportion is even greater because Medicaid covers long-term services and supports that Medicare excludes. Dual eligibles have multiple chronic conditions, behavioral health needs, functional limitations, and social determinants that complicate care delivery. Care is fragmented between two payers with different coverage rules, provider networks, and administrative structures. Emergency departments become the default coordination point because they are available regardless of payer. For providers, the dual eligible population represents both the greatest clinical challenge and the greatest integration opportunity.

The Medicare Workforce Crisis

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Every policy initiative in this series assumes a workforce that exists at sufficient scale to execute it. ACO expansion assumes primary care physicians available to manage attributed beneficiaries. AHEAD assumes hospitals can staff population health programs and care coordination teams. FIDE SNP integration assumes behavioral health providers and home health aides ready to serve complex dual eligibles. Encounter-based risk adjustment assumes clinical documentation specialists embedded in practice workflows. WISeR assumes prior authorization staff or gold-carding infrastructure.

Summary: The Medicare Workforce Crisis

Sun, 15 Mar 2026 00:00:00 +0000

Every policy initiative in Series 5 assumes a workforce that exists at sufficient scale to execute it. ACO expansion assumes available primary care physicians. AHEAD assumes hospitals can staff population health programs. FIDE SNP integration assumes behavioral health providers and home health aides ready to serve complex dual eligibles. Encounter-based risk adjustment assumes clinical documentation specialists embedded in practice workflows. The assumption may not hold. Physician reimbursement has eroded in real terms for two decades. Home health aide wages remain at or near minimum wage. Nursing shortages constrain every care setting. Geographic maldistribution concentrates workforce in urban areas while rural communities face persistent vacancies.

Private Equity and the Medicare Delivery System

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Private equity acquisitions in healthcare delivery nearly tripled from 2010 to 2020. In 2024 alone, there were approximately 1,069 unique private equity-backed healthcare deals in the United States. The sectors attracting PE capital include hospitals, physician staffing, nursing homes, home health and hospice, behavioral health, and dental practices. For providers who have not been acquired, PE-backed competitors are reshaping market dynamics in ways that affect staffing, contracting, and competitive positioning.

Summary: Private Equity and the Medicare Delivery System

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Private equity acquisitions in healthcare delivery nearly tripled from 2010 to 2020. In 2024 alone, there were approximately 1,069 unique PE-backed healthcare deals. PE capital concentrates in physician staffing (emergency medicine, anesthesiology, radiology, hospitalist medicine), home health and hospice, behavioral health, dental service organizations, and nursing homes. For providers who have not been acquired, PE-backed competitors are reshaping market dynamics in ways that affect staffing, contracting, and competitive positioning.

The quality and safety evidence is concerning. A 2025 study in Annals of Internal Medicine found that PE-acquired hospitals reduced salary and staffing in emergency departments and intensive care units, with a 13.4 percent rise in deaths occurring in the emergency department. A 2023 study found that hospital-acquired conditions among Medicare beneficiaries increased by 25 percent at PE-acquired hospitals compared to non-acquired facilities. In nursing homes, PE acquisition has been associated with 11 percent higher patient mortality, reduced staffing, and increased hospitalization rates. PE-owned physician practices have shown nearly 20 percent fewer retinal detachment repairs, a time-sensitive procedure often reimbursed below cost, suggesting that PE ownership may reduce provision of services that do not generate adequate margins. The July 2025 bankruptcy of Genesis Healthcare, a PE-backed nursing home operator across 17 states, illustrated the financial fragility that can accompany PE ownership structures involving asset stripping and high-risk borrowing. A 2024 Physicians Foundation survey found that only 14 percent of physicians agreed that PE funding is good for the future of healthcare.

Post-Acute Care Reform

Sun, 15 Mar 2026 00:00:00 +0000

Post-acute care accounts for more than $55 billion in annual Medicare fee-for-service spending across four settings: skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals. In 2024, Medicare spent approximately $30 billion on SNFs, $15.7 billion on home health agencies, and $11 billion on IRFs. MedPAC has recommended a unified PAC payment system for fifteen years. Congress has never enacted it.

The failure to reform PAC payment reflects the political economy of healthcare silos. Each setting has its own trade association, its own congressional champions, its own cost report structure, and its own payment history. A unified payment system based on patient characteristics rather than care setting would create winners and losers among incumbents, and the losers have consistently blocked reform. Meanwhile, the shift from fee-for-service to Medicare Advantage and the growth of ACOs and AHEAD create external pressure that may accomplish what legislation has not: forcing PAC providers to demonstrate value or lose volume.

Summary: Post-Acute Care Reform

Sun, 15 Mar 2026 00:00:00 +0000

Post-acute care accounts for more than $55 billion in annual Medicare fee-for-service spending across four settings: skilled nursing facilities ($30 billion in 2024), home health agencies ($15.7 billion), inpatient rehabilitation facilities ($11 billion), and long-term care hospitals. MedPAC has recommended a unified PAC payment system for fifteen years. Congress has never enacted it. The failure reflects the political economy of healthcare silos: each setting has its own trade association, its own congressional champions, and its own payment history. A unified payment system based on patient characteristics rather than care setting would create winners and losers among incumbents, and the losers have consistently blocked reform.

Hospice in Crisis

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Total Medicare hospice payments reached $25.7 billion in 2023, up from roughly $7.6 billion in 2010. Hospice utilization reached 51.7 percent among Medicare decedents in 2023, the highest rate since 2019. The growth is driven by longer lengths of stay, not sicker patients. For-profit hospice providers now account for more than 77 percent of all hospices nationwide. Average length of stay among decedents was 95.3 days in 2022, up from 92.1 days in 2021. At the 90th percentile, length of stay reached 275 days.

Summary: Hospice in Crisis

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Total Medicare hospice payments reached $25.7 billion in 2023, up from roughly $7.6 billion in 2010. Hospice utilization reached 51.7 percent among Medicare decedents in 2023. The growth is driven by longer lengths of stay, not sicker patients. For-profit hospice providers now account for more than 77 percent of all hospices nationwide. Average length of stay among decedents was 95.3 days in 2022. At the 90th percentile, length of stay reached 275 days. The combination of per-diem payment, open-ended benefit eligibility, and weak oversight has created an environment where the financial incentive to maximize days overwhelms the clinical purpose of comfort-focused end-of-life care.

Rural Medicare

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Rural Americans are older, sicker, and more Medicare-dependent than their urban counterparts. Rural counties have MA penetration rates as low as 20 percent in some markets. From 2005 through 2024, 193 rural hospitals closed, 71 of them Critical Access Hospitals. The February 2025 Chartis Group report identified 432 financially vulnerable rural hospitals at risk of closing. In over a third of states, the median operating margin for rural hospitals is negative.

Summary: Rural Medicare

Sun, 15 Mar 2026 00:00:00 +0000

Rural Americans are older, sicker, and more Medicare-dependent than their urban counterparts. From 2005 through 2024, 193 rural hospitals closed, 71 of them Critical Access Hospitals. The February 2025 Chartis Group report identified 432 financially vulnerable rural hospitals at risk of closing. Operating margins were lower among rural hospitals (3.1 percent) than urban hospitals (5.4 percent) in 2023, and worse still (1.7 percent) among the nearly 1,000 rural hospitals not connected to a larger health system. The rural Medicare problem is not one problem but several interlocking failures: a hospital payment system that cannot sustain low-volume facilities, a physician fee schedule that undervalues rural practice, an MA benchmark methodology that makes plan participation financially unviable in low-spending markets, and a ground ambulance payment structure that does not account for rural cost differentials.