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

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

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

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

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The Profile Behind the Pattern

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

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

What Evanko said on the call shows how he thinks.

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

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

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

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

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

When the Board Promotes the CFO

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

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

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

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

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The Earnings Call vs the Coverage

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

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

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

How Cigna Will Buy Differently in 2026 and 2027

Three buying behavior shifts are already in motion.

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

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

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

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

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How Cigna Will Partner Differently

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

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

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

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

Four forward shifts to expect on new partnerships:

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

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

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

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

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

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

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The Pattern Across the Other National Health Plans

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

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

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

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

Final Thought

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

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

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

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

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

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Operations and Finance Run the Same Conversation Now

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

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

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

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

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

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

What Forced Operations and Finance to Integrate

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

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

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

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

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

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

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

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

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Three Things This Changes About How Plans Buy

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

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

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

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

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

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

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

3. Track record now outweighs capability differentiation.

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

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

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

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

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

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

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

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

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

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

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

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

The March 31st data confirms all four.

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

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

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

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

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What the Numbers Show

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

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

Those are the benchmarks. What makes the data useful is the variation underneath them.

Harris Secure Connect pulled together a compilation of the seven largest MA insurers, which together hold the majority of MA enrollment. Their report gathers the data. I'm going to analyze five of those plans against each other to show the pattern underneath. Same regulatory framework, same March 31st deadline, but very different operational postures.

Centene (Wellcare MA) denies 12.3% of requests and overturns 95.5% of them on appeal. Read that again. Centene issues denials on more than one in ten requests and reverses nearly every single one when a provider pushes back. That is the highest overturn rate in the entire report card, and it is the single most revealing number in the disclosure. The initial determination process is generating decisions that do not survive clinical review. Every other pattern in the data has to be read against this one.

UnitedHealthcare denies at 12.8% with the lowest prior auth volume per enrollee (1.0 request per enrollee). Few requests, high denial rate. The U.S. Senate Permanent Subcommittee on Investigations (PSI) connected that pattern to UHC’s deployment of the nH Predict algorithm, which drove its post-acute denial rate from 8.7% in 2019 to 22.7% in 2022. Humana and CVS were flagged in the same report for similar post-acute denial behavior, though their overall numbers look different.

Elevance (Anthem) denies at 4.2%, the lowest of the majors. Same market, same regulatory framework, very different operational posture. Elevance has publicly committed not to use AI to automate denials, and its PA Pass program waives prior auth entirely for hundreds of procedure codes for qualifying provider groups. This is what operational maturity at the front door looks like in the data.

Aetna (CVS) denies at 11.9% with the highest appeal rate of any major insurer at 19.9%. Providers invest in appeals only when they believe they will land, which makes that 19.9% a signal about what providers experience with Aetna denials. When providers are willing to push back at almost double the industry rate, they are telling you something about the initial review process.

Kaiser Permanente denies at 10.9% with a 1.6% appeal rate and a 51% overturn rate. The headline denial rate looks similar to the others, but the 1.6% appeal rate is the story. Kaiser's integrated model means the provider making the request and the plan denying it are often the same organization, which collapses the (often) adversarial dynamic that drives appeal behavior everywhere else. The data reflects it: very few appeals, and only half of those filed are overturned. (Kaiser is not a useful benchmark for any plan that doesn't share its structure.)

The Medicaid picture is starker. The Office of Inspector General’s (OIG) 2019 baseline put MCO denial rates at 12.5%, more than double the MA rate at the same time, and the overturn rate on Medicaid appeals is only 36%, less than half the MA rate. The gap comes down to accountability structure. In MA, a denial upheld on internal appeal automatically routes to an independent external review. Only 15 of 39 MCO states have an equivalent external review requirement for Medicaid, and 89% of Medicaid enrollees never appeal. Same denial behavior, but far less backstop.

Cigna is the outlier worth watching. They published their first Customer Transparency Report on March 12, nearly three weeks before the deadline, reporting that fewer than 2% of customers receive a prior auth denial and that 80% of prior auths are approved within 24 hours. They also removed 345 services from their PA list, a 15% reduction. Publishing early was a strategic choice. Expect Cigna to use those numbers in the 2027 bid cycle.

There is more to the numbers than what appears on the surface. Here's what they confirm about how plans handled the March 31st deadline.

What the Data Confirms

Health plans have not been sitting still. On April 7, AHIP and the Blue Cross Blue Shield Association reported that the roughly 50 insurers who signed the June 2025 voluntary prior auth pledge have eliminated 11% of prior authorizations since the commitment, reducing 6.5 million requests and achieving MA reductions of more than 15%. Plans are pulling procedures off PA lists, building continuity-of-care protocols for members who switch coverage, and working toward real-time electronic determinations on the 2027 FHIR timeline.

But reducing the volume of prior auths does not automatically improve the quality of the ones that remain, and the CY2024 data confirms that. Four patterns I flagged in January now have the numbers to back them up:

Plans met the deadline by denying faster. Centene is the cleanest case study. A 95.5% overturn rate on a 12.3% denial rate means the initial decisions are not surviving clinical review. That pattern only occurs when decisions are made faster than they should. The American Medical Association’s (AMA) 2024-2025 prior authorization survey puts physician burden at 39 prior auths per physician per week and 13 hours of staff time, and 61% of physicians reported concerns that plans were using AI to increase denials with minimal human review. The data confirms what providers were already living.

Compliance relocated friction rather than eliminating it. The industry-wide 80.7% overturn rate is the evidence. Friction moved downstream into appeals, where it now sits in a different cost center and a different part of the member experience.

Plans with poor numbers are starting to face questions from brokers, consultants, and members. The disclosures are public, benchmarkable, and already being referenced by advocacy groups and trade press. Plans cannot claim their prior auth numbers are defensible without being prepared to answer for them in every renewal conversation and every member-facing review cycle.

The window on this data is short. This is the pattern that matters most because every other insight in this article is most useful right now. In 90 days, the industry will be talking about CY 2027 bids, summer enrollment, and the next CMS drop. The data will still be public, but vendors who show up in Q3 referencing it will be walking into rooms where five competitors already did.

Two things have shifted since my January article. The Trump administration pulled three of the original CMS-0057-F requirements in June 2025. Health equity analysis of prior auth practices is no longer required, plan-level reporting was reduced to contract-level aggregate data, and the AI oversight requirements for MA denial systems were dropped. What is still enforced: the 7-day standard and 72-hour expedited decision timelines, contract-level reporting, specific denial reasons on every denial, and the annual public posting. The transparency infrastructure held even under a deregulatory administration, which tells you something about where CMS has conviction and where it does not.

One thing CMS did not mandate was where plans had to post the data. The numbers live in different spots on different plans’ websites, some on compliance pages, some in provider sections, some in footer links that take three clicks to reach. The information is there, but vendors and consultants who want to read these numbers have to look for it. Most won’t, and that is part of why the window is open for the ones who do.

The second shift is on the horizon. The Fast Healthcare Interoperability Resources (FHIR) Prior Authorization Application Programming Interface (API) mandate takes effect January 1, 2027, which means the technology that would let plans make better initial decisions at scale arrives in eight months. Between now and then, plans are operating on the manual infrastructure they built to hit the January 2026 deadline, and that infrastructure is exactly what produced the 80.7% overturn rate. The report cards you are reading today are the best-case output of a system that wasn’t built for the job it is being asked to do.

So pull up your prospect’s prior auth numbers before your next meeting. Even if you don’t sell prior auth, they tell you something about how the plan operates that most of your competitors haven’t bothered to look up.

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The Four Patterns Worth Recognizing in the Data

Having the data matters less than knowing what it means. Most vendors will read the report cards, note the big numbers, and move on. Those who get something useful from the disclosure are those who read plan-level patterns as operational signals.

Four patterns are worth learning to recognize. Each one shows up in different parts of the market, and each one points to a different buyer situation:

1. High denial rate plus high overturn rate equals an initial determination problem. Centene is the archetype, with a front-door process that produces decisions that collapse on appeal. If you sell clinical decision support, documentation improvement, utilization management (UM) workflow tooling, or anything that touches first-pass decision quality, you have a data-backed hook. The plan’s own numbers show the initial process is not working, and the downstream costs in appeals volume, provider abrasion, and member experience hits are known and real.

2. High denial rate plus low appeal rate equals a provider relations problem. When providers stop appealing despite high denial rates, they have decided the effort isn’t worth the return. That disengagement affects network adequacy, network stability, and eventually Consumer Assessment of Healthcare Providers and Systems (CAHPS) scores, which feed into Stars. KFF polling already shows that most insured adults find prior auth difficult to manage, so member experience is a documented pressure point before you factor in broken initial decisions. If you sell provider engagement, network management, or member engagement solutions, the data points you toward the right accounts and conversations.

3. Low denial rate equals operational maturity at the front door. Elevance and Cigna have already invested in the front end. (i.e., Selling UM tools into those plans might be harder.) Quality, care management, and clinical workflow tools may be an easier fit because they are the next layer up the stack, and those plans have shown interest in investing there.

4. Missing or late disclosures equal a compliance bandwidth problem. A plan that did not publish on time or published only the minimum contract-level aggregate is sending a signal. It is either short on compliance capacity or deliberately minimizing its exposure, and both readings argue for the same vendor posture: calibrate your ask to what their team can actually absorb.

The pattern-recognition layer matters because the data itself is a commodity. Every vendor has access to the same numbers. What the vendor does with those numbers, how they frame them in discovery, what they ask, how they read silence, is where the insight actually lives.

Everything above is the public data and the framework for reading it: what the numbers show, what they confirm about how plans handled the January deadline, and the four buyer patterns worth recognizing. Below is what I actually use with clients: discovery language for a high-denial plan, an operationally mature plan, and a non-publisher, plus the one-page champion brief that turns the plan’s own numbers into an executive conversation.

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🎁 Unlocked: This post includes the full deep dive
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The Centers for Medicare & Medicaid Services (CMS) issued two massive documents to the payor market in the span of five days. On Thursday, April 2, the Final Rule landed, and I covered what it means for selling into payers. Then on Monday, April 6, CMS released the CY 2027 Rate Announcement, and this one deserves its own article because the Final Rule is about policy while the Rate Announcement is about money, and money is what changes how your buyer behaves.

Here’s the headline: CMS is sending $13 billion more to Medicare Advantage (MA) plans in 2027 than in 2026, a 2.48% net average increase that’s a dramatic reversal from the 0.09% CMS proposed in January 2026. When that January number dropped, health insurer stocks cratered. Humana fell over 20%. UnitedHealth lost 19%. Plans started modeling benefit cuts, market exits, and vendor contract reductions. On April 6, the mood flipped: UnitedHealth jumped 11%, Humana climbed 9%, and CVS gained nearly 9%.

The rate bump does not mean stalled deals are about to start moving again, and most vendors I’m hearing from are wrong about the timeline. What follows is a breakdown of what the Rate Announcement actually changes about your health plan buyer’s behavior over the next 12 months, where it creates real urgency to buy, and why the single most important number in this announcement isn’t the 2.48%.

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The $13 Billion Swing

In January, CMS proposed a 0.09% rate increase for CY 2027. To put that in context, plans received a 5.06% increase for CY 2026, so the January proposal represented a near-5-point year-over-year drop, the smallest proposed increase in recent memory. CMS estimated it would deliver roughly $700 million in additional MA payments, but compared to the billions in additional funding plans had received in prior years, the number landed as a de facto cut, and the industry sentiment treated it that way.

On April 6, CMS finalized a 2.48% increase, translating to over $13 billion in additional payments and representing a swing of roughly $12 billion between what January proposed and what April delivered.

Here’s the CMS table that tells the story:

Look at the Risk Model Revision and Normalization line. It moved from -3.32% to -1.12%, and that single row explains almost the entire $13 billion swing. CMS also updated the effective growth rate from 4.97% to 5.33% after incorporating Q4 2025 fee-for-service cost data, which added real dollars. But even at 2.48%, the increase doesn’t keep pace with the utilization trends plans are reporting: inpatient costs, Part B drugs, post-acute care, and behavioral health are all running hot, and plans heading into bid season know their cost pressures are growing faster than their revenue. The risk model row is where the real story lives, and understanding why it moved tells you more about the next 12 months than the 2.48% headline does.

The Risk Model Freeze Is the Real Story

This is the part of the announcement that matters most, and it requires some context to understand.

CMS uses a risk adjustment (RA) model to determine how much it pays MA plans for each enrolled member. The model assigns a risk score based on the member’s diagnosed conditions, and that score drives the per-member payment. When CMS updates the model, the math behind every plan’s revenue changes.

The current RA model, known as the 2024 model, was built on 2018 diagnosis data and 2019 spending data. It went through a three-year phase-in: one-third of risk scores were calculated under the new model in 2024, two-thirds in 2025, and full implementation arrived in 2026. Plans spent three years absorbing those changes.

In January 2026, CMS proposed replacing this model for CY 2027 with a recalibrated version using 2023 diagnoses and 2024 expenditures. That proposed recalibration was the -3.32% line in the table above, and it was the single biggest reason the January 2026 Advance Notice landed at 0.09%.

CMS pulled the update entirely, so the current model stays in place for CY 2027.

Two things drove this decision. First, the 2024 expenditure data contained a spending anomaly tied to skin substitute products that would have distorted the model’s coefficients, effectively building the new model on flawed inputs. Second, CMS acknowledged that plans had just finished absorbing the V28 RA model phase-in and needed those changes to settle before another recalibration layered on top. On the CMS press call, Director of Medicare Chris Klomp framed it as giving plans time to adjust, while stressing that CMS has not abandoned the recalibration and will keep a “careful eye” on insurer practices.

Here’s why this matters more than the 2.48% headline. The 0.09% that terrified the industry in January 2026 wasn’t a hypothetical. It was the actual rate CMS proposed, including the recalibration. The only reason April 2026’s number landed at 2.48% is because CMS removed the recalibration from the equation. When CMS reintroduces the updated model (and they’ve said they will), the math reverts to something that looks a lot more like the January 2026 Advance Notice. Essentially, the Advance Notice is a preview of the next cycle.

Anyone building a strategy or a pipeline around 2.48% as a new baseline is mispricing what’s ahead. CMS described its vision for risk adjustment in terms of three guiding principles: simplicity, competition regardless of plan size, and payments that accurately reflect beneficiary health risk. That language signals an agency that simply paused, not one that backed down.

For vendors, this changes how you position multi-year contracts. If your deal is structured around a two- or three-year commitment, your buyer is already thinking about what happens when the freeze lifts, and you should be too. The rate announcement shifted plans from surviving the rules to winning the bid, and the vendors who can quantify their value under both the current model and a recalibrated one have a positioning advantage over competitors selling as if the current rate environment is permanent.

The risk model freeze also sets the context for the next big operational change in the Rate Announcement: what CMS did with chart review.

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What the Chart Review Exclusion Actually Changed

If you don’t sell risk adjustment tools, you might be tempted to skip this section. Don’t. The chart review exclusion in this Rate Announcement is going to affect your buyer’s financial position, their budget priorities, and the competitive dynamics between the plans you’re selling to, regardless of what you sell. Understanding why starts with how health plan revenue actually works.

MA plans are paid based on the health risk of their enrolled members: the sicker the population, the higher the CMS payment. Plans submit diagnosis codes for each member, CMS converts those codes into a risk score, and the risk score determines the per-member payment. If a member has diabetes, heart failure, and depression, but only diabetes is coded and submitted, the plan gets paid for a diabetic, not for someone with three chronic conditions. Revenue for an MA plan is directly tied to how completely those submissions reflect the actual health of their population.

Chart review is one of the primary ways plans close that gap. A chart review vendor reviews medical records, identifies conditions that were diagnosed but never properly coded or submitted, and sends those additional diagnoses to CMS for risk score calculation. Some of those chart review records are “linked” to a specific clinical encounter, such as an office visit or a procedure, and those records are unaffected by this rule change. Others are “unlinked,” meaning the diagnosis was found in a medical record but can’t be tied to a specific dated encounter. That’s the category CMS just excluded.

For years, CMS allowed unlinked chart review submissions. Plans built significant portions of their risk-adjusted revenue around this practice, particularly through in-home health risk assessments and third-party retrospective chart review vendors. Plans optimized around what was permitted, which is exactly what you’d expect them to do.

Starting in CY 2027, CMS changed the rules: diagnoses from unlinked chart review records no longer count for risk score calculation. If a diagnosis can’t be tied to a documented clinical encounter, it doesn’t affect payment.

According to CMS, 85% of the 88.8 million unlinked chart review records submitted in 2023 for 2024 payment couldn’t be matched to any encounter data record. Average payment impact of the exclusion: -1.53%. CMS carved out an exception for beneficiaries who switch between MA organizations (the “switcher exception”), without which the impact would have been -1.78%.

That -1.53% is an average. The variation across plans is enormous. Plans that built their risk adjustment strategy around unlinked chart reviews are absorbing a much larger hit, while plans that relied primarily on encounter-based documentation are barely affected. An important note on framing: plans didn’t do anything improper here. CMS allowed this practice, plans optimized within the rules, and CMS changed the rules. If you sell to plans, that distinction matters in every conversation you have about this topic.

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How the Chart Review Exclusion Hits Every Vendor’s Budget

Here’s why this matters even if you don’t sell risk adjustment tools. When a plan loses meaningful revenue due to the chart review exclusion, that financial pressure doesn’t stay within the risk adjustment department. It shows up in budget decisions across every vendor category. A plan absorbing a -2% or -3% revenue hit is going to scrutinize every line item, including your care management contract, your quality reporting platform, and your member engagement tool.

This creates a paradox worth watching. The same exclusion that pressures some buyers’ budgets also creates emergency-level procurement urgency for others. Plans that lost revenue need to shift from retrospective documentation to prospective risk capture, meaning they need to start documenting diagnoses during actual clinical encounters rather than finding them after the fact in medical records. That shift requires encounter data remediation tools, prospective coding workflow platforms, and better linking between chart review submissions and encounter records.

If you sell in that space, some of your prospects are moving faster than they’ve ever moved. But if the exposure is severe enough at a given plan, the budget cuts from lost revenue could stall your deal before the urgency translates into a purchase order. Which dynamic dominates depends on how exposed your specific buyer is, and that’s a question you need to answer before you forecast.

Also, note this policy is part of a multi-year CMS trajectory to tighten how diagnoses translate into payments, meaning the financial pressure on heavily exposed plans is structural, not a one-time adjustment. That structural pressure shapes how the rate announcement actually hits vendor procurement budgets, and it’s the question most vendors are getting wrong right now.

When the Rate Announcement Actually Shows Up in Your Deal

Sure, the 2.48% improved the mood, but unfortunately, it won't loosen budgets on the timeline most vendors are expecting.

Health plans are heading into bid season right now, with bids due to CMS in June 2026. Those bids determine what each plan offers members in CY 2027: the benefits, the premiums, the provider networks. Vendor budgets for CY 2027 are largely set as part of that process. The rate announcement confirms what plans have to work with, but it doesn’t create new vendor spend for the current cycle. For most vendors, the financial relief from the 2.48% increase won’t show up in procurement budgets until CY 2028. It will improve your buyer’s willingness to start conversations for next year’s implementation, but it won’t accelerate a deal this quarter.

One exception, and it’s specific: vendors selling solutions to problems the Rate Announcement just created. Encounter data remediation, prospective risk capture, and chart review linking. When a plan’s CFO realizes that unlinked chart review diagnoses are being excluded from risk scores starting CY 2027, procurement shifts from “next year’s budget” to “we need this before our next submission window.” Those purchases break the normal budget cycle because they address an immediate revenue protection problem.

For everyone else, patience is the right posture. Internal health plan forces drive deal timing: budget cycles, bid timelines, steering committee approvals, and procurement queues all operate on their own calendar, and a favorable rate announcement doesn’t override those mechanics.

And the 2.48% itself deserves scrutiny at the local level. Health policy research firm Avalere Health published a county-level analysis showing that the national average masks enormous geographic variation, with county-level benchmark changes ranging from -4.5% to +19.8%.

Before your next pipeline review, look at the map above. If your prospects operate primarily in counties that saw decreases or flat benchmarks, the 2.48% headline isn’t their reality, and your deal assumptions need to reflect that. If they’re in counties with above-average increases, the relief is real…but so is the increased competition from other vendors who see the same opening.

For context on how much local variation matters: even in CY 2026, when plans received a 5.06% increase (more than double what they’re getting for CY 2027), nearly 50% of counties saw at least one plan terminate, and in 21 counties every MA plan was terminated.

Your buyer’s emotional state changed, but their budget math may not have changed as much as you think. That’s why, when your buyer brings up the rate announcement, the right response is demonstrating that you understand 2.48% is breathing room in the aggregate and that the math looks different depending on where they operate.

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Final Thought

The risk model freeze is the reason the 2.48% landed where it did, and the freeze is temporary. CMS said so on the record.

Health plans are building bids right now with a 12-month window of stability that closes as early as January 2027 when the next Advance Notice drops. Your buyer’s emotional state changed. Their budget math may not have changed as much as you think.

Vendors who use this window to get in front of buyers while the mood is favorable, position around the operational problems the announcement created, and build relationships before the next regulatory cycle resets the board will have pipeline built when the next Advance Notice lands. Vendors who wait for the budget environment to “fully improve” will find themselves starting conversations in late 2027 while everyone else is already in procurement.

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

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

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

Q1 is in the books, spring is here, and welcome to that stretch of the regulatory calendar where the final rule and final rate announcement land in the same week, giving everyone who touches the payor market something to stress about. To that end, CMS dropped the CY 2027 Medicare Advantage and Part D final rule on April 2.

Within hours of its release last Thursday, LinkedIn was full of final rule summaries. Most of them were good, and most of them told you what changed. This article explains why it matters and is written for anyone who sells to health plans, invests in companies that do, advises provider organizations that depend on payor contracts, or helps clients make sense of the payor market. The goal is to give you a point of view you can bring into your next meeting without having read the full document (though I still recommend you do).

When the proposed rule came out in December 2025, I broke down six signals that would change how health plans buy. Now we know which ones held. Most of the proposed rule survived intact, but what changed between proposed and final, and what CMS added that wasn’t in the original document, tells you more about the agency’s direction than what stayed the same.

Two surprises worth flagging upfront. The health equity rollback goes further than anyone expected. CMS didn’t just kill the Health Equity Index (HEI) reward. They eliminated four distinct sets of health equity requirements in a single rule. And CMS finalized supplemental benefit and debit card provisions that came from the CY 2026 proposed rule, not the CY 2027 document, so most vendors who tracked the November release have no idea these are coming.

The throughline from CMS is pretty clear: fewer rules, higher stakes, and a smaller set of requirements they fully intend to back up with enforcement. Let’s get into it.

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What Changed Between Proposed and Final (And Why the Delta Matters More Than the Rule Itself)

CMS received over 42,000 comments on the proposed rule. What survived the comment period and what didn’t reveals where CMS has conviction and where it backed down under pressure.

Let’s start with Stars. CMS proposed removing 12 measures and finalized 11. The diabetes care eye exam measure survived after pushback from plans and provider groups who argued it drives meaningful clinical action and still shows variation across contracts. One measure out of twelve doesn’t sound like much, but it tells you something worth paying attention to: CMS listens when the clinical case is specific, evidence-backed, and tied to real outcomes. Vague objections about “administrative burden” didn’t move the needle, but targeted clinical arguments did.

CMS also proposed a “provider termination” Special Enrollment Period (SEP) that would have allowed members to switch plans when their provider left the network, but that provision was not finalized. CMS pulled it back entirely, stating it will consider future rulemaking. Withdrawing one of the bigger proposals in the original document signals caution about disrupting plan stability while plans are already dealing with benefit cuts, market exits, and over 1.8 million members forced to choose new plans.

Here’s the overall pattern: all deregulation provisions finalized, all Inflation Reduction Act (IRA) codification finalized, 11 of 12 Stars measure removals finalized, and every health equity rollback finalized. The Requests for Information (RFIs) on risk adjustment modernization, Chronic Condition Special Needs Plan (C-SNP) dual enrollment, and wellness/nutrition policy didn’t produce rule changes (CMS said it will consider comments for future rulemaking), but the provisions that were on the table moved forward with almost everything intact. CMS had the estimated spending impact from the Stars changes alone modeled at nearly $14 billion in additional Medicare spending over the next decade, and they didn’t blink.

For companies selling into payors, this matters because it shows you where objections work and where they don’t. If you’re trying to make a case to a buyer that a certain capability still matters, your argument needs to look like the eye exam defense (specific, clinical, evidence-backed) rather than the provider termination SEP (broad, structural, politically complicated).

That delta between proposed and final also tells you something about CMS’s broader direction, which becomes clearer when you look at what they did with health equity.

The Health Equity Rollback Is Bigger Than the Headline

Most coverage of this rule will report that CMS killed the HEI reward and leave it at that. That’s the headline, but it’s only one piece of a much larger shift. CMS finalized four distinct health equity rollbacks in a single rule: they eliminated the requirement for MA quality improvement programs to include health disparities reduction activities, removed health equity requirements for MA Utilization Management (UM) committees (including the health equity expert member requirement), killed the annual health equity analysis and its public posting obligation, and rescinded the requirement for plans to send mid-year notices about unused supplemental benefits.

None of these is surprising on its own. Industry observers like Crowell & Moring noted these rollbacks were expected, given the administration’s position on DEI-related requirements. But most vendors are processing them one at a time instead of recognizing what they add up to: the compliance infrastructure that justified an entire category of vendor purchases just got dismantled.

If you sell health equity analytics, social determinants of health (SDOH) solutions, or population health tools, the buying signal just changed. When your pitch relied on “plans are required to do this,” the mandate was doing a lot of the selling for you. That mandate is gone. Plans serving dually eligible populations, plans in markets with significant disparities, and plans competing on quality where outcomes vary widely still need this work. But the conversation shifts from “we have to” to “we choose to,” and “we choose to” requires a much stronger ROI case than a regulatory citation ever did.

If your value proposition still leads with requirements CMS just eliminated, you have a positioning problem to fix before your next buyer call. That means rebuilding around financial outcomes a CFO can defend in a budget meeting: cost avoided per member, gaps closed per quarter, readmission reductions that show up in the medical loss ratio (MLR). The buyers still funding vendors right now are the ones whose CFOs can stress-test the ROI at 70% of projected performance and still see the math work.

One more thing worth noting here: even as CMS rolls back requirements, enforcement hasn’t relaxed. The Office of Inspector General (OIG) released its first MA-specific compliance guidance since 1999 in February 2026, the Department of Justice (DOJ) recovered $6.8 billion through False Claims Act (FCA) cases in FY 2025, and risk adjustment remains a top enforcement priority. Fewer reporting requirements doesn’t mean less exposure, but it does mean plans have fewer internal checkpoints catching problems before a regulator does.

The health equity rollback reshapes who buys and why, but the Stars overhaul reshapes what every plan gets measured on.

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11 Measures Removed, One Added. The One They Added Is the One to Watch.

CMS confirmed the removal of 11 measures from the Stars program, mostly administrative and process measures where plans were scoring high with little variation between contracts, and refocused the program on clinical care, outcomes, and member experience where meaningful performance differences actually exist.

To understand the magnitude: CMS estimates these Stars changes will produce a net impact of $18.6 billion on the Medicare Trust Fund from 2027 through 2036 (a separate and larger figure than the $14 billion in additional Medicare spending from the overall policy changes, because the Trust Fund estimate captures the downstream effects on Quality Bonus Payments (QBPs) and plan rebates). Press Ganey’s modeling, which was based on the proposed rule’s 12 measure removals with 11 ultimately finalized, projected $1.3 billion in QBP losses and estimated that roughly a quarter of MA contracts could lose half a Star.

Those administrative measures weren’t just easy points, they were also a buffer. Plans that scored well on them could absorb a weak year on a clinical measure without losing their overall Star rating. Now that some of that buffer is gone, the math gets harder in two ways: the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey and Health Outcomes Survey (HOS) will account for nearly 40% of total Star weight by 2029, and each remaining measure now carries more relative weight, which means a single bad performance year does more damage than it used to. For plans that treated member experience as a secondary priority behind clinical gap closure, that calculus just flipped.

CMS described this as “fundamentally shifting our approach to quality” and “moving away from administrative box-checking.” Adding a new clinical measure in the same rule that removes 11 administrative ones makes that statement hard to misread.

And that new measure is the sleeper. CMS added Depression Screening and Follow-Up, effective for the 2027 measurement year and reflected in 2029 Star Ratings. Behavioral health vendors now have something they’ve rarely had in Stars conversations: a discrete, measurable quality hook tied to a specific measure with a defined timeline. “We directly impact your Depression Screening and Follow-Up score” is a materially sharper pitch than “we improve behavioral health outcomes,” and it gives the health plan Stars team something concrete to model.

There’s a second financial angle that goes beyond Stars. Better depression screening produces better behavioral health documentation, which flows into risk adjustment. A plan that identifies and documents a previously undiagnosed major depressive disorder isn’t just closing a Stars gap; they’re potentially capturing a Hierarchical Condition Category (HCC) code that improves their risk-adjusted revenue. Behavioral health vendors who can quantify both the Stars impact and the risk adjustment lift have a dual financial hook that most competitors aren’t connecting yet.

For member experience and CAHPS-focused solutions, the relative weight increase means every percentage point of CAHPS improvement now carries more financial weight than it did under the old measure set. And if your value proposition was tied to any of the removed measures, the repositioning window is narrow, since CY 2027 bids are being built right now.

What plans get measured on is only half the story. The next set of provisions covers operational requirements that most vendors tracking the 2027 regulatory cycle haven't even seen yet.

The Supplemental Benefit Rules Nobody Saw Coming

If you followed the CY 2027 proposed rule closely (or read my article covering it), these provisions weren’t in it. CMS finalized two supplemental benefit policies from the CY 2026 proposed rule, and they landed in this final rule without the advance notice that vendors tracking the 2027 regulatory cycle would have expected.

Two provisions, both operational, both worth understanding even if you don’t sell supplemental benefits directly.

First, plans must now publicly post the eligibility criteria they use to determine which chronically ill members qualify for Special Supplemental Benefits for the Chronically Ill (SSBCI). That means the internal criteria that used to live inside the plan’s operations are now visible to competitors, regulators, members, and advocacy groups.

Second, supplemental benefit debit cards must now be electronically linked to plan-covered items through a real-time point-of-sale (POS) verification system that confirms eligibility at the time of purchase, and cards are limited to the specific plan year. No more carrying balances or using cards for items outside the benefit design.

These rules land in a market that’s already under pressure. Roughly 30% of Medicare Advantage Organizations (MAOs) now offer flex cards with at least one nonmedical supplemental benefit, with average annual values reaching $1,430, and the flex card market is still growing. But plans have also been pulling back supplemental benefits broadly: OTC allowances dropped from 73% to 66% of plans, meals from 65% to 57%, and transportation from 30% to 24% between 2025 and 2026. Plans are cutting benefits and being told to tighten controls on the ones that remain, and that squeeze is going to force hard conversations between plans and their supplemental benefit vendors over the next 60 days.

If you sell benefits administration platforms, card technology, or supplemental benefit solutions, the real-time POS verification requirement is a technology mandate, and plans will surface whether your platform supports it during CY 2027 bid preparation. If you're a plan evaluating your current card vendor, this is the question that tells you whether your partner saw this coming or got caught flat-footed.

This SSBCI transparency requirement is part of a broader pattern. Plans were already required to post prior authorization metrics on their public websites as of March 31, including denial rates, turnaround times, and appeals outcomes. Now, SSBCI eligibility criteria join that list. For the first time, regulators, competitors, advocacy groups, and anyone selling into health plans can see how a plan operationalizes its supplemental benefits and how it handles prior auth without ever getting on a call with anyone at the plan.

This is pre-call intelligence that didn’t exist a year ago. You can see a plan’s SSBCI criteria before your first meeting and reference their prior auth metrics in a discovery call. And as I wrote in January when the prior auth deadlines hit, plans that met the deadline by speeding up denials didn’t eliminate friction, they relocated it into appeals, provider relations, and member experience. Now those relocated problems are visible in the public metrics. Plans know this information is out there, which means they’re more receptive to vendors who can help them make those numbers defensible.

CMS tightened controls on supplemental benefits in the same rule where it loosened requirements on nearly everything else, and that tension is the story of this entire rule. It's also where the budget opportunity lives.

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The Deregulation Pattern (And Where the Freed-Up Budget Goes)

CMS explicitly cited Executive Order 14192 across multiple provisions in this rule. Health equity requirements, mid-year supplemental benefit notices, UM committee mandates, agent and broker restrictions, call center requirements, and creditable coverage disclosures. All of these rolled back in a single document.

For enrollment and distribution tech companies, the agent and broker changes deserve a closer look. CMS removed the 48-hour Scope of Appointment (SOA) waiting period, allowed marketing events to immediately follow educational events, and removed restrictions on how licensed agents interact with beneficiaries. That opens up the agent sales motion considerably.

But here’s what makes it interesting: plans have been cutting supplemental benefits (things like over-the-counter allowances, meal delivery, transportation to appointments, and the flex cards that pay for them) for two years running. So you have more agents selling more aggressively into thinner benefit packages, which means agents will naturally gravitate toward plans that kept their supplemental benefits, because those plans have something compelling to actually offer. If you help plans with enrollment, distribution, or member acquisition, plans with the strongest remaining benefit packages now have a distribution advantage they didn’t have six months ago, and they need the technology to act on it.

The bigger story in this section is about where the freed-up money goes. Health equity analysis staff, UM committee health equity expert roles, mid-year notice production, annual health equity analysis creation and public posting. All of those activities required budget, people, and vendor support. When plans no longer need to fund them, that budget migrates somewhere. Some gets banked as savings by plans under margin pressure. Some shifts toward areas where CMS is increasing scrutiny, like supplemental benefit compliance and Stars measure performance. If you can connect your solution to where that budget is heading, you have a timing advantage over competitors still pitching into compliance categories that no longer exist.

Here’s the tension that runs through the entire rule: CMS simplified the requirements, but the consequences for getting them wrong haven’t changed. Medicare Advantage fraud remains a top enforcement priority for both DOJ and OIG, and several of the removed Stars measures (timely claims processing, call center responsiveness, enrollment and disenrollment processing) served as built-in operational checkpoints. Plans reported on them because they had to, and in doing so, they caught problems early. With those measures gone, plans lose the internal early warning systems they’ve relied on for years. For compliance, documentation integrity, and audit-readiness vendors, the pitch isn’t “enforcement hasn’t relaxed.” The pitch is “the safety nets your buyer relied on are gone, and they need something to replace them.”

What This Rule Means for Each Vendor Category

The scorecard above maps where each vendor category lands after this rule. But the more useful takeaway isn’t which column you’re in. It’s what the rule tells you about how your buyer’s internal priorities just shifted. Plans that used to spend budget and staff time on health equity reporting, UM committee compliance, and administrative measure tracking now have capacity and dollars that need to go somewhere. The vendors who win CY 2027 deals are the ones who can credibly say “that budget should come to us, and here’s the financial case for why.” If you can’t make that case in language a CFO would defend in a budget meeting, the budget gets banked as savings or goes to a competitor who can.

SDOH, enrollment tech, and population health platforms are the ones to watch here. The mandate is gone, but the operational need remains, and the buyers who still invest will do so because someone made the outcomes and ROI case clearly enough that “we choose to” felt like an obvious decision.

Part D Is Now Permanent. Your Financial Models Should Be Too.

And finally, CMS codified the IRA-driven Part D redesign into permanent regulation, locking in the $2,000 out-of-pocket cap (adjusted to $2,100 for 2026), the elimination of the coverage gap, catastrophic phase changes, and the Manufacturer Discount Program. These changes were already in effect through program instructions, but with that authority expiring, CMS wrote them into the permanent rules, which means plans can stop wondering whether any of this might reverse and instead they can start treating these economics as the baseline for every financial model going forward. If your solution touches pharmacy costs, medication adherence, or Part D plan economics, your ROI projections can now assume these margin pressures are permanent.

Final Thought

Four months ago, I wrote about six signals from the proposed rule and said the theme was uncertainty. CMS has now answered most of those questions, and the answer across nearly every provision was: we meant it.

The direction is consistent enough to build a strategy around: Clinical outcomes over administrative process. Tighter controls where CMS sees abuse, lighter requirements where it sees unnecessary burden. Permanent Part D economics. Enforcement that hasn’t blinked even as the rule set shrinks.

CMS wants fewer rules that matter more, and this rule is the clearest signal yet of what “matters more” actually looks like.

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

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

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I was at RISE National in Orlando last week, and kept hearing the same story from different vendors.

The first one asked a regional MA plan for claims data to build a plan-specific ROI model. That was six weeks ago, and the plan hasn't responded since. The second got further with a large multi-state MA plan: their buyer verbally agreed to share data, then the plan's IT team came back and said the extract would take 90 days. The third was told flat out by a single-state Blues plan, "We don't share data with prospective vendors," even though the plan's own clinical team was championing the deal internally.

Three different responses, same result. The moment the vendor introduced a data request, the deal lost momentum.

This isn’t limited to health tech vendors, either. The same dynamic plays out when provider-side companies sell to health plans. A care delivery organization trying to win a Medicaid managed care contract faces the same paradox: the MCO wants to see outcomes data before committing, but the provider can’t generate plan-specific outcomes without the contract. A value-based care company pitching a single-state Blues plan runs into it when the plan asks for population-level impact data that only exists inside the plan’s own systems. The data trust problem is baked into how health plans evaluate anyone who wants to work with them.

Here’s what’s happening: you’re asking the plan to do work before they believe the payoff is worth doing. The data request feels like a reasonable next step to you. To the plan, it feels like a commitment they haven’t agreed to make.

And the timing couldn't be worse. Plans are fielding more vendor requests than ever, each carrying an operational burden their teams didn't face even three years ago, and the internal bandwidth to evaluate external partners is shrinking even as the volume of those requests keeps growing. Most vendors haven't adjusted their sales process to account for that shift.

This article breaks down what this pattern actually is, why vendors keep falling into it, how to restructure the conversation so the data ask lands differently, and what the vendors who consistently earn plan data are doing that most aren’t.

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Why the Data Ask Stalls Deals (Even When the Buyer Is Interested)

You need plan-specific data to build a credible ROI case, but the plan won’t give you data until the ROI case is already compelling enough to justify the effort. That’s the paradox, and most vendors don’t realize they’re stuck in it until the deal has already stopped moving.

Consider what the plan actually hears when you ask for claims data or utilization files: “This vendor is going to create work for my team, and I’m not sure yet whether the outcome is worth it.” You think you’re signaling seriousness and analytical rigor. They’re hearing a commitment request before they’ve committed. You need plan data to prove value, but you need to prove value to earn the data. That’s the core tension, and most sales processes don’t account for it.

What makes this worse is what happens on the plan's side after you ask. Your buyer often can't just hand over data even if they want to. The request may need to route through IT to scope the extract, data governance to review what fields can be shared externally, and legal to confirm whether the existing NDA covers the use or whether a BAA needs to be executed. And the people who work with claims data every day inside the plan's risk adjustment or quality improvement platforms, the ones who could probably pull what you need in an afternoon, often aren't the ones with the authority to share it outside the organization. Even when the data is technically accessible, getting it out the door requires approvals, coordination, and bandwidth that your buyer may not control.

Plans are fielding a growing volume of vendor evaluations every year. The market keeps producing new entrants, and every one of those evaluations comes with its own data request. Your ask isn't evaluated in isolation. It's weighed against every other vendor asking for the same thing from the same internal teams. And when a premature data request fails, it burns goodwill with the people who manage external data sharing, making the next ask harder (and that next ask might be yours, six months later, with a different product or a renewed pitch).

Do the math on your own pipeline. If you have 15 active health plan opportunities, six of which are frozen at the data request stage, and the average deal is worth $500K annually, that’s $3M in pipeline that stopped moving because of a sequencing mistake, not a product problem.

MA plans are under sustained margin pressure, payer retrenchment is accelerating across every line of business, and nearly half of health plan C-suite executives now feel uncertain about the near-term outlook. Plans are consolidating vendor relationships and reducing the number of external partners they manage. In this environment, asking the right question at the wrong moment is one of the fastest ways to get filtered out.

But the paradox has a structural fix, and it starts with understanding what data you actually need and how to build the case without it.

What Data You Actually Need (And How to Build the Case Without It)

Before talking about how to build a case without health plan data, it’s worth getting clear on what data you actually need in the first place. For clarity, let’s define two categories.

Evaluation data is what you need to build the business case and win the deal: it typically includes claims history, utilization patterns, quality measure performance, member demographics, and/or risk score distributions. This is the data that helps you show the plan what your solution could do for their specific book of business.

Operational data is what you need to configure, launch, and run the solution after the contract is signed: eligibility files, provider directory feeds, system integration specs, care management platform configurations, and real-time data exchange protocols.

Vendors routinely ask for more data than they need at this stage, and in many cases, the request includes operational data that has little bearing on the business case. The result is a bigger lift than necessary for the plan and lower odds of getting what you actually need to advance the deal. Separating evaluation data from operational data reduces the size of the ask at the point in the relationship when the plan is least willing to invest effort, and it signals that you understand the difference between building a case and executing a contract.

Even within evaluation data, the ask can usually be far smaller than most vendors realize. More plan-specific information is publicly available than most vendors use, and the best health tech vendors have figured out how to build directionally accurate ROI cases using proxy data, public sources, and their own client benchmarks. They use the plan-specific data request as a trust-building step later rather than an early hurdle.

Start with what’s already public. There’s more plan-specific information sitting in public data sources than most vendors realize, and almost none of it requires the plan to share anything. CMS publishes Star Ratings by contract, MA enrollment and market share data down to the county level, and plan-level financial indicators like medical loss ratios. NCQA publishes HEDIS benchmarks that let you compare a plan’s quality performance against national and regional peers. State Medicaid agencies report managed care enrollment by plan. ACA marketplace data (premiums, metal tier mix, geographic footprint) is available through CMS and state exchanges. Census and American Community Survey data can map SDoH risk concentration across a plan’s service area.

None of this produces the precision of actual claims data, and assembling it into something useful takes real work. But that work is what separates a vendor who shows up with a credible, plan-specific estimate from one who shows up touting great product features and benefits. A risk adjustment vendor can use publicly reported enrollment and county-level demographics to estimate HCC capture opportunity. A Stars vendor can model what a one-Star improvement would mean in bonus revenue based on the plan’s published quality scores. A utilization management company can benchmark a plan’s ED visit and readmission rates against peers. The data, while imperfect, is there. And so, the legwork falls entirely on you, which is exactly why so few vendors do it and exactly why plans notice the ones who do.

Build a “plans like yours” model using your own client data. Your existing customers are your most underused asset in the sales process. If you’ve delivered results for plans of similar size, LOB mix, and geographic profile, that experience is worth more than any industry benchmark, but only if you present it with specificity. Name the cohort size. Name the timeframe. Name the lines of business. Buyers can tell when numbers are grounded in real client experience versus assembled from industry averages. A general case study PDF that could apply to any health plan, but it is rarely going to move them to action. However, a model where the plan can see your assumptions, test different scenarios, and adjust the inputs based on what they know about their own business just might. Transparency about what you know and what you’re estimating is what earns trust at this stage.

Make the data request feel optional, not required. After presenting what you've built with public data and client benchmarks, the strongest move is framing plan-specific data as a refinement rather than a prerequisite. In practice, that sounds something like: "Here's what we're seeing for plans your size in this region. If you want to sharpen this with your actual numbers, we can build a custom model. But even at the benchmark level, the math is pretty compelling." That framing changes the dynamic, as now the plan is deciding whether to give you more data rather than being asked to justify giving you anything at all.

This approach works across every health tech category: risk adjustment, care management, utilization management, behavioral health, SDoH, and provider network optimization. The vendors that plans proactively invite back for expanded scope showed they could do something credible with limited information. They demonstrated pattern recognition, delivered a proxy analysis worth discussing, and made the plan think: imagine what they could do with our actual data. Building that financial credibility before you need the plan’s internal data is what separates ROI models that survive CFO scrutiny from ones that get filed away.

Everything above is written for vendors and provider-side organizations, but there’s another side to this conversation (looking at you, health plans) worth addressing directly.

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A Note for the Health Plans on the Other Side of This Conversation

If you’re a health plan executive reading this (and I know a growing number of you are - welcome!), everything above probably confirms what you already feel: vendors ask for too much, too early, with too little consideration for what it takes on your end.

You’re right. And there’s something you can do about it that benefits both sides.

Without a clear standard for what vendors need to demonstrate before earning access to plan data, every request becomes a one-off decision that wastes time. Implementing a tiered data request framework can give your compliance and data governance teams a repeatable process, filter out vendors who haven't done their homework, and give the vendors you actually want to evaluate a clear path forward instead of ambiguity.

A few health plan colleagues I've spoken with have landed on variations of the same idea: a tiered framework for vendor data access:

Tier 1: Benchmarking (no plan data required). The vendor shows you what they can do with publicly available information and their own client data. If the analysis is credible and the use case is relevant, the vendor proceeds to the next tier.

Tier 2: Aggregate performance data. Plan-level metrics (not member-level, not claims-level) shared under a standard NDA. This includes enough info for the vendor to build a directionally accurate business case. If the case holds, the vendor proceeds to the final tier.

Tier 3: Scoped claims or member-level data. The specific data needed to finalize the ROI model is shared under a BAA with defined data handling, use, and destruction terms.

This framework does three things. It protects your team’s bandwidth by filtering out vendors who can’t demonstrate value without your data. If a vendor can’t build a credible case using public information and their own benchmarks, they probably aren’t the right partner, regardless of what your claims data would show. Second, it gives your compliance and data governance teams a repeatable process instead of a new judgment call every time. And third, it gives vendors a clear path forward, so the vendors you actually want to evaluate spend less of your team’s time chasing approvals and more time building the analysis you need.

Giving vendors a clear standard for what you need to see before sharing data is more useful to both sides than a slow fade. The vendors worth working with will welcome the structure.

We’ve covered the paradox, the distinction between evaluation data and operational data, how to build a credible case before the plan shares anything, and what plans themselves can do to make the process work better. In the paid section below, we’ll discuss five specific moves that make plans more likely to share data, walk through scenarios where the data exchange has already gone wrong, and offer tips to help recover in each situation.

Paid subscribers get this section plus the full archive of frameworks, scripts, and deep dives that actually work when partnering with health plans.

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

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

The Blue Cross Blue Shield system is consolidating from within, and the pace over the last 12 months has been striking. HCSC spent $3.3 billion to absorb Cigna’s entire Medicare business. Highmark is closing its affiliation with Blue KC on March 31. Cambia has pulled in both BCBS North Dakota and Arkansas BCBS within the same year. Multiple other Blues have restructured their corporate entities, suggesting more deals are coming.

If you sell to Blues plans, this is reshaping the organizations you’re selling into in real time. Parent organizations are forming where independent plans used to be, vendor decisions that were made locally are starting to migrate upward, and pipeline opportunities you thought were separate deals may roll up to the same buyer. And even if your company focuses on Medicare Advantage or Medicaid, the forces driving this consolidation are hitting Blues plans across every line of business. Financial losses on commercial books, a new competitive threat in the employer market, and infrastructure costs that small plans can’t shoulder alone are pulling leadership attention, draining reserves, and changing how these organizations think about their future.

After I posted a Blues consolidation leaderboard on LinkedIn last week (200+ likes and a pile of DM convos later), I fell into a bit of a Blues rabbit hole. I started pulling CMS March 2026 enrollment data and mapping every Blues MA contract to its parent organization and state. What came back was a picture of a system that’s further along in consolidation than most people in health tech realize, driven by forces that show no sign of easing.

This article covers what’s driving the consolidation and why it won’t slow down, maps the largest Blues organizations by MA lives, unpacks CMS data findings that tell a different story than the headline numbers, and walks through what changes about how you sell to a Blue that’s now part of something bigger. I also built a full parent-organization enrollment map breaking out MA lives vs. total lives by parent and state. More on how to access that below.

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What’s Happening to the Blues and Why It’s Accelerating

Three forces are hitting the Blues system at the same time, and each one compounds the others.

1. Blues plans are losing money at a scale that threatens their ability to operate independently. At least seven Blues reported financial losses in 2024. BCBS Michigan lost $1.03 billion on $40.6 billion in revenue and has now posted five consecutive years of underwriting losses. BCBS Massachusetts posted its largest operating loss in history at $400 million in 2024, then followed it with another $380 million operating loss in 2025. Rhode Island lost $115 million after a 20% increase in healthcare costs. Arkansas was hemorrhaging over $100 million before it signed its affiliation agreement with Cambia.

BCBS Vermont’s reserves dropped from $133 million to $58 million in four years. Their credit rating was downgraded twice in a matter of months, from “good” to “marginal.” They pay out $35 million a week in claims. When your reserves cover six weeks of claims, well…things are not good.

The drivers are consistent everywhere: medical cost inflation outpacing premium growth, pharmacy costs surging (GLP-1 drugs alone now represent 20% of BCBS Massachusetts’ total pharmacy spend), and utilization rates that haven’t come back down since the post-COVID surge. A 45-million-member organization like Elevance can absorb a bad year, but a single-state Blue with a few hundred thousand members and shrinking reserves cannot. The affiliation deals get the headlines, but frankly, it’s the financial losses that left these plans with no choice that are worth understanding.

2. A landmark antitrust settlement is creating competition inside the Blues family for the first time. A $2.67 billion settlement resolved allegations that Blues plans conspired to divide markets and avoid competing with each other. Among several changes, the settlement introduced the “second blue bid,” a provision that allows large, geographically dispersed, self-funded national employers to solicit bids from any Blues plan in the country, not just the one licensed in their geography.

Even if your organization focuses on Medicare Advantage or Medicaid, the second blue bid matters to you. When a smaller Blue loses a major self-funded employer account to Elevance or HCSC, that revenue loss hits the plan’s overall financial position. It weakens the reserves that support every line of business. It reduces the operating scale that funds technology investments, compliance infrastructure, and the people who run Medicare and Medicaid programs. Health plans don’t have separate balance sheets for each line of business.

The first results of the second blue bid are already in. Elevance bid on 11 national accounts in other Blues' territories in 2025 and won 9 of them. For smaller Blues that depend on a handful of large employer accounts for a significant share of their commercial revenue, that kind of competitive pressure from within the Blues family is new. It didn't exist 18 months ago, and it gives financially stressed plans one more reason to look for a partner with the scale and infrastructure to compete.

3. The technology and infrastructure gap is widening faster than small Blues can close it. A single-state Blue can’t build the claims platform, analytics infrastructure, or regulatory compliance systems that CMS requirements now demand. When BCBS North Dakota’s CEO said affiliating with Cambia allows them to “leap ahead in the capabilities we can bring” to their members, he was describing a gap that cost-cutting alone cannot close.

These forces feed each other. Financial losses erode the reserves needed to invest in technology. The second blue bid means a smaller Blue can now lose its biggest commercial accounts to a larger Blue with better infrastructure and deeper pockets. For the plans caught in that cycle, affiliation is how they attempt to break out of it. And the financial scrutiny reshaping how plans evaluate every dollar of vendor spend is the same scrutiny these plans are applying to their own operating model.

The Blues Leaderboard Looks Different Than It Did Two Years Ago

The leaderboard shows what those forces have already produced. Ranked here by total membership, the top five Blues organizations look different from what they did two years ago. But the story underneath them matters just as much, because it shows how many plans beyond the largest are actively moving toward affiliation or restructuring to make it possible.

1️⃣ Elevance (Anthem): ~45M members across 14 BCBS states. Elevance has always operated more like a national carrier than a federation of local plans. They tried to acquire BCBS Louisiana in 2024 and got blocked after policyholder and regulatory pushback. But the second blue bid changes their competitive posture entirely. They can now compete directly for national accounts in other Blues’ territories, and their first-year record (9 wins out of 11 bids) speaks for itself.

2️⃣ HCSC: ~26.5M members. HCSC closed its $3.3B acquisition of Cigna's Medicare business in March 2025 adding 3.6 million Medicare members. They now operate Blues plans in IL, TX, OK, NM, and MT, plus Medicare plans across 30 states under the HealthSpring brand. The CMS data reveals how much this acquisition reshaped the organization: 71% of HCSC’s MA enrollment is in HealthSpring, not in its legacy Blues plans. HealthSpring operates through its own subsidiary entities (HealthSpring Life and Health Insurance Company, HealthSpring of Florida, and others), has its own Government Markets leadership, provider networks, and payer IDs and provider portal. How much of that operational separation persists over time is an open question, but right now, the HealthSpring side and the legacy Blues side are distinct operations. If your relationship is with the Blues side, you’re connected to less than a third of their MA book.

3️⃣ Highmark: ~8M members. Affiliates in PA, DE, WV, and NY, with the Blue KC affiliation closing March 31, 2026, moving them from #4 to #3. Highmark has been the most methodical acquirer in the Blues system, building shared services and technology infrastructure across affiliates while preserving local governance. Integration tends to move slowly under this model, but the direction toward shared infrastructure and, eventually, a shared vendor strategy is consistent.

4️⃣ Florida Blue / Blue Shield of California: ~6M members each. Two large single-state plans that haven’t affiliated yet. Blue Shield of California reorganized its corporate structure to create flexibility for future deals. Florida Blue operates under GuideWell, whose MA book is split 53% Florida Blue and 47% Triple-S Advantage in Puerto Rico. That split matters if you sell to Florida Blue and your results are Florida-only, because the parent organization’s MA portfolio looks very different from what you’re seeing in one state.

5️⃣ BCBS of Michigan: ~5M members. Michigan is #5 in total members, but #3 in MA lives, so their Medicare Advantage business is a much larger share of their organization than the overall membership number suggests. Their parent group includes Wellmark (IA/SD), NextBlue (ND), WyoBlue (WY), and the BCBS Vermont affiliation. Five states under one parent, and growing.

The pattern underneath the top five is where this story gets harder to dismiss. The smaller Blues affiliations of the past two years share a common thread. Arkansas BCBS reported losses exceeding $100 million in 2024, and reporting on the affiliation with Cambia cited “rising financial challenges” as the driving context. Vermont’s affiliation with Michigan followed the collapse of reserves and two credit rating downgrades. North Dakota’s affiliation with Cambia was framed around technology capabilities that the plan couldn’t build on its own. Each situation is specific, but the underlying math is the same: the cost of staying independent exceeded what the plan could sustain.

Cambia has now pulled in BCBS North Dakota (effective February 2026) and Arkansas BCBS (expected to close later this year), bringing its total to six affiliated Blues plans across the Pacific Northwest, Mountain West, Great Plains, and the South. Horizon BCBS New Jersey and Blue Cross of Idaho have both restructured their corporate entities in ways that appear designed to enable future affiliations.

The plans that haven’t affiliated yet are watching the ones that did and doing their own math. What the CMS data adds to that picture is a view of how these organizations are actually structured today, which is where the headline membership numbers start to break down.

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What the CMS Data Reveals That the Leaderboard Doesn’t

The leaderboard shows size. The CMS enrollment data shows structure, and structure is what determines who you’re actually selling to and how decisions get made inside these organizations.

When I mapped every Blues MA contract to its parent organization, a few things stood out that the headline membership numbers obscure.

The total lives ranking and the MA lives ranking are different lists. Highmark is #3 in total members but #4 in MA. BCBS Michigan is #5 in total members but #3 in MA. If you sell Medicare Advantage solutions, the ranking you’re using to prioritize your Blues pipeline may not be the right one.

HCSC’s Medicare Advantage business is 71% HealthSpring. I covered the org structure in the leaderboard section, but the enrollment split is worth sitting with. The legacy Blues MA plans in Illinois, Texas, Oklahoma, New Mexico, and Montana make up less than a third of HCSC’s total MA enrollment. As HCSC integrates the HealthSpring acquisition over the coming years, vendor decisions that are currently made separately on each side will presumably start to converge. If you sell MA solutions to HCSC and have relationships only on one side of that organization, now is the time to understand the other side before integration decisions are made without your input.

Elevance’s Florida MA presence runs through Freedom Health, Optimum, Simply Healthcare, and HealthSun. If you’re prospecting Elevance in Florida and searching for “Anthem” in your research, you won’t find the plan entities where MA members are actually enrolled or where local vendor and provider decisions get made. The parent-level branding and the operating-level reality are different names, different entities, and in some cases, different procurement paths.

GuideWell’s MA book is split 53% Florida Blue and 47% Triple-S Advantage in Puerto Rico. If you sell to Florida Blue and your pitch is built entirely on Florida market data, you’re telling a story about roughly half of the parent organization’s MA portfolio. When the parent starts thinking about vendor strategy across its full footprint (and the consolidation trend suggests that’s a matter of when, not if), a Florida-only value proposition leaves a gap.

Access the Blues Parent-Organization Enrollment Map

I pulled the CMS enrollment data and mapped every Blues MA contract to its parent organization and state, breaking out MA lives and total lives across the system. Click here to request access and I’ll send it to you. If you find it useful, share it with your team or forward this article to a colleague.

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What Actually Changes When You Sell to a Blue That’s Affiliated

If you sell to a Blue that’s recently affiliated or is positioning to, there are a few questions worth adding to your discovery:

How are vendor and technology decisions being made now compared to a year ago?

Is there an enterprise vendor strategy forming at the parent level that we should be aware of?

We’re live at [affiliated plan]. Would sharing those results be valuable context for your evaluation?

That last question matters the most if you already have an installed base at one affiliate. Your results at one plan could be the proof point that opens an expansion conversation across the parent organization. But the reverse is also true…if the parent already has a different vendor in your category at another affiliate, your position could be the one that gets consolidated when the parent standardizes. Either way, you want to know where you stand before someone else decides for you, and the internal forces shaping deal outcomes inside health plans only get more layered after an affiliation.

How quickly any of this affects your deal depends on what you sell. Technology procurement, data platforms, and analytics infrastructure tend to centralize earlier after an affiliation. Clinical programs, provider network management, and member-facing operations tend to stay local for longer. If your solution falls in the first group, parent-level decisions may be closer than you expect. If you’re in the second, local relationships may carry more weight for years. Asking your buyer where your category sits on the integration timeline is a conversation that signals you understand what’s happening inside their organization and frankly gives you information most of your competitors don’t have.

Map your Blues pipeline and installed base to parent organizations this quarter. It takes a few hours and can surface things your team hasn't connected: prospects that share a parent, an installed base at a small Blue that could affiliate soon, or a plan you're prospecting that's already affiliated with one where you're live. The parent-organization enrollment map I built from CMS data can help with that exercise. If you haven't grabbed it yet, click here to get it.

Final Thought

The Blues still cover roughly one in three Americans, and the system behind that coverage is reorganizing itself under financial pressure that shows no sign of easing. The losses, the antitrust settlement results, the affiliation announcements, and the corporate restructurings are all in public filings and press releases. The CMS data already reflects a leaderboard that has shifted meaningfully in the last two years, with fewer parent organizations, more affiliated plans, and a buying structure that’s still taking shape.

What’s still being written is how deep the integration goes at each parent organization and how quickly vendor decisions centralize. That uncertainty is actually an advantage for vendors who move now, because most of your competitors are waiting for clarity before they adjust. The ones who are already mapping their pipeline to parent organizations, asking about affiliation dynamics in their next meeting, and connecting their installed base across affiliates are having conversations that the rest of the market hasn’t started yet.

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Health plans are cutting providers. If you sell to those plans, the fallout is already in your pipeline.

More than a dozen major health systems dropped Medicare Advantage contracts for 2026. UnitedHealthcare exited 225 counties. Humana exited 198. KFF reports that 2.6 million MA enrollees are in terminated plans, double the prior year's figure. Medicaid MCOs are narrowing networks as states respond to federal funding cuts under the One Big Beautiful Bill. Commercial plans are tightening provider panels to control employer premium increases hitting 15-year highs. Underneath all of it, network management teams at plans of every size are running provider-by-provider evaluations and deciding who stays and who gets a termination letter.

Your buyer is the one making those cuts, and the process is consuming time, budget, and attention across the organization. The plan you've been selling to for six months just restructured its provider network. Even if your champion isn't directly managing termination disputes and member reassignment, the people around them are, and it's pulling leadership focus, internal resources, and budget away from vendor evaluations and toward network stabilization and compliance remediation. That's why your Q1 slowed down, and nobody inside the plan told you that was the reason.

This pattern has come up in nearly every conversation I’ve had over the past several weeks, with PE investors, portfolio company CEOs, and health tech sales leaders. Provider-side companies are losing payor contracts they assumed were stable. Health tech vendors are watching deals stall without explanation. Investors are trying to figure out whether this is a temporary cycle or something structural. When you're selling to one health plan, a stalled deal looks like your problem. When you're hearing the same story from a dozen different directions across provider services and health tech, it stops looking like bad luck and starts looking like a market shift. That broader view is part of what I wanted to bring into this piece, because even if you're running a single sales team at a single company, it helps to know this isn't a slow quarter. It's a structural change in how your buyers are operating.

[If you're a health tech investor seeing this play out across your portfolio, I'd love to hear what you're seeing. I'm building on this topic over the coming months and the best insights I get come from people living it across multiple companies. Shoot me a note.]

Quick note for the regular readers: I'm prepping for RISE National next week (be sure to say hello!) while simultaneously working on a pretty significant marketing and brand buildout for Upward Growth. For years, we’ve been so focused on client work, positioning, go-to-market, payor strategy for other companies, that we never really spent much time on our own brand. We’ve stayed busy through word of mouth, and I owe a real thanks to the clients and readers who’ve trusted us and referred us over the years. There’s something a little funny about spending years helping health tech companies tell their story while barely telling your own. That’s changing this year.

This article breaks down what’s happening inside your buyer’s organization right now, what network narrowing is doing to your sales cycle, and where the buying opportunities are for vendors who understand the shift. There’s also a section for provider-side businesses and the investors who back them, because the same dynamic reshaping your buyer’s behavior is putting portfolio company revenue at risk. Let's get into it.

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What Network Narrowing Actually Looks Like Inside Your Buyer’s Organization

When a health plan cuts providers, the operational work that follows lands on every department your sales process runs through.

Network management evaluates providers across five dimensions before making termination decisions: adequacy math, cost benchmarking, quality performance, administrative friction and fraud risk, and strategic alignment. Adequacy gaps need to be modeled and addressed. Terminated providers file disputes and grievances. Members who lost their doctor need to be reassigned and notified. Provider directories need to be updated and verified, especially now that CMS has finalized rules requiring MA plans to make directory data available through Medicare Plan Finder. Plans that listed providers as in-network in their directories when those providers weren't actually available to see members are now getting caught. That's accelerating the cleanup and triggering even more terminations.

Compliance pressure is compounding all of it. The OIG published its first major Medicare Advantage compliance program guidance update since 1999 in February 2026, and the DOJ’s 2025 National Health Care Fraud Takedown charged 324 defendants tied to $14.6 billion in alleged fraud. Plans are narrowing networks to reduce costs and simultaneously cleaning house as a program-integrity exercise, cutting providers with coding anomalies, billing red flags, or compliance gaps, even when cost and quality metrics look acceptable. That means two different types of termination work, cost-driven and compliance-driven, running through the same departments at the same time.

The people you’re selling to are in the middle of all of it. Network management is most directly consumed, but compliance is responsible for reviewing every termination for regulatory exposure, while legal processes provide dispute resolution. Operations is handling member reassignments and the resulting spike in call volume. Finance is redirecting budget toward stabilization. Clinical leadership is trying to maintain care continuity and quality scores with a smaller provider panel, and that job just got harder because fewer in-network providers mean each one’s HEDIS performance and Stars impact carries more weight.

Network adequacy math is the factor most vendors miss, and it’s the one driving more of these decisions than anything else. Before a plan terminates a provider, network management runs a time-and-distance analysis against CMS requirements: can we meet adequacy standards in this geography and specialty without this provider? If yes, the provider is expendable regardless of tenure, volume, or outcomes.

That’s where vendor opportunity opens up. If your solution helps plans fill the adequacy gaps that cuts create (telehealth, virtual specialty access, digital behavioral health, care navigation that routes members to remaining providers), your budget category just shifted from discretionary to compliance. CMS added outpatient behavioral health as a facility specialty type for network adequacy evaluation in 2026 with a 10% telehealth credit, giving digital behavioral health solutions a regulatory hook that didn’t exist a year ago. And in rural markets, where Johns Hopkins research projects roughly 2.9 million MA enrollees facing forced disenrollment, rural areas are disproportionately affected, and plans need virtual and remote solutions to meet CMS requirements.

Six months ago, your deal competed with other vendors. Right now, it's competing with adequacy gaps, compliance remediation, and member fallout, and those problems have regulatory deadlines your deal doesn't. That reality is part of the broader de-risking trend reshaping how plans evaluate both vendors and providers in 2026, and it's already showing up in how fast your deals are moving.

What Health Plan Network Restructuring Did to Your Q1 Pipeline

Your pipeline slowed in Q1, and you probably chalked it up to the usual reasons. Budget cycles resetting, new priorities getting sorted, buyers finding their footing after the holidays. But that may not be the full story.

Here's what changed inside the plan you've been selling to. They spent January and February managing the fallout from network decisions they finalized in Q4. Termination notices went out, provider disputes started landing, member complaint volume spiked, and directory cleanup projects pulled staff away from everything else for weeks. All of it hit at once, leaving little room to evaluate new vendors.

Your contacts inside the plan are harder to reach, slower to respond, and less focused on your deal than they were six months ago. The budget earmarked for new vendor initiatives may have been redirected to network stabilization, compliance remediation, and member retention. If your deal isn’t tied to one of these priorities, it may be on hold for a while.

And March 31 will make this worse. That’s the date the CMS Interoperability and Prior Authorization final rule requires MA plans to begin publicly reporting, for the first time, prior authorization data on their websites: approval rates, denial rates, average decision times, and appeals outcomes. Every plan in the country is preparing to have those numbers visible to regulators, members, competitors, and the press. Even if your solution has nothing to do with prior auth, the compliance and operations teams inside your buyer’s organization are preparing that data for public posting, auditing prior auth workflows, and managing the reputational risk of what those numbers will show. I wrote about how the prior auth deadline is affecting vendors who don’t sell prior auth a few weeks ago. Network restructuring and prior auth reporting prep are pulling from the same people and hours within the plan, and your deal doesn’t have a regulatory deadline that forces it to the top of anyone’s list.

So the question becomes: how do you know which plans are in the middle of this and which ones aren't? The qualification question that separates vendors who adjusted from vendors who are still guessing is simple: "Is this plan currently expanding, maintaining, or narrowing its network?"

The answer reshapes how you read every deal in your pipeline. If they’re narrowing, your timeline just extended by two to three months unless you can tie your solution to one of the problems the narrowing created. If they’re maintaining, you’re in a normal cycle. If they’re expanding into markets the nationals abandoned, they’re actively investing, and your deal may be better positioned than you think. How to surface that answer without asking directly, and when to time your outreach around it, is what we’ll cover after the paywall.

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A Note for Provider-Side Businesses and the Investors Who Back Them

This section is for the PE investors and portfolio company operators I’ve been talking to over the past several weeks, as well as for any provider-side CEO or COO reading this. If you’re a vendor reader, stay with me here. Understanding what your buyers are doing to the provider side of the market sharpens your picture of the pressures shaping every conversation you’re having right now.

Payor relations at most provider organizations is a back-office task handled by whoever also manages credentialing. Check the boxes, submit the paperwork, assume the contract renews because it always has. That assumption is getting people fired.

For many outpatient provider businesses, a single payor contract represents 15 to 40 percent of revenue. Losing one isn’t just a line-item adjustment, it can be existential. PE-backed companies carrying leverage on the balance sheet have even less room to absorb that kind of revenue shock, and in rural markets where plans are exiting counties entirely, the risk compounds further: the buyer isn’t renegotiating your rate, they’re disappearing from your geography.

The providers who survive the cut make it easy for health plans to want to keep them: low administrative friction, clean billing and coding, strong quality data shared proactively, willingness to participate in value-based arrangements, and responsiveness when network management calls. The providers who get cut tend to have something in common too. Nobody at the plan knows them. There's often little to no relationship beyond the claims file, no track record of collaboration, and no reason for network management to fight to keep them when the evaluation comes.

With plans making faster, more informed decisions about which providers to keep, the organizations that treat payor relations as a strategic function will outperform those still treating it as paperwork. For provider-side businesses, that means elevating payor relations to a leadership-level function reporting to the provider organization's CEO. The person in this role should be running quarterly business reviews with each major payor, sharing cost and quality performance data before the plan asks for it, and monitoring network adequacy dynamics in their geography so they know when a plan is evaluating their position before anyone sends a letter. That’s fundamentally different from credentialing and contract renewals, and most provider organizations haven’t built it yet.

The pressure on outpatient providers right now is coming from both directions. Revenue cycle management is pushing harder to capture every dollar, and payment integrity teams at plans are pushing just as hard to claw it back. Provider organizations are caught in the middle, and those without a strong payor relationship strategy are most exposed. If that describes your portfolio, this is the function to invest in first.

We’ve covered what’s driving the network narrowing wave, what it’s doing inside your buyer’s organization, and why your Q1 pipeline might have slowed. Below is where plan budgets are actually moving post-narrowing, the discovery questions and timing framework to qualify your deals around it, and the positioning language that connects your solution to what your buyer is solving right now.

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If you sell to health plans and you haven’t been asked about outcome-based pricing yet, you will be soon. It’s showing up in RFP questions like, “Describe your organization’s approach to outcome-aligned pricing structures.” It’s coming from board members who forward articles and ask pointed questions. And it’s coming from buyers who watched an AI-native competitor pitch “we only get paid when you see results” and now want to know why your pricing doesn’t work the same way.

The vendors who struggle with this question are those who don't (yet) have an answer, and each audience reads that silence differently. The buyer hears a vendor who hasn't kept up. The board member hears a team that isn't paying attention to where the market is moving. The investor hears a pricing model that might not be defensible if the pressure keeps building.

The problem is that most vendors treat this as one question. It isn’t. A CFO asking about outcome-based pricing wants a different answer than a board member asking the same question. A buyer matching a competitor’s offer needs a different response than a buyer whose procurement team dropped it into a refreshed RFP template. Each version of the question has a different motivation behind it, and each one calls for a different conversation.

This article is a framework for having that conversation, whether you're considering a shift to outcome-based pricing, already experimenting with it, or confident your current model is right and need to defend it in a room where someone just asked why you're not doing what the other vendor offered. The vendors who get this right are the ones who understand outcome-based pricing well enough to speak to it clearly, whether they adopt it or not.

Why Health Plan Conversations Are Starting to Include Pricing Model Questions

The outcomes-based pricing question is accelerating because three forces are converging, each applying a different kind of pressure on vendors.

Health plan margins are at their lowest in two decades. PwC’s 2026 payer outlook found medical cost trends running at 8.5% across commercial, Medicare Advantage, and Medicaid lines. Plans that were comfortably profitable two years ago are now defending their operating models to their own boards. Every dollar of vendor spend is under scrutiny in a way it wasn’t before, and health plan CFOs who are restructuring budget categories to protect Medical Loss Ratio (MLR) are going to ask the natural question: Can we structure vendor deals so the vendor carries some of the risk if performance falls short?

Vendor consolidation is making every pricing conversation higher stakes. Plans are actively cutting vendor counts and moving toward fewer vendors with deeper integrations, not more point solutions with shallow ones. When procurement is looking for reasons to eliminate relationships rather than add them, the vendors who remain are those who can articulate their value in financial terms, and that the health plan can defend internally. Outcome-based language, even when the underlying pricing structure stays standard, is becoming part of how vendors differentiate themselves from those getting cut.

AI-native competitors are using outcome-based pricing as a sales wedge. This is the newest pressure and the most acute one for incumbents. AI companies entering the health plan market are leading with “we only get paid when you see results” as a positioning move against established vendors running on Per Member Per Month (PMPM) or flat-fee structures. (Whether their model holds up at scale is a separate question...) But what matters right now is that your buyers are hearing it, comparing it to your proposal, and asking why you can’t do the same.

To be clear, none of this means you need to change your pricing model. But you do need to understand the conversation well enough to participate in it confidently, whether you're defending your current structure, offering a hybrid, or going all in on outcome-based terms.

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How Health Plans Actually Think About Outcome-Based Pricing

What 'outcome-based pricing' actually means to vendors and health plans

Most vendors and health plans know, in principle, that “outcome-based pricing” means different things to each of them. What they underestimate is how much those different definitions still shape the conversation, even when no one says so out loud.

For a vendor, outcome-based pricing means tying fees to results: pay us when you see improvement, pay us less when you don’t. For a health plan, “outcome-based” is a term they’ve been living inside for years. It means shared savings arrangements with ACOs, quality-linked bonuses for provider networks, Stars incentive structures, and risk corridors in delegated arrangements. These are formal, actuarially modeled, compliance-reviewed frameworks with specific infrastructure requirements and a long institutional history.

Both parties can define the difference when asked. But when a vendor says “pay us on outcomes,” each party often assumes the other is using their definition of the concept. The plan hears a vendor proposing something that sounds like a simplified ACO arrangement. The vendor thinks they’re describing a pricing tweak. And so neither surfaces the language gap, and the conversation proceeds on two different tracks.

The vendors who handle this well name both definitions early: “When we say outcome-based pricing, we mean [X]. We know that term carries a lot of history inside health plans, and we want to be clear about what we’re actually proposing.” That’s what distinguishes a vendor who knows the plan’s world from one who’s just read about the trend.

Why the buyer is asking, and what your answer actually needs to do

The reason a buyer raises outcome-based pricing shapes what kind of answer will actually land, and most vendors miss that because they treat every version of the question the same way.

When the question comes from the CFO, it’s about moving financial risk off the plan’s balance sheet. The CFO has seen the margin compression numbers and wants vendors to carry some of that exposure. This version of the conversation is fundamentally about risk-sharing mechanics, and it requires a response that engages with those mechanics directly.

When it comes from a buyer who just sat across from an AI-native competitor offering outcome-based terms, the motivation is competitive. They want to see if you’ll match. But the real question underneath is whether you can explain why your structure is the better fit for their situation, which is a harder conversation than simply matching the offer.

Sometimes the question appears in a refreshed RFP template with little context. The plan added the language but hasn’t built the internal infrastructure to evaluate outcome-based proposals, which means your response needs to educate, not just answer.

And occasionally the question is a real test! The plan believes in aligned incentives and wants to see which vendors can hold an intelligent conversation about pricing structure, measurement methodology, and shared accountability. Whether or not you’re changing your pricing, this is the version of the question where fluency matters most.

Why Outcome-Based Pricing Stalls Inside Health Plans

Once outcome-based pricing enters a vendor conversation, it moves through the plan's internal machinery. Four functions will weigh in before anything gets approved, and beneath them all sits a measurement problem that none of them have fully solved. Knowing what each stakeholder is actually asking, and understanding the attribution challenge they're all circling around, gives you a significant advantage over vendors who treat the plan as a single buyer.

Actuarial wants to know how your proposed model interacts with the value-based arrangements the plan already has in place with providers, and whether the financial exposure is quantifiable under their existing modeling frameworks. This team has had outcome-based conversations with provider partners who had more capital and more leverage than you, so they’re not learning on the fly.

Compliance is asking whether the payment structure creates incentive conflicts. If you get paid more when utilization drops, does that create pressure to restrict care? OIG safe harbor considerations apply to certain vendor payment structures, and any plan with a competent compliance team will surface this before contract review. If you haven’t thought through the answer, they’ll find it for you, and you won’t like the timing.

Finance wants to know how your outcome metric relates to the numbers they already track: MLR, Stars bonus revenue, and risk adjustment accuracy. If the outcome you’re proposing doesn’t map to a line on their internal dashboard, someone has to build new measurement infrastructure before they can even evaluate your model, and that slows approval in a way that has nothing to do with whether they like your product.

Procurement wants to know whether they have a contract template for this or whether legal has to draft something from scratch. Custom contract architecture adds months to the cycle, and that’s a legitimate operational constraint, not a negotiating tactic. Most vendors underestimate how much procurement complexity alone can kill a deal that every other function has already approved.

The Measurement Problem Underneath All Four Stakeholders

Each of those four functions is reacting to outcome-based pricing through its own lens, but they all share one underlying concern: if we tie payment to outcomes, how do we know which intervention caused the improvement? The attribution problem isn't an objection. Plans raise it because they haven't solved it across their own programs either. Multiple vendors, internal programs, and care teams touch the same member population. Claims data lags 60 to 90 days, Stars measurement years don't align with contract years, and risk adjustment settlements happen 18 or more months after the service year ends. When a vendor proposes outcome-based pricing, the plan's first internal question is: how do we prove your intervention caused the improvement, rather than our own outreach team's, or the care management vendor we already have a performance guarantee with?

Here’s how that plays out in a real conversation. A vendor pitches tying pricing to Stars improvement. The plan’s internal reaction: “How does that interact with the $15M performance guarantee we already have with our care management vendor targeting the same population? How do we isolate your contribution from theirs and from our own outreach program?” That’s a legitimate measurement problem plans have wrestled with for years, and vendors who engage it directly are in a fundamentally different conversation.

Demonstrating that you understand how plans evaluate pricing makes your message travel further through the stakeholder chain that has to approve it. That’s true whether you’re pitching outcome-based terms or explaining why your standard model is the better fit. As I've written before, the message has to survive being forwarded, and a pricing conversation that only makes sense when you're in the room is one you'll lose. And the first place that a forwarded message breaks down is when the outcomes you’re pitching don’t match the outcomes the plan is actually measured on.

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Why the Outcomes You Pitch Aren’t the Outcomes Plans Measure

Here’s the translation problem that compounds everything above: most vendors pitch the outcomes they track internally, but health plans evaluate through the outcomes they get paid on. Those aren’t the same list, and the gap between them is where deals fall apart.

Vendors come in discussing engagement rates, app utilization, NPS, time saved, and reduction in utilization, while health plans score vendors against Stars rating movement, medical cost trend, risk adjustment accuracy (RAF improvement), member retention, and HEDIS measure closure. As plans consolidate vendors and move toward fewer, deeper partnerships, a vendor who speaks engagement metrics in a room evaluating the plan's performance is giving the plan’s CFO nothing to take to the budget review. When the CFO is the real gatekeeper on vendor spend, that gap kills deals regardless of how strong your clinical story is.

Whether you’re proposing outcome-based pricing, a performance guarantee, or defending PMPM, speaking the plan’s outcome language is the prerequisite. Here’s what that translation sounds like:

Instead of: “We’ll tie our pricing to engagement rates.”
Try: “We’ll tie a performance component to HEDIS gaps closed during measurement year, validated against your internal analytics.”

Instead of: “Pay us based on utilization reduction.”
Try: “We’ll structure a shared savings component tied to avoidable ED visits, measured against your baseline with a 12-month lookback using your claims data.”

Instead of: “Our outcome is improved medication adherence.”
Try: “We protect Stars bonus revenue by moving your Part D measures. Based on comparable plans, that translates to roughly $X PMPM in quality bonus protection.”

If your outcome isn’t on the plan’s CFO or CMO performance dashboard, you’re proposing something they have no reason to measure, defend, or approve. Once you’re speaking their language, the pricing model conversation gets considerably easier, regardless of which direction you go.

When Outcome-Based Pricing Works, When It Doesn’t, and What to Say

So let’s get practical with this framework. You now understand how plans think about outcome-based pricing, who inside the plan weighs in, and why the outcomes you pitch need to match the outcomes they measure. The question is what to actually do with all of that: when outcome-based pricing makes sense for your solution, when it doesn't, and what to say in either case.

When outcome-based pricing can work. Five conditions generally need to line up. Your solution targets a measurable, financially material outcome that the plan already tracks. Your intervention is discrete enough that attribution is defensible. The measurement timeline aligns with contract cycles, or you can structure interim milestones. You can fund operations on a base fee while performance accrues. And the plan has data infrastructure to validate outcomes without relying entirely on your reporting. When all five are true, outcome-based pricing can be a real differentiator. When two or three are true, it’s usually more friction than it’s worth for both sides.

When it’s the wrong move. Your impact compounds across multiple measurement cycles, and one contract year doesn’t capture it. Attribution is unsolvable because you’re one of many vendors and programs touching the same population. Procurement doesn’t have a contract template and building one from scratch adds three to six months. Your investors need predictable ARR and revenue tied to lagging outcomes creates forecasting problems that affect your ability to raise, scale, or hit milestones. You’re a smaller vendor and the actuarial and legal cost of structuring the deal exceeds the competitive advantage. Any one of these is a legitimate reason to stay with standard pricing, and to say so plainly when a buyer asks.

The middle ground most vendors miss: performance guarantees within standard pricing. This is the structure gaining the most traction with health plans right now, and it's what most vendors should actually be considering instead of simply Yes or No. You keep PMPM or flat-fee pricing, which gives the plan budget predictability and gives you revenue predictability, but then you attach a contractual guarantee like: if you don’t hit a defined outcome, you provide a remedy, whether that’s a fee rebate, extended service at no additional cost, or additional resources deployed to close the gap. The plan gets the “skin in the game” they’re looking for, and you get pricing differentiation without vastly restructuring your revenue model.

Once you’ve decided where you sit on that spectrum, the next challenge is articulating it. Most vendors who choose not to adopt outcome-based pricing know why, but they haven’t practiced saying it in a way that sounds like a strategic choice rather than a gap.

What to say when you’re not adopting outcome-based pricing. Most vendors either go silent or get defensive, and neither gives the buyer a reason to keep the conversation going. Here are three examples that position standard pricing as a strategic choice:

“We price on a PMPM basis because our impact on your Stars measures compounds over 18 months, and tying payment to a single quarter’s results would drive short-term interventions over the sustained engagement that actually moves your ratings.”

“We structure our pricing as a flat annual fee because it gives your finance team budget predictability, which matters more to CFOs right now than variable pricing tied to outcomes that take two measurement cycles to validate.”

“We offer a performance guarantee rather than outcome-based pricing because it gives you downside protection without the attribution infrastructure that fully outcome-based models require.”

One note that applies to all three: this language only works if the reasoning behind it is actually true for your solution. A vendor who parrots “our impact compounds over 18 months” without backing it up with data will get caught right away.

Want to pressure-test your pricing position before your next health plan conversation?

I built five questions that expose whether your team can actually defend your pricing rationale when a buyer, board member, or investor asks why you’re not doing outcome-based pricing.

📥 Shoot me a note and I’ll send them right over.

You now have the vocabulary, the positioning, and the outcome translation covered. Below the paywall are the three health plan convos that expose vendors who haven’t done the thinking, and the exact language your champion needs to carry your pricing story up and into health plan leadership.

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Two years into the AI gold rush in health tech, health plan evaluation committees have adapted. They've rebuilt their scoring criteria, tightened their compliance requirements, and developed a sharper filter for separating real capability from marketing language. With AI-enabled startups capturing 62% of all digital health VC dollars in the first half of 2025 and most of that money directed at payor buyers, plans have seen every version of "we use AI to automate X" and "we built proprietary models." They've stopped being impressed by the technology pitch.

Selling an AI product to a health plan often involves an 8-to-15-month enterprise sales cycle that spans clinical evaluation, compliance review, financial justification, IT assessment, and procurement. Your AI is what gets you into the clinical conversation, but the plan’s purchasing decision depends on the other four stages, where technology barely comes up, and where most vendors have done the least amount of work. The technology gets you in the room. Compliance, financial justification, and evidence are what keep you there.

This article is the positioning and sales strategy work that fills those gaps. If you’re preparing to bring an AI product to MA plans, Medicaid MCOs, or commercial health plans, what follows is how to build the financial case, the compliance readiness, and the evidence package that health plan buyers actually need to move a deal forward.

What’s Actually on the Plan’s AI Vendor Scorecard

Based on conversations with health plan executives and the vendors I advise, most AI evaluations at plans die in one of three places: compliance review, financial justification, or operational feasibility. The vendor almost never finds out which one killed them because the plan just stops responding.

Here’s how plan evaluation committees are weighing AI vendor decisions right now, roughly rank-ordered by influence on whether a deal moves forward:

Compliance and regulatory readiness (heaviest weight). If your AI product can’t clear the plan’s compliance review, nothing else in your pitch matters. Plans are evaluating your model governance, audit trails, data handling, and human oversight protocols against their internal standards and, increasingly, CMS’s proposed requirements for AI in MA. A vendor can have the support of every other stakeholder and still die here.

Quantified financial impact tied to specific budget lines. Not “ROI” in the abstract. Plans want to see which budget category your product affects (medical expense, administrative cost, quality incentive spend), by how much in PMPM terms, and within what time horizon relative to their fiscal calendar. If your financial case can’t survive CFO scrutiny, clinical evidence alone won’t save it.

Integration complexity and operational burden on the plan. Plans are weighing how much they’d have to change internally to use your product, and they’re doing it from the first meeting. If your AI requires a six-month integration project, three FTEs on the plan side, and a rip-and-replace of their existing care management workflow, you’ve priced yourself out of the conversation before you’ve even discussed price.

Evidence quality and comparability. Plans discount evidence that doesn’t come from an environment that resembles theirs. Pilot data from a comparable plan (similar size, line of business, member population) carries the most weight. Generic accuracy metrics from dissimilar settings carry the least. The specificity of your evidence matters more than the volume of it.

Speed to value. Products that deliver measurable impact within the current contract year score higher than products whose ROI depends on next year’s Stars bonus or risk adjustment settlement. In MA, especially, bid assumptions and CMS benchmark changes can shift the math between years, so plans heavily discount future-year payback.

Vendor stability and long-term viability. Plans are asking about funding, acquisition risk, and operational maturity more than they used to, because they’ve been burned by vendors who didn’t survive long enough to deliver on their promises.

Notice what’s not on this list: your model architecture, your training data size, your accuracy benchmarks in isolation, or how “agentic” your system is. Those may matter to your engineering team, but they barely register on the plan’s evaluation scorecard.

The rest of this article gives you the playbook for the three criteria you can most directly control: financial impact, compliance readiness, and evidence quality.

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How to Build the Financial Case That Survives the CFO’s Review

Quantified financial impact is where vendors leave the most value on the table. Every vendor evaluation at a plan ultimately comes down to a specific set of financial and quality metrics: PMPM cost, medical loss ratio, administrative cost ratio, Stars and HEDIS measures, risk adjustment accuracy, and member retention. If your AI product doesn’t connect to at least one of those in specific, quantified terms, you’re asking the health plan to make assumptions that they probably won’t.

Here’s a five-step process for building that translation.

Step 1: Identify which of the plan’s core financial levers your product touches. There are really only five: medical expense reduction, administrative cost reduction, quality incentive revenue protection (Stars bonuses), risk adjustment revenue protection, and member retention (which affects all of the above). Pick the one or two that your product most directly affects. If you say “all of them,” you haven’t been specific enough.

Step 2: Map your clinical or operational outcome to the specific budget line. “We improve medication adherence” maps to medical expense reduction (fewer avoidable hospitalizations) and quality incentive revenue (Stars medication adherence measures). “We identify undocumented HCCs” maps to risk adjustment revenue protection. Plans need to see the causal chain, not just the endpoint.

Step 3: Quantify using the plan’s own benchmarks, and know where to find them. CMS publishes MA benchmark rates, risk adjustment factors, and Stars bonus thresholds annually. State Medicaid agencies publish rate-setting data. Plans file public financial statements showing their medical loss ratio (MLR) and administrative cost ratios. In a market where dozens of AI vendors are targeting payer operations simultaneously, building your financial case with numbers the plan already recognizes is one of the fastest ways to separate yourself from the pack.

Step 4: Build the ROI at three attainment levels. CFOs don’t trust base-case projections. Show what happens at 100%, 70%, and 50% of your projected outcome. If your ROI still works at 70% attainment, say so. If it doesn’t work below 85%, be honest about that too, because the CFO will run the math themselves, and you’d rather control the narrative.

Step 5: Tie the payback to the plan’s fiscal calendar. Does the plan see impact in the current contract year (CY), or does ROI depend on next year’s Stars bonus? For MA, this means understanding when Stars measurement periods close, when risk adjustment submissions are due, and when bid assumptions lock. For Medicaid, it means aligning with the state’s rate-setting cycle. Plans heavily discount future-year payback, so a product that delivers ROI in the current contract year is a fundamentally stronger financial proposition.

As an example, consider a vendor selling an AI-powered predictive model to identify high-risk members:

The technology pitch is "Our model predicts which members will have an avoidable hospitalization within 90 days with 87% accuracy."

The plan economics version of that same product: "We reduce avoidable inpatient admissions for a 300K-member MA plan by flagging high-risk members early enough for care management intervention, saving an average of $1.80 PMPM in medical expense. That's roughly $6.5M in annual savings against an annual cost of $1.2M. At 70% attainment, that's still $4.5M in savings within the current contract year."

Financial justification gets you through the CFO’s review, but the criterion that carries the heaviest weight and kills more AI deals than any other is compliance. Let’s review that next.

Why the Vendors Winning AI Deals Are Leading With Compliance

The vendors I’m working with who are closing AI deals at plans right now are leading with compliance readiness from the first meeting, while most of their competitors are still treating it as the last boxes to check before a deal can close.

The regulatory environment is forcing this shift, as CMS has proposed new guardrails for AI use in Medicare Advantage, including a broad definition of “automated systems” that could cover almost any AI-assisted process a vendor might sell. The proposed rule for Contract Year (CY) 2026 would require MA organizations to ensure equitable access regardless of whether services are delivered through human or automated systems, and CMS is claiming audit authority to enforce it. Plans are asking compliance questions they weren’t asking 12 months ago, and almost no vendor is prepared to answer them. That’s your opening.

Start by bringing your compliance lead into the conversation early, ideally by the first or second meeting. When the plan’s evaluation team sees a named person who can answer model governance, data handling, and audit trail questions directly, it surfaces the plan’s compliance requirements while you still have time to build toward them instead of scrambling to address them in month four. It also signals operational maturity that most competitors can’t match, because most send their sales rep to handle compliance questions by referencing an FAQ.

Before the plan even sends its security questionnaire, pre-populate it. Most plans use a standardized security questionnaire or their own proprietary vendor assessment. or their own proprietary vendor assessment, and if you’ve sold to plans before, you know what 80% of these questions are. Fill it out proactively and attach it to your second meeting follow-up with a note: “We know this is coming. Here’s a head start.” That move alone can cut weeks off your procurement timeline.

Then get your compliance lead on a call with the plan’s compliance lead in the first two weeks, before the contract is drafted and before procurement is involved.

Surface the hard questions when you still have time to address them:
-How do you handle model drift?
-How do you ensure equitable outcomes across member populations?
-What's your human-in-the-loop protocol for decisions that affect member care or benefits?

These compliance reviews routinely add 4-8 weeks to procurement timelines, which is exactly why the vendors who front-load this work close faster. That kind of delay is becoming standard for AI products, and it’s even more pronounced in Medicaid, where MCOs face a patchwork of state-level AI requirements on top of federal ones.

But even with strong financials and compliance readiness, the plan still needs to believe your AI will work in their environment, and that's a harder question to answer than most vendors expect because the evidence you've built with other clients may not translate directly to the plan sitting across the table.

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The Evidence Problem Every AI-Enabled Vendor Faces With Payors

Health plans are skeptical buyers, and not because of AI specifically. They’ve been burned by health tech promises for over a decade, from care management tools that required three FTEs to maintain to analytics products that generated buy-up dashboards nobody used. The credibility gap in health tech sales is deep, and every plan buyer remembers the vendor solutions they championed that didn’t work.

Frankly, AI makes this worse. Health plans have seen enough demos (AI or otherwise) to know that performance in a controlled environment doesn’t always hold up against their messy, incomplete claims and eligibility files. And with “AI-powered” now the most overused phrase in health tech, applied to everything from genuine machine learning systems to basic rules engines with a chatbot bolted on, plans have learned to discount the label entirely.

The evidence that actually moves plan evaluations forward follows a clear hierarchy:

A live, referenceable client at a comparable plan carries the most weight, and by referenceable, I mean a real customer running your product in production who’s willing to answer hard questions about implementation, data quality, and results. Comparable matters here: a 50K-member Medicaid MCO in the Southeast doesn’t validate your product for a 500K-member MA plan in California, and your three MA clients may not help when you’re pitching a Medicaid MCO for the first time.

Beyond a referenceable client, plans give credit to independent evaluations and published case reviews, but the baseline expectation is that you can show internal data with methodology transparent enough for the plan’s analytics team to evaluate. Peer-reviewed research is a nice-to-have, but plans won’t wait years for it.

The real challenge is that your existing evidence may not match the specific plan you’re pursuing right now. Here’s how to close that gap.

Build a retrospective analysis using the plan’s own publicly available data. CMS publishes plan-level Stars data, risk adjustment scores, and quality measure performance. Pull the prospect’s specific numbers and run your model against their publicly reported baseline to build credibility that’s specific to their environment.

Structure your engagement around pre-agreed success metrics. “If we hit X on measure Y within 60 days using a subset of your member population, we move to a full contract. If we don’t, you’ve lost nothing.” Pre-agreeing on the metrics eliminates the “we’ll evaluate the results and get back to you” death spiral and gives the plan’s champion a concrete framework to take back to their leadership.

And bring a clinical advisor or plan-side reference who can speak to how your approach performs with the kind of member population, line of business, or operational environment this plan manages. The evaluation committee will weigh that voice differently than anything your sales team presents.

Those three elements, plan-specific evidence, a structured engagement with defined success criteria, and a compliance contact who can speak to model governance, are what plans need to move forward. The more specific each one is to the plan you’re pursuing, the faster the deal moves.

That’s the strategic framework: how plans score you, how to translate your AI into their financial language, how to lead with compliance, and how to build the right evidence package for the plan in front of you. Below is the tactical layer: a credibility checklist for your plan-facing materials, a three-question script that surfaces your buyer’s real concerns, and a positioning template that translates any AI capability into plan-ready language.

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As digital health companies scale, performance marketing gets more complex, and so do privacy expectations. What many teams don’t realize is that common website analytics and advertising tools can unintentionally capture sensitive information, whether you’re running patient-facing campaigns or operating a B2B site with educational health information.

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I’ve had more conversations about Medicaid in the past four months than in the previous two years combined.

Some are with vendors who’ve been selling to Medicaid MCOs for years and are watching their renewals get delayed, their pricing challenged, and their buyer contacts go quiet. Some are with companies expanding from MA into Medicaid who built pipeline in Q4 and are now sitting on accounts where the budget picture has fundamentally shifted. And a few are with Medicaid MCO executives themselves, who are telling me things like: “We’re reviewing every vendor line item against reprocurement criteria. If it doesn’t tie directly to a state metric, it’s getting cut.”

Here's what we're looking at. The One Big Beautiful Bill Act (OBBBA) cut nearly $1 trillion in federal Medicaid spending over the next decade, and the effects are compounding faster than most vendors realize. States are building their FY2027 budgets right now, with nearly two-thirds of Medicaid directors rating the chance of a budget shortfall as "50-50" or worse. Work requirements will take effect by the end of 2026, which means MCOs are simultaneously preparing for 7.5 to 10 million members to lose coverage while losing one of their most reliable financing tools (the provider tax safe harbor is dropping from 6% to 3.5%, and states can no longer create new provider taxes or increase existing ones). Every one of these pressures is hitting your buyer at once.

This article is a guide to what these changes mean for your pipeline, your pricing model, and your next conversation with a Medicaid MCO buyer. Whether you’ve been in Medicaid for years or you’re just starting, the selling environment shifted underneath everyone. I’ll cover what happened to your Medicaid buyer’s budget, the five selling dynamics that changed post-OBBBA, which pricing models are getting rejected (and what’s replacing them), where the growth segments actually are, and how to position when your buyer’s budget is getting cut.

Your Medicaid Buyer’s Budget Just Got Rewritten

The Medicaid MCO you’re selling into is not the same organization it was nine months ago. And if you’re an incumbent vendor, don’t assume your renewal is safe just because the relationship is strong.

McKinsey projects that Medicaid EBITDA will decline to negative levels through 2025 and 2026, with OBBBA-driven disenrollments pushing EBITDA to approximately negative $7 billion by 2028. But here’s what makes this different from past Medicaid budget cycles: McKinsey’s payer outlook shows every other sub-segment (large group, stop loss, MA, individual, even ACA) recovering from 2024 lows and posting positive growth trajectories by 2029. Medicaid is the only segment that doesn’t participate in that recovery. (see illustration below).

The rest of the payer world gets better. Medicaid doesn’t.

And this isn’t happening in isolation. Plans operating across both MA and Medicaid are getting hit from multiple directions. The near-zero rate increase CMS proposed for 2027 on the MA side compounds with OBBBA cuts on the Medicaid side. If you’re selling to a plan with both books of business, their CFO is managing two margin crises simultaneously, except the MA book has a recovery trajectory and the Medicaid book doesn’t.

Here’s what that means inside the organizations you’re prospecting (or already contracted with). When every other line of business is recovering, but Medicaid margins stay negative, the internal budget conversation becomes: “Why are we spending discretionary dollars on the book of business that isn’t recovering?” Vendor categories without a direct tie to reprocurement or regulatory compliance get reallocated to the segments where margins are actually improving. Your solution might be excellent, and your outcomes might be real, but if it doesn’t answer a question the MCO’s state regulator is asking, it moves from “budget line” to “nice to have.” Simply put, nice-to-haves don’t survive when the CFO has a recovering MA book competing for the same dollars.

For context (especially if you’re sharing this with your sales team or board): Medicaid MCOs don’t compete for members the way MA plans do. They compete for state contracts through procurement cycles, and those cycles are binary. You either win the bid or you lose the entire book of business. That’s why every budget decision inside an MCO gets filtered through one question: Does this help us win or keep the contract? That filter was already strong before OBBBA. Now, with budgets contracting, member disenrollments accelerating, and no projected recovery in sight, it’s the only filter that matters.

So before your next meeting with a Medicaid MCO, find out where they are in their state’s procurement cycle. If they’re 12 to 18 months from rebid, every conversation is about reprocurement readiness (whether they say so or not). If they recently won, you have a window of opportunity when they’re more open to capability investments. Either way, your pitch needs to connect to reprocurement metrics, because that’s the language their leadership is speaking internally.

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Five Selling Dynamics That Changed After OBBBA

I wrote about the structural differences between selling to MA plans and selling to Medicaid MCOs last September. That piece covered the foundational gaps, but what’s changed since then is that the margin for error has collapsed for everyone, including vendors who’ve been in Medicaid for years and thought they had the buyer relationship dialed in.

Here are the five dynamics I keep seeing in conversations with both vendors and MCO executives:

1. Budget authority shifted upward. Before OBBBA, a VP of Medicaid Operations or a clinical director could often approve a vendor contract within their budget. Now that MCOs are running negative margins, vendor decisions (even the smaller stuff) are being elevated to plan presidents and CFOs. I’ve even heard of one renewal that was pulled into an enterprise-level budget review. The move here is to ask your current contact directly: “Is the approval process for vendor contracts the same as last year, or has it changed?” That question doesn’t offend anyone, and the answer tells you immediately whether you need to build a financial case for a new audience.

2. Proof points need to be state-specific. This was always true in Medicaid, but post-OBBBA the tolerance for generic outcomes data dropped to zero. Medicaid evaluators want impact on cost avoidance, access expansion, and regulatory compliance within their state’s specific reporting framework. For example, a care gap closure result in Florida means little to a buyer in Ohio who’s being evaluated on a completely different set of state contract metrics, so case studies only count if they map to your target state’s reprocurement scorecard. The fix is simple but time-consuming: pull your target state’s most recent reprocurement RFP and map your outcomes to the evaluation criteria. That mapping becomes your state-specific “proof” deck.

3. Urgency triggers changed. Reprocurement calendars and state legislative sessions have always driven Medicaid timelines, but the most acute urgency right now is around work requirement implementation by December 2026, six-month eligibility redetermination cycles (up from annual), and the provider tax changes that some states are facing as early as April 2026. Two-thirds of state Medicaid directors expect FY2026 budget shortfalls. Your urgency needs to match theirs, and right now theirs is about compliance infrastructure, not quality improvement timelines. If your outreach is anchored to Stars measurement periods or open enrollment cycles, you’re speaking a different language than your buyer right now.

4. Compliance scrutiny intensified. Medicaid plans were already more cautious than MA plans about what they’d approve around AI, member outreach, data sharing, and scripting (state regulators are closer and more hands-on than CMS). Post-OBBBA, that caution increased further. MCOs implementing new eligibility verification systems and work requirement processes aren’t going to layer on vendor programs that create additional compliance exposure. If your solution involves AI-driven outreach or automated member communications, lead with how you stay inside state-specific guardrails, not with your technology. Better yet, bring a compliance brief specific to the state you’re selling into that shows you’ve already done the regulatory homework.

5. Incumbent advantage got stronger…sorta. When budgets tighten, the default instinct is to stick with known vendors, as switching costs feel higher in uncertain times. But MCOs are also reviewing incumbent contracts with the same reprocurement filter they apply to new vendors: Does this directly protect our contract? Incumbents who can’t demonstrate that connection are getting cut, even with years of relationship equity. And new entrants who can demonstrate it have a real opening, because “we’ve always used them” is not a sufficient budget defense. So if you’re an incumbent, don’t wait for renewal to make the case. Instead, work proactively to connect your current results to reprocurement criteria now, before your buyer has to justify your line item in a budget review.

Each of the above dynamics hits differently depending on how long you’ve been in Medicaid and what you sell, but the pattern is the same: the post-OBBBA selling environment rewards vendors who understand the buyer’s fiscal reality and punishes those who act as if the market hasn’t significantly changed.

The Pricing Models That Are Getting Rejected (And What’s Replacing Them)

Frankly speaking, PMPM pricing is getting rejected in Medicaid right now. I hear it from both sides: from vendors who can’t close contracts they expected to win, and from Medicaid MCO executives who are sending back PMPM proposals without discussion.

MCO buyers, I’ve been talking to explain it very simply: When your membership is about to shrink by 10 to 15 percent over two years, and your margins are negative, adding fixed per-member costs to the balance sheet is the last thing finance will approve. That budget scrutiny that kills most vendor proposals at the CFO level is even more intense inside Medicaid MCOs right now because there’s no margin buffer to absorb a vendor that underdelivers.

So what are MCO executives telling me they’re gravitating toward instead? Effort-based pricing, fee-for-service arrangements, and hybrid models that pair a lower fixed component with a performance kicker. They want pricing that flexes down when membership shrinks and doesn’t lock them into commitments they can’t defend during budget review.

But there’s a trap in performance-based models that vendors need to watch out for. Full performance risk on care gap closure sounds appealing to plans (they only pay when gaps close), but the problem is threefold. First, the plan controls the timing and quality of the gap list. Second, the data is frequently stale or wrong. And third, the vendor often becomes the last resort for closing gaps that the plan's own team and other vendors have already failed to close. So, if you're taking full performance risk without means to account for data integrity, you're basically paying for the plan's bad data with your own margin.

Here’s the practical move instead: lower the fixed component, add a performance kicker, but protect yourself contractually. Define data freshness requirements (e.g., the gap list is no more than 30 days old), specify timing of gap list delivery (you need it in January, not March), and build exclusion clauses for gaps already being addressed by another vendor or program. These aren’t unreasonable requests, and sophisticated Medicaid buyers should expect them (and the ones who push back on data quality protections are telling you something about how they treat vendors).

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D-SNPs, C-SNPs, and Rural Health: Where Medicaid Dollars Are Actually Growing

While broad Medicaid membership faces disenrollment pressure, specific segments are growing fast, and that's where the opportunity is for health tech vendors right now.

D-SNP enrollment hit 6.4 million in February 2026, up 16% from the prior year. C-SNP enrollment surged even faster, growing 49% to 1.6 million members. SNP growth accounted for 74% of all MA enrollment growth between February 2025 and February 2026. Specialized populations are expanding even as broad Medicaid membership faces disenrollment pressure.

Those D-SNP numbers point to the biggest near-term opening: duals alignment. CMS is requiring alignment between Medicare and Medicaid coverage for dual-eligible individuals, and roughly 50% of duals remain unaligned. Plans have a defined window to bring those members into integrated D-SNP products, and they need vendor support across care gap closure for dual-eligible populations, enrollment and brokerage, and clinical coordination across Medicare and Medicaid benefits. If your solution touches any of those functions, you're selling into a segment that's growing while the broader Medicaid population shrinks around it.

A few vendors are also starting to pivot from plan-paid arrangements to billing through the provider payment system, which removes the “is this a medical expense or an administrative expense?” question that stalls deals in MCO finance review. I wouldn’t overhaul your model around it yet, but if you have provider relationships and billing capability, it's a pathway that could avoid the MCO budget conversation entirely.

State-specific opportunities also exist for vendors with rural health capabilities. OBBBA’s Rural Health Transformation Program allocates $10 billion per year in state allotments through 2030. As such, all 50 states received FY2026 RHTP funding, and states are actively looking for technology and service partners to deploy those dollars toward access expansion, outcome improvement, and clinician recruitment.

And finally, keep in mind the impact of OBBBA’s spending cuts varies dramatically by state. Louisiana, Illinois, Nevada, and Oregon face 19% or greater reductions in federal Medicaid spending, while other states are only 4% to 5%. Vendors who treat Medicaid as a monolithic national market will get outmaneuvered by competitors who build state-specific strategies. Your pipeline, pricing, and positioning need to reflect those differences. This can’t be stressed enough.

We’ve covered much of what’s changed, where the money is moving, and what your buyers are dealing with right now. Below is how to position when budgets are getting cut, plus a conversation framework for your next Medicaid meeting.

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It’s Monday morning, and your team is running the pipeline review. You go deal by deal, and for each one, someone asks, “Who are we competing against?” The answers come quickly. A few familiar vendor names, maybe an incumbent, occasionally someone new. That question comes up in every health tech sales org, every week. And though it’s not wrong, it’s incomplete in a way that’s costing you deals you don’t even know you’re losing.

The missing question isn’t “who” you’re competing against. It’s “what.” Because the forces most likely to kill your pipeline right now don’t have a logo, a sales team, or a conference booth. They’re actually forces inside the health plan itself, and they never show up in your CRM.

Three forces in particular are responsible for more lost deals than most sales teams realize. Health plans are choosing to do nothing instead of onboarding a new vendor. They're building capabilities in-house instead of buying them. And they're eliminating entire categories of vendor spend from their budgets because they've decided the categories themselves aren't worth funding this year. Most sales teams never categorize a loss this way, so they keep losing the same way without realizing it.

When your team miscategorizes a loss as 'lost to competitor' or 'deal slipped,' they apply the wrong lessons. They refine positioning against a vendor that wasn't the threat. They assume 'better timing next quarter' when the structural problem will be exactly the same next quarter. Over time, the team gets better at solving problems…but, that may not be the real ones.

Below, I’ll break down what each of these invisible competitors looks like inside a health plan, how to spot when you’re losing to one of them instead of another vendor, and what to do about it, including when to recognize a deal is dead and walk away.

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The Competitors That Never Show Up in a Pipeline Review

Health plans don’t run bake-offs the way tech companies do. More often, they compare you to their internal status quo more than to another vendor. Once you accept that premise, the framework shifts. The competitors that are actually killing your deals fall into three categories, none of which show up in a pipeline review.

Doing Nothing

The status quo is the most powerful competitor in health tech. Change has real operational costs, and in a year when plans are focused on defending margins, keeping things the way they are will always be cheaper than onboarding a new vendor.

You know what this looks like. Your champion is enthusiastic, the evaluation went well, the clinical results were strong, and then... nothing. Just silence, because the plan didn’t choose a competitor. They simply chose not to choose.

Vendors miss this because "doing nothing" doesn't feel like a competitor; it feels more like a timing issue. Sales teams tell themselves the deal slipped to next quarter, but next quarter, the same dynamic holds because the operational burden of onboarding hasn’t changed, and the urgency hasn’t increased. At some point, the deal fades from the forecast, but nobody ever calls it a competitive loss.

Building In-House

Health plans are increasingly framing vendor functions as short-term fixes and internal capabilities as long-term strategy. HealthScape Advisors recently described the dual mandate facing plans as the need to stabilize performance in the short term while building capabilities for the future, and that framing is exactly why “we’ll build it ourselves” keeps showing up as the answer.

Plans don't need to be great at building software for this to work. The pitch to internal leadership ("we already have the data and the staff, let's invest in our own capability") is becoming easier to defend than "let's bring in a new vendor and hope this time is different." That doesn't mean plans are well-positioned to build. Most have spent the last decade outsourcing more, not less, and they're not staffed for product development. But the internal champion for "build" has a lower bar to clear than the one advocating for a new vendor, because redirecting existing headcount doesn't require a new budget allocation or a procurement cycle. And there's a psychological dimension that vendors underestimate: choosing another vendor feels like repeating the same decision, while choosing to build feels like charting a new direction. That sense of agency is hard to sell against.

This decision-making is showing up more often with solutions like analytics, care management workflows, risk adjustment documentation, and member outreach; anything that feels adjacent to capabilities the plan already has.

What’s changed, however, is the tooling. The explosion of AI-powered no-code and low-code platforms has lowered the technical barrier for plans to build functional solutions internally. Historically, most health plans (outside the largest nationals) didn’t employ engineers or product builders. They had IT departments that kept claims systems running and managed vendor integrations. Those are different skillsets and different mindsets than building new tools from scratch. But no-code and low-code AI tools are collapsing that gap. A plan that, five years ago, couldn’t have built a member outreach workflow without a vendor can now credibly attempt it with a small team and off-the-shelf AI tools.

The pressure on health plan CEOs only makes it worse. Health plan CEOs, at both public and private companies, are under increasing board-level pressure to demonstrate that they’re leading on AI, not just buying it from vendors. For a public plan, showcasing a proprietary AI capability during an earnings call or investor presentation signals a strategic vision. For a private plan, building internal IP and proprietary assets directly strengthens the organization’s valuation story. Every internal build that displaces a vendor function becomes an asset the plan owns rather than a subscription it pays for, and that distinction matters to investors and acquirers evaluating long-term enterprise value.

So you’re not just competing against the plan’s confidence in their own team. You’re competing against a CEO who wants to tell an AI leadership story, a board that wants to see proprietary assets on the balance sheet, and a new generation of tools that make “build” feel more achievable than it ever has. The internal advocate for “build with AI” has a structural advantage over your sales cycle: they don’t need to survive procurement.

Eliminating the Line Item

This is the one most vendors never see coming, because there’s no alternative to point to. The plan doesn’t choose another vendor or build in-house. They decide the entire category of spend is no longer justified. The budget is reallocated to something with a clearer regulatory mandate or a more direct impact on margins, and your category simply disappears from the priority list.

The margin pressure driving this is worse than most vendors realize. MA plans posted a collective underwriting loss of $5.7 billion in 2024. Total non-SNP MA and MAPD plan offerings nationally declined 10% from 2025 to 2026, with 2.6 million enrollees in plans that have been terminated entirely. When plans are exiting markets and cutting benefits at that rate, categories without a clear, immediate financial return get triaged out of the budget.

CFOs are often the ones making this call, evaluating whether an entire vendor category is defensible in a budget meeting, not just whether your specific contract pencils out. They’re not comparing you to another vendor, instead they’re comparing your category to every other line item competing for the same constrained dollars. And when the question shifts from “which vendor?” to “do we need a vendor at all?”, most sales teams aren’t equipped for that conversation.

The signal is subtle but recognizable. When a buyer starts asking, “What’s the cost of not doing this?” they’re often building the internal case to do exactly that: not do it. That question sounds like diligence, but it’s frequently an exit ramp. When you hear it, your deal has already shifted from a vendor evaluation to a category evaluation, and if you’re still pitching features and differentiation, you’re answering the wrong question.

Most vendors misread the signals for all three. They see a stalled deal and assume timing, see detailed technical questions and assume interest, or see budget scrutiny and assume they need a better ROI model. The playbook they’re running doesn’t account for an opponent that never shows up in the room.

Why Your Competitive Tracking Misses What's Happening Inside Health Plans

Every health tech sales org runs some version of competitive tracking. You monitor other vendors, prep objection-handling, and refine positioning against known players. It’s standard enterprise sales practice, and it works when you’re actually up against another vendor. The problem is that it doesn’t account for the deals you’re losing to something else entirely.

Health plan buyers don’t evaluate your solution the way you evaluate your competitors. You’re comparing features and pricing against other vendors. They’re comparing your entire category against alternatives that don’t involve a vendor at all, and in many cases, the fight you’re preparing for isn’t the one you’re actually in.

The data makes this gap hard to ignore. According to a Black Book Research flash survey, 60% of CIOs have active pause directives on new platform purchases, extended payment terms on new contracts, and a hard pivot toward projects demonstrating ROI within 12 months. When budgets tighten to that degree, the competitor isn’t another vendor offering a cheaper version of what you do. It’s the decision to spend nothing at all. And that decision doesn’t require a committee meeting, a procurement process, or a vendor evaluation. It requires only inertia, which is the one thing health plans have in abundance right now.

How plans respond to this pressure varies dramatically based on their financial position and strategic posture. A frozen health plan that doesn't buy anything until the market stabilizes presents a completely different competitive dynamic than one that selectively funds initiatives with near-term payback, or one that buys only what a compliance mandate requires.

When teams don’t adjust for these differences, they keep refining their pitch against the wrong opponent. They win the vendor comparison and still lose the deal because the plan decided the category itself wasn’t worth funding this year. Your team walks away thinking you lost to a competitor or that the timing wasn’t right, when you actually lost to something you never identified as a threat. The same pattern repeats next quarter, and your win rate declines for reasons your competitive intelligence can’t explain.

This is why so many health tech vendors are seeing pipeline metrics that don’t make sense. Win rates against named competitors hold steady, but overall close rates are dropping. Deals take longer without clear competitive pressure, and forecasted revenue continues to slip. Those are the symptoms of losing to invisible competitors, and the standard tracking framework can’t diagnose them. Which is why it’s worth paying attention to what health plan buyers are actually telling you when deals stall.

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What Health Plan Buyers Are Really Signaling (And What They're Not)

When a buyer mentions a named competitor, “We’re also looking at [X],” it often has nothing to do with your competitive positioning. They may be testing your confidence, creating negotiating leverage for a deal they’ve already decided to do with you, or giving you a convenient explanation for a decision that was actually made for internal reasons they don’t want to discuss. Sure, sometimes they’re genuinely evaluating alternatives, but often enough, you should pay attention to what isn’t being said.

The stall with no objection. When your deal has moved through a thorough evaluation with strong engagement at every stage, and then stalls with no clear objection surfaced, you’re probably losing to “doing nothing.” The plan hasn’t rejected your solution. They just can’t generate enough internal urgency to justify the disruption of onboarding a new vendor. Your champion may still believe in you, but they can’t sway their organization.

The questions that go too deep. When the buyer starts asking detailed technical questions about your architecture, data model, and integration requirements beyond what’s needed for a standard evaluation, pay attention. They may be scoping an internal build. Those questions aren’t about understanding your solution. They’re about understanding whether their team could replicate it.

The shift to "help me justify this." When the buyer’s tone shifts from “how does this work?” to “help me make the case to my CFO,” the line item itself is at risk. They’re not asking for your help selling the solution internally. They’re signaling that the category of spend is under threat and they’re looking for ammunition to defend it, which means someone above them is already asking whether this money should be spent at all.

Your reputation matters here more than most vendors realize. Plans evaluate vendors through peer networks and industry relationships before you ever get into the room, and a strong reputation can inoculate you against some of these invisible competitors. The plan that trusts you is less likely to default to inaction.

And if you’re a health plan leader reading this, here’s where this framework applies to you, too! Honestly, telling a vendor “we decided to build this internally” or “this category got cut from the budget” is more useful than “we went a different direction.” It saves time for both sides and preserves the relationship for future budget cycles.

You've reached the end of the free article. Everything above is the framework. Below is how to actually fight back: specific repositioning moves for each invisible competitor, when to walk away, and how to restructure the competitive conversation with your team.

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(This is the third in a series of deep dives on five health tech trends shaping sales cycles in 2026. The first two covered why health plan buyers are scrutinizing vendor financial health and the prior auth compliance window. Trends 4 and 5 will be published in the coming weeks.)

Health plan buyers are responding to the same policy pressures in fundamentally different ways, and six weeks into 2026, those differences are showing up in every pipeline. Some buyers have frozen vendor spend entirely. Others are accelerating purchases faster than they were twelve months ago. And a third group is buying regardless of financial conditions because a regulatory deadline leaves them no choice. Same market, completely different purchasing behavior. The reason has nothing to do with your product or your team's effort. It has everything to do with how each plan is positioned financially and strategically heading into the rest of the year.

That positioning is playing out in three distinct ways. Defensive buyers are freezing spending and scrutinizing every vendor. Opportunistic buyers are accelerating investment while competitors pull back. Compliance-driven buyers are purchasing because a CMS deadline forces their hand, regardless of market conditions. If you’re running one sales motion across all three, you’re misreading at least half of your pipeline.

Most vendors are treating the current environment as universally “harder” and responding with a single strategy, usually something like “be patient and offer more proof.” That misses what’s actually happening. Closing a defensive buyer requires a fundamentally different deal architecture than closing an opportunistic one, and selling outcomes to a plan that’s buying compliance is answering a question nobody asked.

Below, I’ll break down what’s driving the split, how to recognize which of the three camps a health plan falls into, and the specific qualification questions, messaging shifts, and deal sequencing that match each one.

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Why the Split Is Happening Now

The three camps map directly to the line of business (LOB) to which a plan is most exposed, and four LOBs are producing distinctly different purchasing responses right now. Knowing which pressure is driving your buyer also tells you something the framework alone can't: which buyers are likely to shift camps over the next 12 months and which ones are locked in.

Let’s quickly review each LOB and the buyer behavior it's producing:

Medicare Advantage plans collectively posted a $5.7 billion underwriting loss in 2024. Total non-SNP MA and MAPD plan offerings nationally declined 10% from 2025 to 2026. National plans such as UnitedHealthcare, Humana, CVS Aetna, and Elevance each scaled back operations in at least 100 counties, while six MAOs ceased operations entirely. For the first time in nearly two decades, as health plans prioritize margins over membership, that same contraction is creating opportunities for regional and health-system-owned plans to pick up displaced members in markets the nationals have abandoned. One carrier’s defensive retreat is another carrier’s growth thesis.

Medicaid is facing a structural funding shift. The reconciliation law cut roughly $900 billion to $1 trillion in federal Medicaid funding over ten years. States are already cutting provider reimbursement rates, suspending rate increases, and eliminating optional benefits. CBO estimates that 7.5 million additional people will be uninsured by 2034 from the Medicaid changes alone. MCOs are in defensive mode on discretionary vendor spend, but compliance requirements are simultaneously creating mandatory technology spend. More frequent eligibility redeterminations, the launch of work requirement systems in 2027, and new enrollment verification processes all require technology that MCOs can’t defer, regardless of their financial position. Medicaid is producing defensive and compliance-driven buyers at the same time, often within the same organization.

ACA enhanced premium tax credits expired at the end of 2025. The House passed a three-year extension in January, but the Senate has not acted, and the path forward remains unclear. ACA marketplace premiums are rising an estimated 26% on average, and plans are split between pulling back from marketplace exposure and doubling down in geographies where competitors are retreating. It mirrors the MA dynamic on a smaller scale: the same uncertainty is creating both defensive and opportunistic responses depending on the plan's financial position and risk appetite.

Commercial group health plan costs are projected to rise nearly 9% in 2026 before employer cost-cutting measures, the steepest increase since 2010, with 59% of employers planning cost-cutting changes to their health plans. Employers are pushing plans harder than they have in years, and plans that demonstrate cost-containment results are winning renewals. This pressure is making commercial plan leaders more willing to invest in vendor solutions that reduce medical or administrative costs, and more willing to move quickly on those investments. Commercial is where most of the opportunistic buying behavior is concentrated right now.

What matters for vendors is not the policy detail itself but the purchasing behavior it produces. And right now, those behaviors are clustering into three recognizable patterns.

Defensive, Opportunistic, and Compliance-Driven: What Each Buyer Looks Like in Practice

The previous section explains why the split is happening. This section is about pattern recognition: how to identify which camp you’re sitting across from before you’ve invested months in the wrong approach.

Defensive Buyers

These are plans with thin or negative margins, direct exposure to the policy shifts above, and leadership teams in preservation mode. Plans that exited markets, cut benefits, or are actively restructuring vendor relationships. The CFO has become the gatekeeper for every dollar of new spend.

You’ll know you’re dealing with a defensive buyer by what happens in the first two meetings. Evaluation timelines stretch without explanation. Pilot-first requirements show up with exit clauses attached. Questions about contract flexibility and termination terms surface before you’ve presented outcomes. Budget conversations reference “this year’s remaining allocation” rather than “next year’s plan.” Procurement asks about your financial stability before evaluating your product. And stakeholders you’ve never met start entering the evaluation late, which is a sign that more people now need to sign off on smaller dollar amounts. If you’ve read the Trend 1 deep-dive on vendor stability scrutiny, defensive buyers are the ones driving that dynamic.

What's happening inside the plan: a bad quarter prompted the CFO's office to lower discretionary spending thresholds, which means deals that used to require three signatures now require six. Your champion still wants to buy, but they're running an internal approval gauntlet that didn't exist eight months ago, and every new signature is another opportunity for someone to kill the deal. That's why the timeline keeps slipping without anyone telling you why.

Everything about their behavior points toward a single priority: the safest, most defensible spend. “Defensible to the board” matters more than “best ROI.” They want to be able to explain the decision if it goes wrong, not just if it goes right.

Vendors almost always get this wrong by leading with innovation or differentiation. Defensive buyers don't want to hear how you're different. They want to hear how you're safe, proven, and reversible. Every slide about your proprietary technology or unique methodology increases their perceived risk.

Opportunistic Buyers

These are plans with strong balance sheets and leadership teams that see the current environment as an opportunity to gain ground. You'll find them among regional plans or health-system-owned plans picking up members in markets the nationals abandoned, and among commercial plans under employer pressure to find cost containment wins and willing to invest to get them.

You'll recognize these buyers quickly because everything moves faster than you expect. They ask you to start sooner than your standard implementation allows. Questions focus on scalability and multi-market deployment rather than contract protections. Oftentimes, senior VPs or C-level folks attend earlier-stage meetings instead of waiting for the final decision-making presentation. Yes, they may be running competitive evaluations, but the pace is fast, and the questions are forward-looking. Another tell is they are less guarded about their strategy, because they see the current environment as an advantage they're actively trying to press.

So what’s happening inside opportunistic health plans? Leadership has already made the strategic decision to invest, and the budget is allocated or being allocated. Your contact isn’t trying to build a business case from scratch, they’re trying to execute on a directive that came from above. That’s why the executive shows up early. They’re not evaluating whether to spend, they’re evaluating whether you can move at their speed.

These buyers are optimizing for speed to competitive advantage. They want to move while others are frozen, and they're willing to accept imperfection if the upside is clear and the proof is real. The mistake vendors make is moving too slowly. If you run your standard six-month enterprise sales cycle with an opportunistic buyer, they'll find someone who can start in 90 days.

Compliance-Driven Buyers

These are plans that must purchase regardless of financial conditions because a regulatory requirement demands it: prior auth automation under the CMS interoperability rule, quality measure reporting systems, eligibility redetermination technology for Medicaid as states implement more frequent redetermination cycles, and prepare for work requirement verification in 2026-2027.

You'll recognize compliance-driven buyers by what's missing from the conversation as much as what's in it. There's almost no discussion of ROI or strategic outcomes in early meetings. Instead, RFPs include specific regulatory language traceable to a CMS final rule, timeline conversations anchor to compliance deadlines rather than budget cycles, and IT and compliance teams lead the evaluation rather than clinical or operational buyers. When you ask, "What's driving the timeline?" the answer often refers to a specific regulation or date rather than a strategic initiative.

The counterintuitive part: risk tolerance among compliance-driven buyers is actually high for the right solution, because the risk of non-compliance is higher than the risk of picking the wrong vendor. “Will this keep us compliant by [date]?” is the only question that matters in the first three meetings. (ROI is real but secondary).

But don't mistake regulatory urgency for an easy deal. Compliance purchases have their own brutal internal politics. Sure, the mandate comes from CMS, but the organizational readiness to execute it is a separate question. Vendors who read compliance urgency as a frictionless sale get blindsided when the organization can't keep up operationally.

This framework so far assumes each plan fits neatly into one camp. Most don’t, and the next section explains why that matters more than the framework itself.

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Most Health Plans Don’t Fit Neatly Into One Camp

If the framework above seems clean, that’s because real organizations are messier than frameworks. Large health plans, especially multi-LOB nationals, can sit in multiple camps simultaneously.

A large national plan might be defensive in Medicaid (cutting MCO vendor spend as states slash reimbursement), opportunistic in commercial (investing in cost containment as employer demand surges), and compliance-driven in MA (racing to meet prior auth automation deadlines). Same plan, three different purchasing postures running in parallel.

This is why enterprise qualification must occur at the initiative level, not the plan level. You’re not selling to “Aetna.” You’re selling to a specific budget, owned by a specific leader, inside a specific line of business, under specific financial pressure. The vendor who walks into a national plan meeting with a single pitch is going to get it wrong in at least two of the three rooms. Your discovery questions need to identify which camp this initiative belongs to, not which camp the plan broadly occupies. Financial pressure in one line of business ripples across the organization, but purchasing behavior varies by budget owner, leader, and LOB.

It also means camps can shift mid-deal. A plan that started as opportunistic in Q1 can flip to defensive by Q3 if a bad earnings quarter triggers a spending freeze. If your champion suddenly starts asking about pilot options and exit clauses when they were talking full deployment two months ago, the initiative moved camps. The worst thing you can do at that point is to keep running the opportunistic playbook after the buying posture has shifted beneath you. Recognize the shift, adjust your approach, and re-qualify.

Five Questions That Tell You Which Camp You’re Selling Into

In the original five-trends article, I offered a single qualification question: "How is your organization responding to the current policy environment?" It's a good opener, but it's not enough to classify a buyer on its own. The five questions below work as a conversation flow, not a checklist. And to be clear, you're listening for patterns across the answers, not scoring each one independently.

1. “How is your organization responding to the current policy environment, accelerating investment or pulling back?” This question rarely produces a straight answer. Most buyers give a general, slightly optimistic response regardless of their actual position. But that’s useful in itself. It tells you how the buyer sees themselves, and the gap between their self-perception here and the reality that surfaces in questions 2 through 5 is often the most revealing signal of all.

2. “What’s driving the timeline on this initiative?” This is where the real classification lives. A regulatory deadline points to compliance-driven. A strategic goal or competitive positioning points to opportunistic. “We need to show savings this year” or “we’re rationalizing our vendor portfolio” points to defensive. The language they use matters as much as the answer.

3. “Who needs to approve this beyond your team?” The approval chain tells you more about the buyer’s camp than almost anything they’ll say directly. Heavy financial oversight (CFO, VP of Finance, budget committee) signals defensive. An executive sponsor already aligned and pushing the process forward signals opportunistic. Compliance and business unit owners leading the approval chain often signal compliance-driven.

4. “What happens if you don’t move forward this year?” Listen for the consequence, not just the answer. Defensive buyers describe the status quo: “We keep doing what we’re doing.” Opportunistic buyers describe a missed window: “we lose ground” or “competitors get there first.” Compliance-driven buyers describe a penalty: “we’re out of compliance” or they reference a specific audit risk.

5. “Is this budgeted, or does it need to be budgeted?” Already allocated budget usually means compliance or opportunistic, the money is committed because the initiative has urgency or mandate behind it. If it needs new budget approval, you’re likely working with a defensive buyer, and you should plan for a longer, harder close.

The pattern across these five answers tells you which camp you’re in.

You’ve reached the end of the free article. Everything above is the framework: what’s driving the split, how to recognize each camp, and the five questions that classify a buyer. Below is the execution layer: camp-specific messaging, proof points, deal sequencing, and the mistakes that kill deals when you run the wrong playbook.

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

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

Most health tech executives don’t read CMS regulatory documents. They have teams for that. But when those documents reshape how your buyers think about spending, priorities, and vendor relationships, you can’t afford to be the last one in the room to understand what changed.

The 2027 Advance Notice dropped January 26, 2026. The major headline is a near-zero rate increase: 0.09% versus roughly 5% last year. LinkedIn is full of stock charts and hot takes from brilliant industry veterans, but, to me, the near-zero rate isn’t the story.

The story is how CMS got there and what it signals about where Medicare Advantage economics are headed. Two risk adjustment reforms eat almost the entire growth rate, and one of them takes direct aim at a practice that’s been central to MA revenue strategy for years: chart reviews. CMS explicitly called out $7.5 billion in payments for diagnoses that appeared in chart reviews but had no corresponding medical encounter. Starting in 2027, those diagnoses won’t count toward risk scores.

The coding arbitrage that drove MA margins is being systematically unwound. That changes which health tech companies win, which need to reposition, and which face hard questions about their value prop.

This article breaks down the four signals that matter for your sales conversations and your positioning, plus a deeper look at where CMS is taking MA economics over the next few years. You'll walk away knowing what your buyers are reacting to, which solutions are advantaged or disadvantaged, and the specific questions to ask in your next health plan meeting.

Key Dates

• Advance Notice published: January 26, 2026

• Comments due: February 25, 2026

• Final Rate Announcement: April 6, 2026

• Applies to: Contract Year 2027

Who Wins and Who Loses

Before diving into the signals, here’s the framework. CMS is shifting MA economics away from coding sophistication and toward clinical value delivery. That creates clear winners and losers, and your current positioning likely falls into one of these two categories:

If your company sits on the left side, this article is a warning. If you sit on the right side, this article is about how to press your advantage. If you’re somewhere in the middle, the next 12 months will determine which side you land on.

The four signals that follow break down what’s actually in the Advance Notice and what it means for your sales conversations. Then we’ll look at where CMS is heading beyond 2027 and what that means for health tech strategy.

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Signal 1: CMS Just Put a $7.5 Billion Target on Chart Reviews

Urgency: Immediate. If this affects your positioning, start reworking it now.

The near-zero rate increase comes down to two risk adjustment reforms that eat almost the entire effective growth rate:

1. Model recalibration (-3.32% with normalization). CMS updated the risk model to use 2023 diagnoses to predict 2024 expenditures, rather than 2018/2019 data. This narrows the gap between MA and FFS coding patterns by capturing more recent trends.

2. Excluding unlinked chart reviews (-1.53%). CMS will no longer count diagnoses from chart reviews or health risk assessments that aren’t tied to a medical encounter. The agency called out $7.5 billion in 2023 payments for exactly these diagnoses. One in six Medicare Advantage enrollees had diagnoses added from chart reviews that weren’t documented elsewhere, meaning plans were paid for conditions with no evidence of active treatment.

(It’s also worth noting that CMS also announced it will exclude diagnoses from audio-only services).

What this means for your sales motion: The language of “diagnosis capture” and “RAF optimization” now works against you. Plans that relied heavily on retrospective chart mining and HRA-driven coding got hit hardest in the stock market, as they had the most exposure to exactly what CMS is curtailing.

If your solution connects documentation to actual clinical encounters, your case just got stronger. Provider-facing workflows, prospective gap closure during care delivery, and clinical documentation integrity that improves accuracy rather than volume. That’s the winning positioning.

If your value prop was built around helping plans maximize risk scores through chart reviews, you have a positioning problem that needs to be solved quickly.

Question to ask buyers: “The unlinked chart review policy hits in 2027. How is your team rethinking documentation strategy, and where does that leave your current vendor relationships?”

Signal 2: CMS Is Leveling the Playing Field Between Nationals and Regionals

Urgency: Medium-term. Factor into account strategy and targeting over the next two quarters.

CMS laid out three principles guiding risk adjustment reform: simplicity, competition that works equally regardless of plan size, and payment accuracy. That second principle matters most for health tech vendors thinking about where to focus.

The “level the playing field for smaller, regional, and less well-resourced MA plans” language from the proposed rule is now showing up in actual rate policy. CMS is explicitly targeting the advantages that accrued to large nationals with sophisticated coding operations. The stated goal is that risk adjustment shouldn’t give larger, wealthier companies with more resources a competitive advantage.

Again, look at the stock market reactions. UnitedHealth and Humana got hit hardest as they had the most invested in the infrastructure that CMS is now devaluing.

What this means for your sales motion: If your customer mix skews toward large nationals, understand they’re facing both a rate hit and a structural shift away from their competitive advantages. Budget pressure will be real.

If you serve regional plans, take a clearer stance in your positioning. Regional plans often couldn’t compete as well in coding sophistication, which was a disadvantage (now it’s less of one). The gap is narrowing by design, and regionals may have more flexibility to invest in solutions that deliver genuine clinical value rather than scrambling to protect risk adjustment revenue.

This doesn’t mean national health plans stop buying; however, their buying criteria will most likely shift, and their budget scrutiny is intensifying. As such, regional and even smaller health plans may be relatively better positioned to invest.

Question to ask buyers: “With CMS explicitly targeting coding advantages that favored larger plans, how do you see your competitive position shifting over the next two years?”

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Signal 3: Stars Measure Removals Shift Weight to Clinical and CAHPS

Urgency: 18 months. The measure removals hit 2028-2029 Star Ratings, but repositioning takes time. Start now.

The proposed rule’s removal of 12 measures is still on track. Operational and administrative measures are going away. Clinical outcomes, HEDIS measures, and CAHPS surveys gain relative weight.

The measures being cut are those on which everyone scored well, since they weren’t meaningfully differentiating plans. What remains will actually separate high performers from the pack. CMS has been explicit: the goal is to refocus the program on clinical care, outcomes, and patient experience where there’s meaningful variation across contracts.

There are two specific opportunities worth calling out here:

1. Depression Screening and Follow-Up is being added as a new measure (2027 measurement year, 2029 Stars). Mental health solutions now have a discrete, measurable hook tied directly to Star Ratings. If you sell anything in the behavioral health space, this is your talking point.

2. CAHPS and member experience measures gain relative weight as operational measures are dropped, thus making survey performance more critical. Solutions that improve member experience, reduce friction, and drive engagement scores gain ground as these measures carry more weight. And if you’ve been positioning around “member satisfaction” without a Stars connection, you now have one.

What this means for your sales motion: If your value prop ties to any of the 12 measures being removed, you have a limited repositioning window. The measures aren’t gone yet, but the smart money is already planning for a world without them.

Clinical quality improvement, gap closure, care management, behavioral health, and member experience are all relatively advantaged. If your pitch is "we help you hit operational Stars measures," it needs to evolve and fast.

Question to ask buyers: “The Stars measure removals shift weight toward clinical and survey measures. Which of those are you most concerned about, and where are you investing to close gaps?”

Signal 4: Part D Margin Pressure Is Permanent. Here’s Who Benefits.

Urgency: Ongoing. The IRA changes aren't new, but plans are still rebuilding their economics around them.

The IRA changes are now codified as permanent: a $2,000 out-of-pocket cap, elimination of the coverage gap, and increased plan liability in the catastrophic phase. The Part D risk model is also being updated to include reforms similar to those in Part C, such as excluding unlinked chart review diagnoses.

Health plans can't wait this out because the margin pressure is structural, not cyclical.

What this means for your sales motion: Pharmacy cost management, adherence, and MTM solutions continue to benefit from tailwinds. This isn't a temporary policy bump that might swing back the other direction. It's the new baseline.

The ROI case for anything that bends the Part D cost curve is cleaner than it’s ever been. Reduced pharmacy spend, improved adherence that prevents costly acute events, and specialty utilization management. All of these connect directly to a budget line that CFOs are actively trying to protect.

Question to ask buyers: “Part D margin pressure is locked in. Where are you seeing the biggest cost drivers, and what’s your priority for managing them in 2027?”

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The Strategic Layer: Where CMS Is Taking MA Economics

Each signal above matters on its own, but the pattern across them tells you something bigger about where to place your bets.

V28 changed how diagnoses are weighted. The unlinked chart review exclusion changes how diagnoses are sourced. The Stars measure removals shift what plans get rated on. Each of these moves all point in the same direction: CMS is systematically unwinding the economics that rewarded coding sophistication and replacing them with economics that reward clinical value delivery.

If you're selling into MA, four strategic implications follow from this trajectory. These aren't about what to do this quarter. They're about where to position for the next three years.

1. The ROI conversation is shifting from revenue capture to cost reduction.
When coding arbitrage drove MA margins, plans could tolerate higher medical costs because those costs were offset by higher risk scores. However, as risk adjustment revenue compresses, the only path to margin protection is actually reducing the cost of care: care management, chronic condition management, transitions of care, avoidable ED visits, and preventable readmissions. If your value prop still centers on helping plans capture revenue they’re missing, you’re selling into a shrinking budget while the budget for medical cost reduction grows. The large nationals are currently distracted by rate pressure, margin compression, and benefit cuts, but they’re actively seeking vendors who can demonstrate documented cost avoidance.

2. Retrospective documentation strategies are losing their value.
The chart review crackdown isn’t just about unlinked diagnoses. It targets the entire retrospective chart review model. CMS is making the standard clear: if it didn't happen during a clinical encounter, it doesn't count. What plans need now is help with accurately documenting in real time, closing gaps during visits, and capturing clinical complexity as part of care delivery.

This is a problem for plans because retrospective chart review was operationally easier. You didn’t need to change provider workflows or integrate into the care delivery process. You just reviewed records after the fact. The vendors who built businesses around that model now need to pivot, and the plans who relied on them may need new partners.

What plans need now is help with accurately documenting in real time, closing gaps during visits, and capturing clinical complexity as part of care delivery. That’s harder to execute because it requires provider adoption (meaning strong, positive relationships with providers!), EHR integrations, and workflow changes. But it’s where the defensible revenue lives. The vendors who can make real-time documentation easier for providers have an opportunity that wasn’t as urgent as two years ago.

3. Member experience is becoming a margin protection strategy.
For years, plans confused lavish benefits with member loyalty. When rates forced benefit cuts over the past two years, many discovered they didn't have the brand affinity they assumed they did. Members left. The time for platitudes about member experience is over, and the real work begins. Plans that maintain strong experience while tightening benefits have a competitive advantage over those that can't. Solutions that reduce friction, improve communication, and drive proactive engagement connect directly to both Stars performance and member retention.

And to be clear: member engagement isn't the same as member experience. Sending reminders and closing gaps is necessary, but it's not what builds the kind of loyalty that keeps members from switching plans. Engagement is operational. Experience is emotional. Plans need both, but only one protects against churn when benefits get cut.

4. Compliance and documentation integrity are becoming procurement criteria.
Health plans have always cared about compliance, but the enforcement environment has shifted. In May 2025, CMS announced plans to audit all 550 eligible MA contracts annually and is working through a backlog of audits covering payment years 2018 through 2024.

With DOJ actively pursuing False Claims Act cases and clawbacks becoming a real line item, plans are asking harder questions about their vendors: Does your solution create documentation we can defend in an audit, or does it create exposure? Vendors who can demonstrate that their approach strengthens compliance posture rather than just capturing revenue have an advantage. Those still leading with "we help you capture more" will find themselves on the wrong side of procurement conversations.

Question to ask buyers: “Given where CMS is heading, what capabilities are you building for the next three years versus just solving for 2027?”

Final Thought

The throughline between the proposed rule and the Advance Notice is clear: the risk-adjustment arbitrage era is ending. CMS is closing the gap between Medicare Advantage and Fee-For-Service coding, deliberately and methodically. The advantages that built MA margins for years are being unwound.

What replaces that arbitrage? Actual clinical value. Care management that reduces utilization. Quality improvement that moves the clinical Stars measures. Member experience that drives retention and CAHPS. Documentation accuracy, not documentation volume.

If that’s what your company delivers, this is the moment to say it directly. Stop hedging. Stop leading with features. Lead with the outcome: we reduce costs through better care, not better coding.

If your company was built around the old economics (which many are), the next 12 months are a repositioning exercise. The longer you wait, the harder that conversation becomes with health plan prospects who are already hearing a different message from your competitors.

First things first: look at your pitch deck, your website, your sales scripts, etc. Find every instance of language that sounds like “capture,” “optimize,” “maximize RAF,” or “improve coding.” Ask yourself whether that language helps you or hurts you in the current environment. CMS just told you where they stand. Your positioning should make clear where you stand, too.

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

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Three regulatory deadlines are reshaping how health plans operate, what they prioritize, and how much bandwidth they have for new vendor relationships. If you’re selling to health plans, these deadlines are already affecting your pipeline, whether anyone told you or not. If you work at a health plan, you’re living this, and your vendor partners need to understand what you’re dealing with.

At the end of last year, I published “Five Trends That Will Shape Health Tech Sales Cycles in 2026.” Prior authorization compliance was one of them, and I’m going deeper on it here because understanding the regulatory timeline helps you understand your buyers.

Here’s what’s unfolding:

January 1, 2026 (just passed): Operational requirements went live. Plans must now respond to expedited prior auth requests within 72 hours and standard requests within seven days. They must provide specific denial reasons. And they had to hit these requirements manually, without the technology infrastructure to support them.

March 31, 2026 (two months away): Public reporting begins. Every impacted plan must post its prior authorization metrics on its website. Denial rates, approval rates, turnaround times, and appeals outcomes become visible and comparable for the first time. Plans with poor numbers will face questions from brokers, consultants, and members.

January 1, 2027: Technology requirements take effect. The FHIR-based APIs that would have made the operational changes sustainable finally arrive, a full year after plans needed them. This will trigger another wave of implementation work.

This isn’t a single compliance moment but a two-year wave that’s already affecting health plan buying decisions and will continue to do so through 2027.

If your health plan deals slowed in the back half of 2025, this is probably why. If you’ve been waiting for the right moment to re-engage, the window between the January deadline and March reporting is it. This article breaks down what changed, what problems compliance created for plans, and how vendors outside the prior auth space can position themselves around it.

What January 1 Actually Required (And What It Didn’t)

The CMS Interoperability and Prior Authorization Final Rule created two sets of requirements with different deadlines. The technology requirements, specifically the FHIR-based APIs for electronic prior authorization, don’t take effect until January 1, 2027. Most of the industry conversation focused there.

But the operational requirements went live on January 1, 2026. If you've noticed health plan buyers being harder to reach or pushing timelines, this is partly why.

Decision timelines got compressed. Medicare Advantage plans, Medicaid MCOs, CHIP, and ACA exchange plans must now respond to expedited prior authorization requests within 72 hours and to standard prior authorization requests within 7 calendar days. For plans already operating at two to three-day turnarounds, this changed almost nothing. For plans that were routinely taking ten to fourteen days, it required a fundamental operational overhaul.

Denial reasons must be specific. Plans can no longer issue vague denials. They must provide specific reasons, regardless of whether the request was submitted by fax, portal, or phone. This sounds minor, but it means UM teams now need to document clinical rationale for every denial in a way that can be communicated back to providers. That’s new work.

Metrics collection started. Plans must now track and collect prior authorization data that will be publicly reported by March 31, 2026. Denial rates, approval rates, turnaround times, and appeals outcomes will become visible and comparable for the first time.

Not all plans are equally affected. Plans that already operated with tight turnarounds experienced minimal disruption, often because state requirements were already more aggressive than federal standards. These plans made minor adjustments and moved on. Plans that had been operating at the slower end of the range had to overhaul their UM operations without the technology to support them. They added staff, created workarounds, and are now running on manual processes that won’t scale.

If you’re selling into health plans, understanding where your target accounts fall on this spectrum tells you whether they have bandwidth for new initiatives or whether they’re still buried in compliance work.

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Faster Denials, More Appeals, Angrier Providers

The new prior auth requirements forced plans to respond faster. Many responded by denying faster. That's creating problems in appeals, provider relationships, and member experience (all problems that have nothing to do with prior auth solutions).

The fastest way to hit a 72-hour or seven-day turnaround isn’t to make better decisions faster. It’s simply to make faster decisions. For some plans, that meant issuing denials more quickly rather than taking the time to work with providers on documentation or alternative approaches.

And the math is stark. MA plans processed nearly 50 million prior authorization requests in 2023, with about 6.4% denied. But among denials that were appealed, 82% were overturned. That’s not a rounding error. It’s a signal that a significant share of initial denials shouldn’t have been denials at all.

Now compress the decision timeline without changing the underlying review process. You get the same dynamic, just faster. More denials issued quickly. More appeals filed. More provider frustration. More member friction.

You can quickly see how this spirals and creates downstream problems that have nothing to do with prior authorization technology:

Provider abrasion increases. Physicians report spending an average of 13 hours per week on prior authorizations, completing roughly 39 requests per physician per week. When denials come back faster but don’t improve, provider relationships are going to suffer. This will show up in network satisfaction scores, willingness to participate in value-based arrangements, and the plan’s ability to maintain competitive networks.

Member experience takes a hit. When members experience delays or denials, their perception of the plan suffers. This happens to more than half of insured adults who need specialized care. For MA plans, member perception directly impacts CAHPS scores, which feed into Star Ratings. A plan that “solved” prior auth compliance by denying faster may have created a member experience problem that costs them more in quality bonus revenue than they saved in medical expense.

Appeals volume grows. Faster denials with specific denial reasons (now required) make it easier for providers and members to understand why something was denied and to file an appeal. Plans that weren’t staffed for increased appeals volume are now dealing with backlogs.

This is about to get worse. Providers are increasingly using AI tools to automatically generate appeals, and some can fire off an appeal within hours of receiving a denial. Plans are responding with their own AI to process the volume. The result is an escalating automation arms race that will drive appeal volume even higher and create more pressure on the staff, systems, and processes that support it.

Prior auth compliance didn't eliminate friction. It relocated it. Plans that met the deadline by speeding up denials now have problems in appeals, provider relations, and member experience. Those are problems that vendors outside the prior auth space can help solve.

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The March Reporting Deadline Is Your Sales Lever

The public reporting requirement changes the sales conversation for any vendor who can credibly claim they improve the metrics that are about to become visible.

By March 31, 2026, every impacted payer must post prior authorization metrics on their public website: denial rates, approval rates, average and median turnaround times, and appeals outcomes. For the first time, these numbers will be visible to brokers selecting plans for employer groups, consultants advising on network decisions, and members comparing options during open enrollment.

Plans with poor metrics will face questions they’ve never had to answer before. Why is your denial rate 15% when the plan down the street is at 8%? Why do 40% of your denials get overturned on appeal? These aren’t hypothetical concerns. They’re competitive differentiators that will influence enrollment and retention.

If your solution can credibly improve the metrics that plans are about to publicly report, you have a window right now where that message lands differently than it did six months ago.

The positioning isn’t complicated: Your March 2026 numbers are going to be public. What’s your plan to make them defensible?

That question opens doors for vendors across categories:

• Member engagement vendors can reduce the friction that leads to complaints and disenrollment.

• Care management vendors can improve care coordination and reduce the need for prior auth in the first place.

• Provider engagement solutions can reduce documentation deficiencies and first-pass denial rates.

• Appeals management vendors can improve initial decision quality.

The key is connecting your solution to the specific metrics that will be visible. Vague claims about “improving member experience” won’t land. Specific claims tied to denial rates, turnaround times, or appeals outcomes will.

How This Changes Your Approach

If you're selling member engagement, care management, provider engagement, analytics, or anything else that isn't prior auth technology, the last six months probably felt like pushing uphill. Deals that were moving stopped moving, and you may not have heard "prior auth" as the reason (but it was likely the cause). Health plans were consumed by the operational changes they had to implement manually, and, as a result, many other initiatives were deprioritized.

That’s starting to shift as the January deadline has passed. Plans are through the worst of the operational scramble. But they’re not out of the woods yet. The way many of them met the March deadline has created new problems: appeals backlogs, provider friction, and member experience hits. And in two months, their metrics will go public for the first time.

This is a different selling environment than six months ago. Bandwidth is returning. The problems compliance created are exactly the problems that member engagement, care management, and provider engagement solutions can solve. And March 31 gives you a concrete reason to reach back out: plans are about to be publicly accountable for metrics your solution can improve.

If you’ve been waiting for the right moment to re-engage your health plan accounts, this is it. The window between “through the crisis” and “moved on to the next thing” doesn’t stay open long.

You’ve reached the end of the free article.

Everything above is the landscape: what changed, what problems it created, and why the next 60 days matter. What’s below is what I actually use with clients: positioning scripts for the “compliance created new problems” conversation and how to use March reporting pressure as a sales lever without overselling it.

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

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Every vendor deck now says “AI-powered.” The term has been diluted to the point where it signals nothing.

I’ve written before about this problem: if a competitor achieved identical outcomes using a completely different approach, would your buyer care how you built it? Almost always, the answer is no. They’d buy whoever gets them the result. Saying “we use AI” is like a health plan saying “we use claims data.” Of course you do. The question is what you accomplish with it.

But here’s what most vendors haven’t fully internalized: health plan buyers aren’t just tuning out AI messaging. They’re actively skeptical. “AI-powered” now triggers a specific set of concerns that didn’t exist two years ago.

The turning point was 2024. Between spring and fall, every booth at every conference slapped “Now with AI” on its signage like a cereal box advertising a new flavor. Vendors who already sounded similar became indistinguishable. By the time 2025 hit, those words had lost all meaning. Buyers stopped hearing “innovative” and started hearing “same as everyone else.”

What used to be an asset is now a trust tax. You have to prove AI isn’t a liability before you can position it as a strength. The vendors who’ve figured this out are positioning completely differently, and they’re winning deals while their competitors wonder why “AI-powered” stopped working. This article breaks down that shift: what buyers actually hear when you lead with AI, the reframing that changes the conversation, and how to make AI a credible part of your value story rather than the thing that triggers skepticism.

McKinsey's Q4 2024 survey of 150 healthcare leaders found that 85% were exploring or had already adopted gen AI capabilities. That's not innovation. That's saturation.

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Four Things Running Through Your Buyer’s Mind When You Lead with AI

When you lead with AI, here’s what runs through a health plan buyer’s mind. They won’t say them out loud, but these thoughts are shaping every question they ask and every objection they raise.

1. “What happens to our patient data?”

Where does the data go? Who has access? Is our data used to train your models? What happens in a breach? PHI plus AI equals a compliance conversation they don’t want to have with their legal team. Health plans have spent years tightening data governance, and every new vendor relationship gets scrutinized. AI feels like a step backward, not forward, because it introduces variables they don’t fully understand and can’t fully control.

2. “Has this actually worked at scale?”

Health plans don’t want to be guinea pigs for technology that sounds impressive but hasn’t been validated in real-world conditions. “AI-powered” often translates in the buyer’s mind to “we built something cool, and now we’re looking for someone to test it.” Is this proven with a population like ours, or are we the pilot?

3. “How much lift does this require from us?”

Implementation complexity is already a concern with any new vendor, and AI makes it worse. Buyers assume AI means IT resources, integration headaches, workflow changes, and a long runway before they see value. The last thing an already-stretched operations team wants is a vendor promising transformation that requires six months (or more) of internal work before anyone sees results.

4. “Is this a real company or a feature wrapped in a funding pitch?”

Vendor stability concerns are heightened with AI companies. Buyers have watched enough startups pivot, get acquired, or run out of runway. When your pitch leads with AI, some part of the buyer’s brain is calculating how long you’ll be around and whether betting on you is worth the switching cost later.

The irony is that AI might actually reduce their risk, improve accuracy, and simplify operations. But leading with “AI” triggers the opposite assumption. Health plans have been burned by tech promises before (not just AI, but any “revolutionary” tool), and the credibility bar for AI is now higher than for any other capability you’ll pitch.

There’s another layer to this that most vendors miss: many health plans have internal data science teams running their own predictive models. Some have been experimenting with AI for years. When you lead with AI, you’re often talking to someone who’s already tried something similar, or who’s evaluating three other vendors making the same pitch. You’re not impressing them, you’re inviting comparison. The better move is to lead with the specific outcomes you’ve delivered, then let them ask how you got there. If they’ve tried and failed to move that metric internally, now you have their attention for a different reason: you solved something they couldn’t.

This is the trust tax I mentioned. Before you can talk about what AI does for them, you have to overcome the assumption that it’s a risk. That’s why leading with AI backfires. You’re triggering concerns before you’ve built any credibility to address them. The fix isn’t to hide that you use AI. It’s to change what you lead with.

Lead with Results, Not the Technology That Gets You There

If leading with AI triggers skepticism, what do you lead with instead? The answer is almost embarrassingly simple: lead with results.

Run this test on your own positioning. If a competitor got the same outcome using a completely different technical approach, would the buyer care how you built it? Would they pay more for the AI version? Almost always, the answer is no. They’d buy whoever gets them the result. That means your positioning needs to lead with the result, not the technology. AI becomes something you mention when the buyer asks, “How do you do that?”, not the headline of your pitch.

Here’s what that shift looks like in practice:

Technology-first: “Our AI-powered platform uses machine learning to analyze member data and predict risk.”
Outcome-first: “We reduce avoidable ED visits by 18% in high-risk populations. Here’s the data from three regional plans.”

Technology-first: “Our natural language processing (NLP) engine automates prior authorization decisions.”
Outcome-first: “We cut prior auth turnaround from 5 days to 4 hours while maintaining 99% accuracy. That’s 340 hours of staff time back per month for a plan your size.”

Technology-first: “Our AI identifies gaps in care through predictive analytics.” Outcome-first: “We catch 31% more gaps in care than manual chart review, and we do it in hours instead of days.”

The difference isn’t subtle. One version asks the buyer to be impressed by technology. The other gives them a number they can take to their CFO.

Three questions to pressure-test your positioning:

1. What specific metric does this improve for the health plan? If you can’t name the metric, you’re not ready.

2. Can we prove it with the data they already track? If they have to build new reporting to see your impact, adoption will stall before it starts.

3. Would this message be credible if we never mentioned AI? If the answer is no, you’re leaning on the technology as a crutch rather than letting the results speak for themselves.

The vendors winning health plan deals aren’t hiding that they use AI; they’re just not leading with it. They’ve realized that outcomes build the credibility that makes AI messaging land. Get the sequence backwards, and you’re fighting the trust tax.

There’s also a revenue dimension to this that most vendors miss. When AI was novel, you could charge a premium for it. Now that everyone says it, leading with AI compresses your pricing power. You’re inviting a technology comparison, which becomes a feature checklist, which becomes procurement leverage to drive your price down. The vendors maintaining premium pricing have shifted the conversation to outcomes that are hard to replicate. When the buyer is evaluating you on results rather than capabilities, the question stops being “why should we pay more for your AI?” and becomes “what’s it worth to us to get these results?” That’s a different negotiation entirely.

That raises an obvious question: if you’re not leading with AI, when do you bring it up at all?

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When to Mention AI (And When to Let Outcomes Lead)

The goal isn’t to hide AI. It’s to introduce it at the right moment, in the right way, so it reinforces your credibility instead of undermining it.

Bring up AI when the buyer asks directly (they will eventually), when AI explains why your results are better, faster, or more accurate than alternatives, when it addresses a specific concern they’ve raised about accuracy or speed or scale, or when you’re in late-stage procurement and they need technical specifics for their evaluation. In these moments, AI becomes a proof point rather than a pitch. “The reason we can identify risk across your entire population, not just a sample, is because our models run continuously rather than relying on quarterly manual review.” That’s AI as an answer, not AI as a buzzword.

Let outcomes lead when you’re in early conversations focused on problem and fit, when the buyer is already skeptical of vendor hype (read the room), or when your outcome story is strong enough to stand alone. If you can say “we reduce readmissions by 14%” and back it up, you don’t need AI to carry the pitch. Your goal in early conversations is to establish whether there’s a match, not to explain your tech stack.

The exception: When a buyer is explicitly seeking AI capabilities (whether through an RFP that scores for it or because they’re a tech-forward plan looking to innovate), lean into the technology. But recognize that this buyer is prepared to take risks and ride the edge. Frankly, that’s not your typical risk-averse health plan buyer. For most conversations, the guidance above applies.

Language shifts that reduce skepticism. Instead of “AI-powered,” try “automated,” “predictive,” “real-time,” or “continuous.” These words describe what the technology does without triggering the baggage that “AI” now carries. You’re not hiding anything. You’re describing capabilities in terms that matter to the buyer.

The “proof sandwich” structure. When you do talk about AI, sandwich it between outcomes. Outcome, then how AI enables it, then outcome again. Example: “Four health plans we support have each seen a 19% reduction in medication adherence gaps within six months. Our models flag members likely to miss a fill before it happens, so care managers can intervene proactively. ” The AI is in there. But it’s surrounded by results, which is what the buyer actually cares about.

Here’s the counterintuitive part: the more boring your AI explanation, the more credible it sounds. Vendors who try to impress buyers with technical sophistication often trigger more skepticism, not less. When you explain AI in plain, almost mundane terms (“we use pattern recognition on claims and pharmacy data to flag high-risk members”), it sounds like something that actually works. When you use phrases like “cutting-edge machine learning” or “proprietary algorithms,” it sounds like marketing. In most situations, boring actually wins.

The mistake smart vendors make. The sophisticated version of this problem is the vendor who moves AI from slide 1 to slide 3, but still structures the entire conversation around the technology. They’ve heard “lead with outcomes,” but they’re executing it as “mention outcomes briefly, then spend 20 minutes on a technical deep-dive nobody asked for.” The sequencing changed, but the message didn’t. If you find yourself spending more time explaining how your AI works than discussing the buyer’s problem and your results, you’ve fallen into this trap.

There’s one conversation, though, where you can’t be boring or vague: data security. How you handle that conversation often determines whether the deal moves forward or stalls indefinitely.

The Security Conversation Is an Opportunity, Not an Obstacle

Most vendors treat security questions as an obstacle to overcome. That’s a mistake. This conversation is actually your best opportunity to build credibility, and mishandling it can kill deals even when everything else is going well.

Buyers will ask (or worry silently) about where the data lives, who has access, whether their data is used to train your models, and what happens in a breach. The training question is a big one. Many plans assume the answer is yes, and they’re not comfortable with it.

Don’t wait for them to ask. Raise it yourself in mid-funnel conversations: “I know data security is a priority for your team, so let me address that directly. Your data stays in a dedicated environment. We don’t train on customer data. We’re SOC 2 Type II and HITRUST certified. Happy to walk through our compliance documentation or connect you with our security team.” Being proactive signals that you understand their concerns and have nothing to hide. Waiting for them to ask puts you on defense.

Here’s why this conversation is actually an opportunity: being upfront about limitations and safeguards makes everything else you say about AI more credible. When you say “we don’t train our models on customer data” or “our models work well for populations over 10,000 members, but below that threshold we’d recommend a different approach,” you’re demonstrating that you understand the risks and have thought through the edge cases. Buyers trust vendors who acknowledge complexity. Vendors who brush past security questions or give vague assurances (”we take security very seriously”) lose credibility fast.

What to have ready before you need it: clear, plain-language answers on data handling (not just legal boilerplate your buyer can’t parse), compliance documentation (SOC 2, HITRUST, BAA templates), and a technical contact who can go deeper with their security team if needed.

The vendors winning AI deals have stopped treating security as a checkbox and started treating it as a differentiator. When your competitors fumble this conversation, you have an opening.

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How AI Fits in Early, Mid, and Late-Stage Conversations

Where AI fits in your pitch depends entirely on where the buyer is in their process. Get this wrong, and you’re either burying something they need to hear or leading with something that triggers skepticism. Here’s how to calibrate.

For early-stage conversations (discovery, qualification), lead with problem and outcome. Mention AI only if asked. Your goal is to establish fit, not explain your tech stack. If they ask how you do it, give a brief answer and pivot back to results: “We use predictive models to identify high-risk members before they become high-cost. The bigger question is whether reducing avoidable admissions is a priority for you this year.”

For mid-funnel (evaluation, building the business case), use AI as a “how we’re different” proof point, not a headline. This is where you explain why your approach produces better results than alternatives. Frame AI as the reason your outcomes are better, faster, or more scalable: “The reason we can do this across your entire population rather than a sample is because our models run continuously rather than relying on quarterly manual review.” At this stage, the buyer has already decided the problem is worth solving. Now they’re evaluating whether you can solve it better than alternatives.

For late-stage (procurement, contracting), be specific and technical. Avoid marketing language entirely. Their procurement and IT teams will ask detailed questions. Have answers ready. This is where you bring in technical resources who can speak credibly to how the technology works without overselling it.

Red flags that you’re over-relying on AI positioning: Your first slide mentions AI before it mentions outcomes. You can’t articulate your value proposition without referencing the technology. Buyers keep asking, “But what does it actually do?” after you’ve explained it. Your differentiation disappears if competitors use the same technical approach.

AI’s Real Win Is Disappearing from Your Pitch Entirely

Here’s the thing about AI in health tech sales: The technology that actually transforms an industry eventually becomes invisible. Nobody pitches “cloud-based” anymore. Nobody explains how the internet works. AI is heading in the same direction. The vendors still leading with it are advertising that they haven’t figured this out yet.

That’s not a prediction about some distant future. It’s already happening. The vendors closing deals today aren’t the ones with the most impressive AI. They’re the ones who’ve made AI a background capability, something that powers their outcomes rather than something they need to explain and defend.

The transition from “look at our AI” to “look at our results (powered by AI)” isn’t just a messaging shift. It’s a maturity signal. Buyers can tell the difference between a company that’s still excited about their technology and a company that’s focused on solving problems. One sounds like a startup. The other sounds like a partner.

You’ve reached the end of the free article.

What’s below is the part I actually use with clients: the specific language for when buyers push back on AI, a security conversation script you can run in your next meeting, and a structure for talking about AI that makes it disappear into the background where it belongs.

A paid subscription unlocks this section, plus the full archive of paid subscriber deep-dives, positioning frameworks, and scripts.

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If you’ve been selling to health plans over the past 18 months, you’ve probably noticed the questions have changed.

Not the clinical questions or the integration questions. Those are the same grind as always. What’s changed more recently is how often buyers are scrutinizing your financial health. Your funding. Your investor backing. Whether you’ve been acquired or might be. Whether you’ll still be around in two years.

These questions were once reserved for early-stage companies with clear risk profiles. Now they’re showing up in nearly every serious evaluation, regardless of how long you’ve been in business or how strong your track record is. Health plan buyers have reason to be cautious. MA plans collectively lost $5.7 billion in 2024, and many are cutting vendor relationships as they restructure. Vendors with years of revenue, long customer tenure, and healthy retention are fielding the same scrutiny as companies that launched 18 months ago.

This is one of five trends I’m watching closely in 2026, and it’s the one creating the most immediate friction in sales cycles. However, most vendors are responding incorrectly.

The reasonable instinct is to treat this as an objection-handling problem and to prep better answers about financial stability. Or perhaps coach the team to proactively address concerns. That’s not wrong, but it misses what’s really behind the behavior.

Because these questions about funding, acquisition risk, and long-term viability aren’t really about those things. They’re about something else entirely, and until you understand what that is, you’re going to keep running into friction you can’t explain.

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What Buyers Are Actually Trying to Figure Out

When a health plan VP or CMO champions a vendor internally, they’re not just recommending a solution. They’re putting their judgment on the line. They’ll have to explain the choice to their CFO, the CEO, and the board if the contract is large enough. They need a reason that, well… sounds like a darn good reason.

When they pick a large incumbent, the story is easy: “We went with the safe choice. They’re not going anywhere.”

When they pick an exciting early-stage company, the story is also easy: “We made a bet on innovation. They’re doing something nobody else can do.”

When they pick a mid-sized company with a solid track record, the story is harder to tell. I mean, what is it? “We picked the vendor that seemed pretty good”? “They’ve been around for a while and haven’t screwed up”?

That’s not a very compelling story.

So, no, the stability questions aren’t really about whether you’ll survive. They’re a symptom of something else: the buyer can’t articulate a compelling reason to choose you over the alternatives. So they start probing for risks, because risk is something concrete to evaluate when the upside story isn’t clear.

Which raises the question: why is this happening now, and why is the middle getting hit hardest?

Why the Middle Gets Hit Hardest

The answer is in how capital has been moving.

Capital in health tech has been flowing to the extremes. Series B deal flow has dropped by half compared to recent years, while mega-rounds over $100 million now account for nearly 40% of total funding. Meanwhile, early-stage companies are getting funded as bets on potential, many of them AI-native, most of them unproven but exciting. And large incumbents are consolidating, acquiring capabilities and customers, and getting bigger and harder to displace.

The middle, companies with real revenue, real customers, and years of operating history, are getting squeezed. Not because these companies are failing. Because they’re harder to tell a story about.

• Early-stage companies have a built-in narrative: we’re building the future. That narrative carries risk, and buyers know it, but at least it’s a story. A buyer who chooses an early-stage vendor is making a bet, and bets are defensible. “We took a calculated risk on a company that could give us a real advantage” is something you can say in a meeting.

• Large incumbents have a built-in narrative too: we’re the safe choice. Nobody gets fired for buying IBM, as the old saying goes. A buyer who chooses the biggest player doesn’t have to explain much. The choice explains itself.

• Mid-sized companies have to manufacture their narrative. It doesn’t come automatically. And most of them don’t. They assume their track record speaks for itself, that being solid and reliable is enough. It isn’t. "Solid and reliable" doesn’t give a VP enough to say anymore when their CFO asks why this contract landed on their desk.

The companies with the strongest track records often face the most friction because they're not shiny enough to bet on and yet not big enough to feel safe. And so these stability questions arise when there’s no story to grab onto.

So what are the vendors still closing deals doing differently?

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The Vendors Still Winning Have Figured This Out

The companies closing deals in this environment aren’t just better at addressing questions about stability. They’re giving buyers a story that makes those questions secondary.

That story takes different forms across companies, but it always does the same thing: it gives the buyer something to say.

1. The Specialist. “They’re the only vendor that really understands our specific situation. They’ve worked with plans like ours for years. They know things the generalists don’t.” A buyer can walk into a room and say, “We’re going with the specialists,” and everyone agrees.

2. The Trusted Partner. “They’ve been with us for five years. They’ve never let us down. We trust them.” A buyer who says “we’re staying with the partner who’s earned it” doesn’t have to defend much.

3. The Insurgent. “Everyone else is going with the big incumbent, but we found a company that moves faster and treats us like we matter.” A certain kind of buyer wants to tell this story, the one who sees themselves as smarter than the crowd.

4. The Bet. “This is the company that’s going to change how this works. We got in early.” Not every buyer wants to tell that story, but the ones who do are your buyers if you’re early-stage.

And then there’s what happens when you don’t have a story at all.

5. The Non-Story. “They seemed competent, and their pricing was reasonable.” Nobody wants to say this out loud. It’s a default, not a choice. Defaults get second-guessed. Defaults invite questions about risk, because there’s nothing else to talk about.

Knowing which story is yours is the first step; the next is ensuring buyers can tell it.

The Story That Makes Scrutiny Irrelevant

Knowing your story matters, but only if you’re honest about whether you actually have one.

If you’re getting stuck on stability questions, the fix isn’t to give a better answer. The fix is giving buyers a story that makes those questions feel beside the point. That starts with clarity about what your story actually is.

Not your positioning statement. Not your value proposition. The actual story a buyer would tell to justify choosing you. If you can’t articulate that in a sentence, you have a problem that no amount of stability messaging will solve. You’re asking buyers to defend a choice they can’t easily explain.

Some questions to pressure-test whether you have a real story:

What would a buyer say when their boss asks, “Why this vendor?” If the answer is some version of “they checked all the boxes,” you don’t have a story. If the answer is “they’re the only ones who really get X” or “they’ve been our partner for Y years, and they’ve earned our trust” or “they’re building something nobody else is building,” that’s a story.

What’s the risk of not choosing you? If there’s no clear downside to going with someone else, your story isn’t compelling enough. The best stories have stakes. “If we don’t go with the specialists, we’re going to struggle with X.” “If we don’t bet on this now, we’ll be three years behind when it becomes standard.”

Who’s the buyer that wants to choose you? Not every buyer is your buyer. Some want the safe choice. Some want the innovative bet. Some want the deep specialist. Some want the proven relationship. If you’re trying to be acceptable to all of them, you’re not compelling to any of them.

Once you’re clear on your story, the work becomes making it easy to repeat. This is more literal than most vendors realize. You need to give buyers the actual words they’ll use when they’re justifying the decision internally. The best salespeople do this instinctively. They say things like “The way most of our customers explain it to their leadership is...” and then they hand the buyer a sentence. They make it easy. The buyer doesn’t have to invent the story, they just have to repeat it.

This shows up in how you talk about your company. Not features and benefits, but the narrative wrapper around them. “We’re the company that X,” (where X is something a buyer would actually say out loud).

It shows up in your materials too. Case studies that aren’t just about outcomes but about why the customer chose you. Quotes that articulate the story, not just the satisfaction.

And finally, it shows up in how you position against alternatives. Not “we’re better than them” but “here’s why a certain kind of buyer chooses us instead of them.” You’re helping the buyer see where they fit.

And yes, it shows up in how you address stability. But when you have a real story, stability becomes a supporting detail, not the main event. “We’ve been doing this for eight years, and our first customers are still with us” lands differently when it’s reinforcing a story about deep expertise or trusted partnership than when it’s the only thing you have to say.

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Building Your Story Based on Where You Sit

The specifics depend on whether you're a middle-stage or early-stage company.

If you’re in the middle and feeling the squeeze: The strategic question isn’t how to answer stability questions better. It’s how to build a story that’s worth telling.

• Narrow your focus. Become the obvious choice for a specific buyer segment rather than a reasonable option for everyone. The more specific your story, the easier it is to tell. Get detailed.

• Lean into longevity. Not just “we’ve been around” but “we’ve been your partner, we’ve earned your trust, we’re not going anywhere.” That’s a real story for buyers who value continuity over novelty.

• Go on offense against the incumbents. “The legacy companies are slow, they don’t care about you, they’re resting on their reputation. We’re the company that still shows up and is highly attentive.” You need to put that in your own words and show how you’re different, but it’s a story that resonates with buyers who feel underserved by larger vendors.

• Double down on existing customers. Expansion revenue, deeper relationships, proof points that compound over time. All of these help build the story (with evidence) as you pursue new logos.

The wrong move is trying to be a little bit of everything: Safe enough to not seem risky, innovative enough to seem current, specialized enough to seem expert, flexible enough to serve anyone. That’s not a story, that’s a hedge. And hedges don’t give buyers anything to say.

If you’re early-stage: Your story is the bet. That’s not a weakness to hide, it’s the whole point.

The mistake early-stage companies make is trying to seem safer than they are. They play up their funding, their advisors, their enterprise-ready features. They try to compete with larger vendors on stability. That’s the wrong game as you won’t “out-safe” the safe choice. The buyer who wants safety isn’t your buyer.

Your buyer is the one who wants to tell the story of making a smart bet. “We found this company before everyone else did. We got access to innovation that the big vendors can’t match. We took a calculated risk, and it’s paying off.”

That’s a story certain buyers want to tell about themselves. Your job is to find those buyers and make the bet feel worth taking. That means being clear about what they get by betting on you: speed, access, influence over the product, and a team that needs this to work as much as they do. And being honest about the risk while showing you’ve thought it through.

The stability questions will still come. But when the story is “we made a bet,” the stability conversation becomes “is this bet reasonable?” rather than “is this vendor risky?” That’s a much better conversation.

Be selective about where you make this case. If a buyer is clearly looking for the safest possible choice, you’re probably not going to win them over. Focus on buyers who are frustrated with incumbents, willing to move faster than their peers, or facing a problem that larger players aren’t solving well.

If you don’t have a good story yet: If that’s you, here’s the hard truth: the solution isn’t better messaging or more polished decks. The solution is strategic clarity about what you’re actually for and who you’re actually for.

That might mean making choices you’ve been avoiding. Picking a segment and letting others go. Taking a position that not everyone will like. Becoming known for something specific rather than being available for everything.

The stability question is a gift in that sense. It’s a signal that your story isn’t clear enough. It’s the market telling you that “pretty good at a lot of things” isn’t enough anymore.

The vendors who figure out their story will close more deals. Those who keep trying to answer the stability question without a story will keep getting stuck on it.

The paid section below is the execution layer. I’ll walk through what to say when buyers probe your financial health and how to recover when those concerns arise mid-deal, and you’re on the defensive.

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One year ago this week, I started the Upward Growth newsletter.

The consulting practice had already been running for over three years at that point, helping health tech companies think through positioning, sales strategy, and what it actually takes to grow in a market that doesn’t make it easy. The newsletter was an extension of that work. Both an outlet and a way to share what I was seeing beyond the clients I worked with directly.

Fifty articles later, the conversations the newsletter sparked proved more valuable than the writing itself.

Let’s face it. Health tech executives don’t engage publicly on growth challenges; not when competitors and investors are watching. Nobody’s commenting, “We’re struggling with exactly this,” on LinkedIn. But they email. They DM. They pull me aside at conferences. And in those private conversations, the same patterns kept surfacing. Different companies, different stages, different segments, but similar underlying problems.

What follows are six of those patterns. They came up so consistently this year that I stopped viewing them as isolated issues and spent time reflecting on what connected them. What I discovered is that each one is a different way that health tech companies avoid making hard choices about who they serve, what they’re willing to say no to, and what kind of company they’re actually trying to build.

These aren’t meant to be callouts. They’re meant to be useful. If you recognize your company in any of them, you’re not alone. And that recognition is the first step toward fixing it.

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1. Growth-Stage Companies Are Getting Squeezed and Don't Know Why

There’s a pattern in capital flows right now that should concern anyone in the growth stage.

Recently, it’s easier to raise pre-seed funding than Series B funding, as early-stage companies are bets on potential, with investors buying a vision, a team, and a market opportunity. But once you’ve been operating for a few years, you’re a known quantity. Investors can see your growth curve, retention metrics, and competitive positioning. And a lot of what they see is ambiguity.

At the other end, very large companies with proven economics continue to attract capital because the risk is lower. They’ve figured out their model. They can show the math.

As for mid-sized companies, many grew without locking in the fundamentals (who they’re for, what problem they solve, why they win), or have grown without reevaluating themselves and now find themselves stuck. Growth has flattened, and no one can quite explain why. The usual response is to blame sales execution or hire a new VP. But often the real problem happened earlier, when the company had the chance to make hard choices about focus and chose to stay broad instead.

That choice, to delay commitment, to keep options open, compounds over time. And by the time growth stalls, the window for easy correction has often closed.

2. Positioning Isn't Marketing and the Confusion Is Expensive

When I write about positioning, those articles consistently get less engagement than my articles about sales strategy or buyer psychology. Readers see the headline, assume it’s about messaging or brand, and move on. “Marketing handles that stuff. We’re covered.”

Except positioning isn’t messaging. Messaging is what you say. Positioning is the decision underneath that, like: who you’re for, what problem you solve for them, what you deliberately choose not to do. If you haven’t made that decision, your messaging is just words. You can spend all you want on campaigns and content, but without a clear position, you’re probably not going to see the results you were hoping for.

I regularly run an exercise with clients: pull up their homepage alongside four competitors, read them aloud, and ask whether anyone can tell the difference. Most of the time, you can swap logos, and nothing feels off. Everyone improves outcomes. Everyone reduces costs. Everyone serves health plans, providers, and employers because being specific feels like leaving opportunity on the table.

The companies that break through do something uncomfortable: they choose. They pick a segment and commit to it. They identify a specific problem and orient everything around solving it. They say no to opportunities that don’t fit, even when it’s painful.

That kind of focus is rare. Which is exactly why being clear about who you’re for becomes a competitive advantage. The bar is low, but clearing it requires making the hard calls that most companies keep deferring.

3. Vague Positioning Feels Safer But Kills the Deals You Should Win

The last section was about avoiding the positioning decision, and this section is about what that avoidance costs you in practice.

Here’s how the argument usually goes:

A company stays broad in its messaging because narrowing feels risky. What if a big opportunity comes along and we’ve positioned ourselves too small? What if they need something we didn’t emphasize? So the pitch stays generic. “AI-powered platform for improving outcomes” …which could describe anyone (in almost any industry).

Sure, you may get some meetings, but here’s what typically happens next:

The health plan can’t determine which specific problem your solution solves better than the others. And so, your internal health plan champion can’t articulate why you are better than your competition. Or your RFP response blends in with every other submission. Either way, you’re stuck in limbo for months.

Months later, the post-mortem attributes the failure to long sales cycles, budget freezes, or market uncertainty. But the real problem was at the start. Either this wasn’t the right fit, or it was, but no one could tell because the positioning was too vague to differentiate.

And the long-term damage is worse. Health plans remember who wasted their time. When the next cycle comes around, the vendors who were clear about what they did get invited back. The ones who were vague might not.

Simply put, staying vague isn’t a way to keep options open. It’s a way to make sure it’s harder for your best-fit clients to never find you.

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4. "AI-Powered" Stopped Meaning Anything a Year Ago

This is another version of the same avoidance, using a technology label instead of making a claim about what you actually do better than anyone else.

At some point, “AI-powered” stopped meaning anything. Every vendor uses it. Every pitch deck features it. Whatever signal it once carried has been diluted to zero.

Here’s a test I use: if a competitor achieved identical outcomes using a completely different approach, would your buyer care how you built it? Would they pay more for the AI version?

Almost always, the answer is no. They’d buy whoever gets them the result.

Saying “we use AI” is like a health plan saying “we use claims data.” Of course you do. The question is what you accomplish with it that matters to the buyer and whether you can prove it in outcomes they already track.

The vendors I see winning aren’t leading with technology. They’re leading with what the technology delivers: measurable cost reductions, quantified accuracy improvements, and specific outcomes tied to the problems health plans are already trying to solve. The AI is how they get there. But the AI isn’t the point.

Leading with a mechanism rather than an outcome helps avoid committing to a specific claim. Sure, it feels safer. But safe and forgettable often go hand in hand.

5. Warm Intros Help, But They're Not a Growth Strategy

The first four patterns are about avoiding hard choices in how you position and communicate. This one is about avoiding the hard work of building systems that don’t depend on your personal network.

Boards love this conversation. “We’ll grow through relationships.” “Our network will open doors.” “We just need the right introductions.”

And yes, a warm intro can compress trust and get you into rooms that might otherwise take months to access. In a market where attention is hard to earn, relationships matter.

But I keep watching companies use warm intros to avoid the harder work. If you can get introduced around your positioning problem, you don’t have to fix it. If every deal feels like a special case driven by a personal connection, you never have to ask whether your sales process actually works.

Warm intros feel capital-efficient (and boards love capital-efficient). But relationships don’t compound. They don’t scale. And they let you postpone building the systems that would actually allow you to grow on the merit of what you do, not who you know.

I’ve been asking for years: name a health tech company that reached $50M on warm intros alone. I’m still waiting. Referrals can supplement an engine. They aren’t the engine.

6. The CRO Role Has Become Nearly Impossible to Do Well

The previous patterns are about avoiding choices in strategy and positioning. This one is about avoiding a hard truth in how companies structure themselves, specifically the CRO, Head of Sales, etc.

Look at what the CRO role has become: sales strategy, pipeline generation, forecasting, hiring, coaching, comp design, pricing, competitive positioning, enablement, CRM operations, cross-functional alignment with marketing, product, and customer success. That’s seven or eight distinct functions, each requiring real skill and sustained attention.

Nobody can execute all of them well. But the role assumes someone should, and most CROs feel that admitting bandwidth constraints is seen as making excuses. So they spread thin, firefight constantly, and defer the strategic work that would actually fix root causes. And when growth stalls, the diagnosis is usually “we need a different CRO” rather than “we designed a job that can’t be done.”

The companies that figure this out don’t all solve it the same way. Some bring in outside help for specific areas, such as strategy or positioning. Others create internal roles that take ownership of functions like enablement or revenue operations. The right answer depends on stage, budget, and what’s actually breaking.

The common thread is honesty about what’s realistic. Right-size the role, then hold the person accountable for what they can actually do well.

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7. The Leaders Who Succeed See How the Pieces Connect

The six patterns above are all variations on the same theme: avoiding commitment, deferring decisions, and hoping that staying flexible will somehow be safer than getting specific.

But there’s a related pattern I see in how growth leaders think about their own roles, and it’s why this newsletter covers topics that might, at first glance, seem outside their lane.

Growth problems don’t stay contained in the sales org. A bad implementation process shows up as churn that kills your expansion revenue. A product roadmap that doesn’t align with what sales is promising creates objections that are hard to overcome. A poorly designed compensation plan drives your top performers out the door.

Treating these as “someone else’s department” is another form of avoidance. It lets you focus on your slice without taking responsibility for how the pieces connect.

The most successful growth leaders don’t think that way. They understand how the system fits together. They read about Medicaid dynamics even when they only sell to MA plans, because regulatory pressure migrates across programs. They pay attention to commercial trends because innovations there eventually get tested in government markets.

Growth is a system, not a department. Learning to think that way doesn't happen by accident. It's a choice to zoom out, to study how the pieces connect, to care about things that aren't technically your job. Those who make that choice tend to be much more successful and (at least me personally) more fulfilled by their work.

8. We All Have Front-Row Seats to Healthcare's Failures

The patterns above are all about business: positioning, process, structure. But there’s something else I’ve noticed this year that’s harder to quantify, but is vital to try to understand.

The industry has felt very different this past year, and I’ve been reflecting on what exactly feels so different.

Many people in this industry are watching the same thing play out in their own lives. Healthcare costs are climbing so fast that working people are gambling on going uninsured or cutting their medication doses in half to stretch a prescription. Adult children spending their weekends on hold with insurance companies, fighting prior auth denials for a parent’s medication that’s worked for years. Seniors are getting discharged from the hospital with instructions that no one explained and follow-up appointments that no one scheduled. People who work in health tech every day, posting on LinkedIn about terrible care experiences for themselves or the people they love.

We have front-row seats to how broken this is. And many of us are also the ones trying to hold it together for our families while we work on fixing it professionally.

I think that shared frustration is changing the atmosphere. There’s more generosity than pure competitive dynamics would predict. More “how do we actually make this work” and less zero-sum thinking. The business pressures are real, but beneath them, there’s a layer of people who genuinely want the industry to improve, not just their own company.

Year Two and What’s Next

Upward Growth has been a consulting practice for four and a half years. The newsletter (which shares the same name) started a year ago as an extension of that work. A way to share ideas more broadly, to start conversations beyond client engagements, to see what resonated.

Both sides have grown more than I anticipated.

The consulting work had a strong year. The newsletter opened doors I didn’t expect, like podcast invitations, guest writing requests, and conversations with people I’d admired from a distance. The two feed each other: the writing sharpens how I think about client problems, and the client work gives me something real to write about.

I’m building on that in Year Two of the newsletter. More reach for these ideas. More ways to participate in the conversation about how health tech companies actually grow. I don’t yet know exactly what form everything will take, but I’m paying attention to what the demand is telling me: there’s an appetite for candid discussion about strategic growth. The kind that goes deeper than pipeline hacks and campaign tactics.

If you’ve been here for much or all of this last year, thank you. You took a chance on something that didn’t exist yet, and the responses (private and public) shaped what this became.

If you’re newer, welcome! There are fifty articles in the archives to read through!

And as always, reply if something landed, or find me on LinkedIn. I read everything.

Year Two starts now.

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Last week, I published my year-end scorecard on the five trends I predicted for 2025. I got four right and one wrong. More importantly, the exercise clarified something about where this market is headed.

The through-line from 2025 could be distilled to health plans are de-risking their vendor relationships. And that isn’t changing heading into the New Year. However, the way that de-risking shows up in buyer behavior is still evolving. Because health plans aren’t just asking for more proof. They’re asking harder questions about which vendors will survive the next two years, which solutions address problems they’re required to solve versus problems they’d like to solve, and whether the ROI shows up in this contract year or depends on assumptions about next year’s Stars bonus.

What I’m seeing across dozens of sales conversations is that buyers now require a level of clarity most vendors aren’t providing. Clarity about what you solve. Clarity about who you serve. Clarity about what you can actually prove.

This article covers five trends that will shape the GTM environment in 2026. They aren’t predictions about what might happen. They’re patterns already underway.

Before I get into each one, here’s why they hang together and why you should read this regardless of what line of business you serve, or whether you sell to payors, providers, or employers.

Government-sponsored healthcare operates as an interconnected system, even when vendors focus on a single line of business. Regulatory pressure in one program often migrates to another. For example, buyer scrutiny that starts with Medicaid MCOs eventually shows up in MA plan procurement. And innovation that works in commercial self-funded employers gets tested in Medicare (And vice versa). If you only sell to MA plans, you still need to understand what’s happening in Medicaid and the ACA marketplace, because those dynamics travel. These five trends reflect that interconnection. Some will hit your business directly. Others will hit your buyers, your competitors, or your future market.

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Trend 1: Health Plan Buyers Are Asking New Questions About Vendor Stability

The headline numbers look healthy. Digital health VC hit $9.9 billion through Q3 2025, exceeding the same period last year. But beneath the surface, the market structure is shifting in ways that affect every vendor, regardless of stage or funding status.

The Series B market has collapsed. Only 30 companies reported Series B rounds through Q3 2025, compared to an average of 60 per year over the past three years. The median time between Series A and Series B has increased to 27 months, up from 17 months two years ago. Meanwhile, mega-rounds are concentrating capital among a smaller number of well-funded winners, and 35 percent of 2025 rounds are “unlabeled,” often signaling companies that raised at pandemic valuations and now need cash but can’t justify a priced round.

Here’s why this matters even if your own funding situation is stable: health plan buyers have noticed. They’ve been burned by vendors that folded mid-implementation or couldn’t invest in product improvements after the initial sale. Procurement teams are asking harder questions about financial stability. RFPs increasingly include requirements around runway and funding status. The due diligence that used to focus on clinical outcomes and integration capability now includes a serious look at whether you’ll still be operating in two years.

This dynamic creates both risk and opportunity. If you’re well-funded, you can win deals partly by emphasizing stability and long-term partnership when competitors can’t credibly make that case. If you’re at an earlier stage or navigating a difficult fundraising environment, you need to proactively address buyer concerns about durability before they become objections. That might mean highlighting capital efficiency, customer retention, or strategic backing. It might mean being selective about which deals you pursue, so you’re not overextending. The worst response is to ignore the concern and hope buyers don’t ask.

The broader point is that the funding environment has changed buyer psychology. Health plans are thinking about vendor risk differently than they were two years ago, and your GTM needs to account for that regardless of where you sit in the funding landscape.

Trend 2: Prior Auth Compliance Creates a Finite Buying Window

Most regulatory deadlines don’t create true forcing functions. Compliance timelines slip, enforcement is inconsistent, and buyers find workarounds. But occasionally a deadline arrives with enough weight to create a genuine must-buy moment, and every vendor should understand how to recognize and position around these windows, whether the regulation touches their business directly or not.

Prior authorization in 2026 is a clear example. The CMS Interoperability and Prior Authorization Final Rule requires Medicare Advantage plans, Medicaid, and CHIP to implement a FHIR-based API for prior authorization by January 1, 2026. Plans must allow providers to query PA requirements and submit requests electronically. Expedited decisions must happen within 72 hours, standard decisions within 7 days. Specific reasons for denials must be provided through the API.

What makes this a real forcing function rather than another deadline that slips? CMS has signaled serious enforcement. Plans have internal pressure beyond regulatory requirements, since prior auth is one of the most complained-about aspects of health insurance. The technical lift is real, and build-versus-buy timelines favor buying for anything going live in 2026. Prior auth automation investment grew 10x year over year in 2025. Plans are moving.

If you’re a prior auth solution provider, this is your moment, and your 2026 pipeline should reflect that. But even if prior auth isn’t your core business, the dynamic matters. Adjacent vendors in care management, utilization management, and provider engagement can identify integration opportunities to ride the compliance spending wave. Platform and data companies can position themselves around the new data flows these APIs create. And every vendor can learn from watching how this plays out: which companies captured the window, which missed it, and what set them apart.

Regulatory forcing functions are rare. When they happen, they reward vendors who recognized the moment early and positioned themselves accordingly.

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Trend 3: Policy Chaos Is Splitting Health Plan Buyers Into Three Camps

Health plan buyers are under financial pressure across every line of business right now. But they’re not all responding the same way. What I’m seeing is that buyers are splitting into three distinct camps based on their financial position and risk tolerance, and most vendors aren’t qualifying for these differences.

Defensive buyers are pulling back on anything discretionary. These are plans with thin margins, recent losses, or direct exposure to policy changes that threaten their economics. If your product doesn’t address a regulatory requirement or an immediate cost crisis, you’re deprioritized. They’re not taking meetings on “nice to have” solutions.

Opportunistic buyers are doing the opposite. Plans with strong balance sheets and growth ambitions see this as a chance to gain ground while competitors are frozen. They’re accelerating investments in member acquisition, retention technology, and operational efficiency. These buyers are moving faster than normal because they’re playing offense, while others are playing defense.

Compliance-driven buyers continue to purchase regardless of conditions. Prior authorization deadlines, interoperability requirements, and quality measure performance don’t pause for policy uncertainty. If your solution addresses a regulatory must-have, these buyers are still active.

The pressure creating this segmentation is real and widespread. Medicaid is facing $1 trillion in federal funding cuts from the recently passed reconciliation bill. MA plans are navigating margin compression, benefit pullbacks, and market exits. Commercial plans are bracing for cost increases not seen in 15 years. And in the ACA marketplace, 22 million Americans face premiums that could double after enhanced subsidies expired at year-end. A discharge petition will force a vote on a three-year extension in January, but the outcome remains uncertain.

If your primary market is Medicare Advantage, you might wonder why ACA or Medicaid dynamics matter to you. They matter because (as we said earlier) the financial pressure in one line of business often changes how a plan operates across all of them. A plan losing money in Medicaid may tighten vendor budgets enterprise-wide. A plan exiting the ACA markets may redirect resources to MA. The buyers you’re calling on are often making decisions in the context of their entire book of business (or at least their entire budget), not just the segment you sell into.

Your 2026 pipeline includes all three camps of buyers, so make sure you’re addressing them uniquely. The qualification question that matters most right now: “How is your organization responding to the current policy environment? Accelerating or pulling back?” That single question tells you which camp you’re selling into and whether the deal is worth pursuing on your current timeline.

Trend 4: Healthcare Costs Are Pushing Employers to Buy Differently

Every working American is talking about rising healthcare costs. Premiums are climbing. Deductibles are climbing. And employers, who cover the majority of insured Americans through self-funded plans, are feeling the pressure acutely. Group health plan costs are projected to rise 8 to 9 percent in 2026, the steepest increase in over a decade.

This pressure is driving employers to look beyond their traditional health plan relationships for solutions. Sixty-three percent of covered workers are now in self-funded plans, in which employers bear the risk directly. Seven percent of firms with 50 or more employees contract directly for primary care services outside their health plan networks. Thirty percent have contracts for virtual primary care. ICHRA adoption has increased 1,000 percent since 2020, with projections for 5.8 million covered lives by 2026.

For health tech vendors, this raises a strategic question many are debating: Should we expand from selling to health plans to selling to employers, or vice versa?

The answer isn’t obvious, and it depends on your product, your sales motion, and your willingness to build for a different buyer. Health plan buyers and employer buyers operate on different priorities, different timelines, and different proof points. Health plans care about PMPM cost, MLR, Stars scores, and regulatory compliance. Employers care about total benefits spend, employee satisfaction, and retention. Health plans have multi-year contract cycles and complex decision committees spanning clinical, network, IT, compliance, and finance. Employers often move faster but renew annually, and decisions typically run through HR and finance.

Vendors who try to sell to both channels with a single GTM motion usually underperform in both. The sales cycles and the proof points are different. And the decision-makers care about different things. A vendor who walks into an employer meeting with health plan collateral, talking about HEDIS measures and Stars performance, is speaking a language the buyer doesn’t use. The same is true in reverse: an employer-focused vendor that tries to sell to an MA plan without understanding how MLR pressure and risk-adjustment economics shape purchasing decisions will lose to competitors who do.

The question isn’t whether employer revenue is attractive. It’s whether you’re willing to build a second GTM motion, with dedicated positioning, dedicated proof points, and potentially dedicated sales resources, or whether you’ll accept underperforming in the channel you’re not designed for. From my experience, half-committing usually produces worse results than picking a lane and going all-in.

But even if you’re not planning to expand into a new channel, understanding these dynamics matters. Healthcare is consolidating and converging. M&A happens, and suddenly you need to know how the other side of the market works. Finally, career opportunities emerge in adjacent spaces too, and so the more you understand about how healthcare costs flow through the system, the more future job opportunities you’ll have open to you.

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Trend 5: Outcomes Claims Without Reproducible Evidence Are Getting Ignored

Health plan CFOs have become the hidden gatekeepers for vendor decisions. Clinical champions still matter, but finance increasingly controls whether deals move forward. And CFOs evaluate outcome claims differently from clinical buyers.

The problem is that most vendors are still leading with outcomes narratives rather than outcomes evidence. “We improve medication adherence.” “We close gaps faster.” “We reduce avoidable utilization.” These claims have become so common that they’ve lost meaning. When every vendor says some version of “we improve outcomes,” buyers stop hearing it.

What I’m seeing in competitive deals is that winners have shifted from narrative to evidence. Not “we improve adherence” but “12 percent reduction in 30-day readmissions for CHF patients in a 50,000-member MA population, measured via claims data over 18 months, validated by an independent actuarial firm, and replicated across three implementations.”

That level of specificity is what CFO scrutiny now requires. Defined population. Clear timeframe. Transparent methodology. Statistical validity. Reproducibility across multiple customers.

The Hinge Health and Omada Health IPOs earlier this year illustrate what this looks like at scale. Both companies spent over a decade building clinical evidence before going public. Their outcomes claims weren’t marketing. They were validated, reproducible, and sufficiently specific to withstand investor due diligence and public-market scrutiny.

You don’t need a decade and hundreds of millions in funding to start building an evidence stack. But you do need to treat outcomes measurement as infrastructure, not an afterthought. That means consistent methodology across implementations, tracking the same metrics the same way, so results are comparable. It means being honest about what you can prove and what you can’t, rather than overclaiming and hoping buyers don’t ask hard questions. And it means investing in data pipelines and validation relationships that enable you to generate credible evidence over time. I’ll go into more detail on how to build this in the coming weeks.

The gap between vendors with this evidence and those without is widening. Buyers have seen too many one-off results that don’t replicate. Single case studies might generate interest, but reproducible evidence is what closes deals.

Final Thought

2025 was about health plans de-risking their vendor relationships. 2026 is about what happens after the bar has been raised. Buyers are now screening vendors for financial stability before evaluating your product. Regulatory windows are compressing timelines and concentrating spend. Policy chaos is segmenting buyers in ways that break one-size-fits-all sales motions. The employer channel is demanding its own GTM, not a repurposed health plan pitch. And outcomes claims that worked three years ago are getting ignored because everyone makes them, and no one can prove them.

These aren’t five separate challenges. They’re five angles on the same shift: health plan and employer buyers are making fewer bets, and the vendors who win those bets will be the ones who’ve done the positioning, qualification, and evidence work before the conversation starts.

Over the next several weeks, I’ll go deeper on each trend. How to position around it, how to sell into it, and what vendors who are getting it right are doing differently.

A personal note: This is the last Upward Growth article of 2025. I’ve published every Tuesday since mid-January, and so I’m taking next week off to recharge (no article) before Year Two kicks off on January 6th, 2026.

Finally, two requests have come up repeatedly over the past few months:

1. Audio versions of these articles - something you can listen to in the car or at the gym instead of reading.

2. A podcast or video format - with more commentary on current events and what they mean for health tech growth strategy.

I’m seriously considering both. If you have thoughts on what you’d want from either format, reply to this email or reach out on LinkedIn.

Thanks for reading this year. See you in 2026! 🎉

Ryan Peterson
Principal
Upward Growth

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A year ago, I published five healthcare trends to watch in 2025, based on shifts I was seeing in real conversations with health plan buyers, patterns emerging from dozens of sales cycles, and signals I thought would define how health tech companies win (or lose) deals in the year ahead.

I wrote an article on each one throughout January 2025, highlighting what vendors, investors, and health plans should focus on as they navigate the following areas:

1. Data security as a competitive advantage
2. Interoperability as a backbone
3. Advanced risk stratification and predictive analytics
4. Social determinants of health (SDoH)
5. Value-based care driving innovation

Now it’s December, and I owe you a scorecard.

This isn’t a comprehensive recap of everything that happened in health tech this year (that would be a book, not an article). Instead, I’m revisiting each trend with a few key highlights that either validated the direction I was tracking or forced me to rethink the thesis entirely.

As you can imagine, some landed exactly how I expected. Others played out differently than I anticipated. And regulatory shifts entirely reversed one I didn’t see coming, which was a strong reminder that in healthcare, CMS can change the game overnight.

So here’s the honest assessment: what held up, what didn’t, and more importantly, what each trend revealed about where health plan buying behavior is actually headed in 2026.

Trend 1: Data Security Becomes a Competitive Advantage

What I said: Data security would shift from a compliance checkbox to a competitive differentiator. Plans and vendors who led on security would build trust and win business.

What actually happened: 2025 proved it. Not just because the breach environment stayed brutal (the first half of 2025 alone saw major breaches at Yale New Haven, DaVita, Frederick Health, and McLaren), but because buyer behavior actually changed.

A Ponemon Institute study found 44% of healthcare organizations experienced a third-party breach in the past 12 months. After Change Healthcare exposed the risk of single-vendor concentration, buyers began asking different questions. Not “show me your SOC 2,” but “what happens to my operations if you go down?” KLAS research confirms third-party risk management is now the top cybersecurity investment priority for healthcare organizations over the next two years.

HITRUST certification became table stakes. If you’re selling to health plans or provider organizations without it, you’re frankly starting the conversation at a disadvantage. HITRUST’s data show that fewer than 1% of certified organizations reported breaches in the past two years.

In June 2025, the FDA issued final guidance on medical device cybersecurity, clarifying that if your device contains software, cybersecurity requirements apply. No more arguing your product doesn’t qualify as a “cyber device.” This changes procurement conversations for any vendor touching clinical workflows.

Verdict: ✅ Right, and buyers have changed how they are selecting vendors.

What this means for 2026: Security isn’t just table stakes for survival. It’s a sales accelerator for vendors who can prove it. The vendors winning deals in 2025 weren’t just avoiding breaches. They leveraged certifications and a documented security posture to shorten sales cycles and displace competitors unable to offer the same assurances.

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Trend 2: Data Interoperability Becomes the Backbone of Healthcare

What I said: CMS regulations would force the industry to prioritize interoperability. The winners wouldn’t be organizations that simply moved data across the ecosystem. And the competitive advantage would come from making sense of fragmented, unstructured information and turning it into actionable insights.

What actually happened: The regulatory push continued, but a voluntary industry movement surprised me.

TEFCA has expanded significantly, and eleven data exchanges now hold Qualified Health Information Network status, more than double the number when TEFCA went live in late 2023. CMS finalized rules requiring payers to implement FHIR APIs for prior authorization by January 2026 and additional APIs by January 2027.

But the bigger story was the Trump administration’s “Making Health Tech Great Again” initiative in July 2025. More than 60 providers, payers, and software companies made voluntary commitments to a new CMS Interoperability Framework. The framing from CMS was explicit: “This is a movement, not a mandate. It is a call to action, not a regulation.” There was plenty of debate about which organizations were (or weren’t) included from the industry, but for now, the focus should be on the initiative and CMS's stance, as it’s a meaningful shift in how interoperability is advancing (voluntary alignment vs. regulatory mandate) and signals how this administration approaches healthcare technology policy.

Verdict: ✅ Right on the direction (but honestly surprised by the mechanism).

What this means for 2026: Vendors positioned around “CMS requires this” have a weaker story than those positioned around “this is where the industry is moving, regardless of regulation.” The interoperability conversation is shifting from compliance deadlines to operational efficiency and competitive advantage.

Trend 3: Advanced Risk Stratification and Predictive Analytics

What I said: AI and machine learning were becoming table stakes, but the real value would come from how health plans and vendors used these tools to identify risks, prevent costly interventions, and improve outcomes. I warned that AI was being commoditized by loud marketing with little application (more on this near the end of the article).

What actually happened: The investment thesis played out, and my commoditization warning proved accurate.

Healthcare AI spending hit $1.4 billion in 2025, nearly tripling 2024’s investment, according to Menlo Ventures’ annual State of AI in Healthcare report. The industry is now deploying AI at more than twice the rate of the broader economy, with 22% of healthcare organizations implementing domain-specific AI tools (a 7x increase over 2024).

But here’s what matters: the dollars are flowing to specific categories with measurable ROI, not to generic “AI-powered” platforms. Ambient clinical documentation captured $600 million (reducing physician burnout), and coding and billing automation captured $450 million (recovering revenue lost to errors and denials). Prior authorization automation grew 10x year over year. These aren’t moonshot bets. They’re solutions to operational pain points that CFOs can quantify.

Abridge is a good example of what this looks like in practice. They raised $550 million across two rounds in 2025, bringing their valuation to $5.3 billion. But the number investors are watching isn’t the fundraising, it’s that over 90% of clinicians who start using their platform continue using it. Retention, not the underlying technology, is what’s driving the valuation.

The common thread? These companies aren’t selling AI. They’re selling time back to clinicians, faster clean claim rates, and more accurate risk capture. The AI is the engine, not the product.

Meanwhile, the market remains flooded with “AI-powered” claims that don’t address the problems they’re meant to solve. For every company with real traction, there are a dozen pitching vaporware wrapped in buzzwords. More on this below.

Verdict: ✅ Right.

What this means for 2026: The practical AI companies (ambient documentation, revenue cycle automation, care management workflows) are pulling away from the “AI for AI’s sake” crowd. If your pitch deck has “AI-powered” on the cover and outcomes data is not front and center, you have it backwards. Plans are buying solutions to problems, not technology for technology’s sake. Lead with the problem solved and the outcomes documented. Bury the AI jargon.

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Trend 4: Addressing Health Equity Through Social Determinants of Health

What I said: Health plans would embrace SDoH as a core strategy, driven by the financial reality that unaddressed social factors drive avoidable utilization. CMS was pushing screening requirements, new reimbursement models, and data-sharing initiatives. The organizations that moved beyond screening to intervention would lead.

What actually happened: The need for addressing social determinants hasn’t gone anywhere. If anything, it’s more urgent than ever. But the regulatory momentum I was counting on? CMS reversed course.

There was some movement. CMS increased severity-level designations for inpatient encounters with housing insecurity Z-codes, resulting in higher reimbursement for plans serving members with documented social needs. But that was the exception, not the rule.

The broader regulatory momentum I expected didn’t materialize. CMS proposed significant rollbacks to SDoH and equity-related reporting requirements across inpatient settings, framed as reducing provider burden. Four SDoH-related quality measures will become optional in 2025 and phased out entirely by 2028. The Health Equity Index (also known as EHO4all), which would have created explicit financial incentives for plans serving underserved populations, was scrapped in the CY2027 Proposed Rule.

Verdict: ❌ Wrong. I did not see the regulatory reversal happening this year. (I assumed the renaming of HEI to EHO4all was the only change that would occur.)

What this means for 2026: Vendors whose SDoH pitch centers on “CMS requires this” are repositioning. Vendors who built around “this reduces readmissions and protects margin” are better off. And at least in the short term, the compliance-driven buyer for SDoH solutions has largely disappeared (the ROI-driven buyer didn’t). That changes who you’re selling to (finance and medical economics teams, not just quality and compliance) and how you position (cost avoidance and outcomes, not regulatory checkbox). If your SDoH value prop was anchored to the Health Equity Index bonus, you need a new story fast.

Trend 5: Value-Based Care Drives Innovation

What I said: Value-based Care (VBC) would reach a critical turning point, with CMS and payors accelerating the shift to address a growing and aging population with fewer resources. The real winners would be those who operationalized VBC effectively, not just participated in programs.

What actually happened: The momentum continued and accelerated.

As of January 2025, 53.4% of people with Traditional Medicare are in an accountable care relationship with a provider. 14% of nationwide provider reimbursement is now tied to delegated or capitated risk models, double from three years prior. Over 60% of health organizations surveyed expect higher VBC revenue this year.

The Hinge Health and Omada Health IPOs validated that outcomes-based, tech-enabled care models can reach public markets. Hinge opened 23% above its IPO price. Omada opened 21% above. Both companies spent over a decade building clinical evidence and operational maturity before going public.

Verdict: ✅ Right.

What this means for 2026: VBC is no longer optional or experimental. The math will continue to force it. But the vendors winning aren’t promising to “enable value-based care.” They’re showing documented cost savings in current contract years, not projections dependent on future Stars bonuses or risk adjustment settlements. CFOs are funding certainty, not potential. If your ROI story requires waiting 18 months for a Stars bonus to show returns, you’re losing to competitors who can demonstrate impact in the current contract year.

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A Note on AI: Why It Wasn’t a Standalone Trend

You’ll notice AI wasn’t one of my five trends. That was intentional, and perhaps the most significant misunderstanding I’m seeing in our industry.

AI is a tool, not a product. It’s a capability that can accelerate everything I wrote about (security, interoperability, risk stratification, SDoH, VBC), but it’s not a category unto itself. Companies treating AI as the headline rather than the capability are losing positioning ground to competitors who lead with outcomes.

I recently spoke with an investor at a massive firm about the AI landscape in health tech. I told him, “I’ve never seen a bleeding-edge innovation become commoditized faster than AI has. I mean, everyone says they use AI, but few are talking about the problem they’re now solving better or faster because of it.”

He agreed immediately that he sees countless pitches weekly, ranging from Stealth-mode companies to Series C health tech orgs. And that’s a big issue.

When every vendor claims “AI-powered,” the term means nothing. It’s table stakes, not differentiation. The massive missed opportunity is that most vendors are talking about the road (AI) when they should be talking about the destination (reduced clinician burnout, faster prior auth, fewer readmissions, better gap closure).

Look at the companies actually winning: Abridge doesn’t lead with “we have AI.” They lead with “we give clinicians two hours back per day.” The AI is how. The two hours are the why. That distinction is everything, and most vendors have it backwards.

If your 2026 positioning leads with AI, you’re competing on a feature that everyone claims to have and that buyers can’t differentiate. If you lead with the problem solved and the outcomes documented, you’re competing on value. That’s the difference between a demo and a deal.

Final Thought

The through-line across all five trends is this: health plans are de-risking their vendor relationships.

Security posture is getting vetted before the first demo even happens. Solutions that plug into standardized infrastructure are winning out over proprietary silos. Buyers are asking for retention data and documented outcomes instead of roadmaps and projections. Business models need to hold up even when CMS changes direction mid-year. And the companies that have already proven they can operate at scale are the ones actually getting the contracts.

This isn’t pessimism. It’s what I’m hearing in every buyer conversation I have. The vendors who understood this in 2025 built pipeline. Those who kept pitching innovation and disruption without proof continued to watch their deals stall.

Next week, I’ll publish my five trends to watch for 2026, informed by what actually happened this year rather than what we hoped would happen. If you’re not already subscribed, now’s a good time.

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