Medicare Advantage’s Reset: What Vendors Need to Get Right
Market exits, benefit redesigns, and tougher vendor scrutiny are reshaping the field. Here’s what to do about it.
The Reset Happening Inside Medicare Advantage
Over the past two months, the exit or pullback of national health plans from certain Medicare Advantage (MA) markets has become one of the most common concerns shared with me. CEOs are wondering how this will affect growth. Investors are asking whether forecasts need to be cut or deals delayed. Sales leaders are anxious about having fewer plans to sell into. Overall, the industry conversation has been dominated by questions about what these moves signal for MA’s future.
The speculation usually falls into two camps: either this is the start of a broader retreat from MA, or it’s just a temporary blip. Both frames miss the reality. The exits are real, but they represent a familiar cycle: carriers tightening portfolios, resetting pricing, and focusing on profitability before the next phase of growth.
If you’ve been around, you’ll recall we’ve seen this before in government-sponsored coverage, most notably in the ACA individual market in 2014–2015 (and MA itself went through a similar reset in that era, too). The pattern is consistent: this is correction, not collapse. In each case, carriers pulled back when margins tightened, then re-entered stronger once pricing, risk models, and benefits realigned. The cycle reset the market but did not end it.
This article is written for vendor leaders who need to separate headlines from fundamentals. My goal is to explain why the pullbacks are happening, what they mean for MA’s long-term health, and how vendors should adjust their sales and growth strategies in the coming 12–24 months.
Why Health Plans Are Exiting and Retrenching in MA Markets
To understand why national carriers are exiting or retrenching in certain MA markets, it helps to stop thinking of it as a healthcare issue and instead look at it as a business margin problem. When the revenue side of the P&L is squeezed and the cost side keeps rising, leaders prune. That is what is happening here.
On the revenue side, CMS’s risk adjustment model (v28) reduced payments in many geographies, especially for complex, high-utilization members. At the same time, Stars bonuses, another major revenue lever, have been harder to secure, with fewer contracts earning 4+ Stars in the last two years. When both risk and quality are under pressure, plans lose the two main offsets that usually cushion medical cost growth.
On the cost side, medical expenses are still rising faster than plan benchmarks in many counties. In rural or low-density geographies, the math no longer works: the reimbursement does not cover the claims unless a plan is consistently hitting bonuses. Add in drug benefit changes from the Inflation Reduction Act, and certain MA-PD products have tipped from marginally profitable to consistently negative.
This combination leaves carriers with a clear decision: trim underperforming contracts and focus resources where the economics are more predictable. It is the same playbook a private equity firm would use inside a portfolio company. You don’t shut the company down. Instead, you cut the divisions that are dragging down margins, allowing the core business to stabilize and grow again.
For vendors, the message is simple but essential: this is not just about risk adjustment coding firms losing contracts. When both Stars and RAFs are harder to achieve, every category of spend tied to quality, utilization, and revenue capture is under sharper scrutiny. If your solution cannot demonstrate points gained in Star Ratings, closed care gaps that drive risk revenue, or reductions in avoidable admissions and ED visits within the current plan year, it will be dropped by existing clients and passed over by new ones than can.
The Health of the MA Market and Why It Matters to Vendors
Headlines about exits are loud, but the fundamentals of Medicare Advantage are still strong. Enrollment continues to rise, with more than half of eligible seniors now in MA rather than traditional Medicare. This is a multi-year trend with strong demand. Politically, MA has support from both parties, making it one of the few health programs unlikely to be rolled back regardless of which way Washington leans. And in April, CMS finalized a 5.06 percent increase in MA payments for 2026, which equates to roughly $25 billion in added budget capacity across the industry.
Those policy facts matter because they are the same ones your board members and investors are reading in trade press and regulator releases. The job of a CEO or CRO is not just to know these industry impacts, but to help translate them into business terms.
For example, if we translate the first paragraph in this section: Enrollment growth means the denominator is getting bigger: more members needing gap closure, more spend flowing to vendors who can reach them. Bipartisan support means low political risk and stable long-term budgets. The 2026 rate increase means buyers will have more money to deploy in less than 18 months. All are proof that MA is being funded for growth, not contraction.
This is the script to carry into the boardroom. When an investor asks if MA is still worth betting on, you can point to that 5 percent increase already locked in. It’s not forecasted upside. It is appropriated dollars, waiting to be deployed.
This framing changes the conversation. Instead of debating whether MA is “in trouble,” you can tell stakeholders the real story: the category is stable, demand is rising, and plans are under temporary margin pressure that creates an opening for vendors who can prove value. That gives your board a reason to stay confident in your strategy and gives investors a reason to stay patient through a slower sales cycles.
It also sets the tone inside your company. Sales and Customer Success teams often view take this news as lost opportunities. What they need to understand is that members do not leave MA when a plan exits, rather, they shift to other carriers who still need Stars bonuses and risk revenue to compete. Those buyers may be fewer in number, but they are just as motivated, and in many cases, more selective about partners.
Perhaps, the better analogy here is not recession-proofing. It is capital allocation. Airlines don’t abandon air travel when they cut unprofitable routes; they consolidate flights to profitable hubs, and traffic still grows through those hubs. Large corporations don’t shutter entire industries when they exit underperforming lines; they double down where returns are highest. MA carriers are doing the same with counties and products. The category is not shrinking. It is consolidating around profitability, and that favors vendors who can prove financial impact within a single plan year.
For vendors, that message needs to land in two places:
In the boardroom: “This is not about whether MA is shrinking, it is about whether we are positioned as the type of partner plans still fund in a tighter cycle.”
In the field: “Exits don’t erase demand. Members still need gap closure and quality lift; they just flow to fewer plans. Our job is to be indispensable to those plans.”
How Health Plan Market Exits Are Raising the Bar for Vendors
When health plans pull back, the market doesn’t shrink as much as it sharpens. What’s left flows to the vendors who save money fast or deliver undeniable results.
Further, the remaining plans carry heavier pressure to deliver Stars gains, protect risk revenue, and contain medical costs. That pressure changes how they evaluate vendors. Sales cycles lengthen, procurement tightens, and CFOs weigh in earlier on vendor review. It’s no surprise, that every solution now has to prove it earns a place on the margin line.
For health tech vendors, three shifts define the new landscape:
Cycles stretch, but they still close. More diligence, more steps, harder ROI scrutiny. Deals move if you can show results this plan year. This is true across Star ratings, risk revenue, or avoidable admissions.
Decisions move higher. Authority is consolidating. CFOs and COOs want scale and clear financial impact. Your story has to speak their language: revenue protected, spend reduced, bonuses earned. And be ready to pull your exec team into deals earlier and more often, with a sharp message that proves your value and ability to deliver.
Winners stick. As markets concentrate, clearing the higher bar locks you in. Once a plan sees you as essential to performance, they’re less likely to churn.
Think of it as a barbell market. One end is commodity services squeezed for price. The other is strategic solutions defended by direct margin impact. The middle is where vendors get stuck: too expensive to be seen as pure cost-savers, but not differentiated enough to be indispensable growth partners. Vendors who can’t articulate a crisp value proposition risk being stranded there.
Five Strategic Moves Vendors Must Make to Stay Aligned With Health Plans
If the market is a barbell, then the next year is about moving decisively to the weighted ends. Vendors that treat 2025 as a positioning year will come out stronger; those that play it safe in the middle will drift.
That doesn’t mean doing everything at once. It means focusing on the handful of moves that actually shift how plans view you. I’d suggest you focus on these five:
Re-prioritize your targets
Use CMS landscape files to spot plans that added counties or benefits in 2025. Double down on SNP-heavy portfolios, which tend to be insulated from cutbacks and have clearer ROI drivers.Protect defensible budgets
Anchor your offering in categories tied to quality bonuses, risk adjustment revenue, or compliance. These buckets are the least likely to be trimmed as spend is scrutinized.Refocus your proof
Tie outcomes directly to Stars, risk score accuracy, and avoidable utilization (all metrics that plans track in real time). And replace any generic “feature-rich” messaging with messaging tied to immediate and proven value in the current plan year.Accelerate time-to-proof
Establish a clear baseline immediately using retrospective claims or quality data. Re-run at day 90 against agreed go/no-go criteria. The faster you surface undeniable results, the faster you get locked in as essential.Reduce adoption friction
Plans don’t have patience for heavy lifts right now. The easier you are to stand up, the faster you move from “interesting” to “essential.” Strip away integration headaches, meet them where they work today, and prove value without asking for more than they can give.
The throughline across these moves is speed and defensibility. In a barbelled market, you don’t win by spreading out, you win by proving you belong on the heavy end.
Final Thought
The seismic chatter around Medicare Advantage has created a sense of uncertainty, but stepping back, the picture is clearer: this is a recalibration, not a retreat. Plans are defending margins, aligning benefits, and tightening the standards for outside partners.
For vendors, the market is splitting. Incremental tools and nice to haves are getting squeezed. Solutions that can prove hard value like revenue impact, Stars gains, or avoided costs are gaining ground. Where you land depends entirely on whether you can show measurable outcomes tied to plan incentives.
This is a time of reinvention for Medicare Advantage itself, for the health plans reshaping their strategies, and for the vendors rewriting their value. That reinvention is what makes this moment exciting: MA remains one of the strongest growth engines in healthcare, and the companies that adapt now will be the ones setting the pace for the decade ahead.
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