MedPAC's June Report: How Health Plans Are Buying Differently in 2026

MedPAC's June 2026 report to Congress dropped on June 15 and attached $22 billion in higher-than-justified Medicare Advantage payments in 2026 to coding intensity alone. The same report documented $23.7 billion in improper MA payments for fiscal year 2025 and endorsed a federal role for technology in fixing Medicare enrollment, in the same chapter that flagged the broker channel as part of the problem the technology is meant to solve.

In this episode of the Upward Growth Podcast, Ryan Peterson walks through how the three MedPAC findings change the procurement conversation inside MA plans for the rest of 2026. The episode goes past the article to spend time on why the risk adjustment buyer profile has shifted on both sides of the CMS intensity adjustment, what the WISeR Model means for the AI utilization management category, and three live questions over the next 90 days that will shape what plans buy in 2027. Vendors hear which version of the buyer they're actually selling to. Investors hear which sub-segments of the MA market and which vendor categories are getting repriced. Health plans hear how the report sorts their peers and what their procurement counterparts are now being asked to defend.

What you'll hear:

• Why MedPAC's three findings, read as one document, change who the buyer is inside the plan for risk adjustment, utilization management, and member experience
• How the half of MA plans coding above the CMS intensity adjustment and the half coding below it are operating differently in 2026
• Why compliance, legal, and the CFO are now at the risk adjustment vendor table on both sides of that line
• What the WISeR Model means for the AI utilization management category, now that CMS itself is the buyer under a shared-savings contract
• How the June 17 CMS guidance memo on the 2027 Quality Bonus Payment ratings reshapes the ROI conversation around member experience investments
• Three things to watch over the next 90 days: the CMS appeal on Clover, the eviCore strategic review outcome, and the RADV extrapolation methodology

Read the full analysis in the Upward Growth newsletter: Three Things MedPAC Just Told Congress That Will Change What Health Plans Buy

About Upward Growth: Upward Growth is a health plan market advisory firm. We work with health tech vendors, investors, provider organizations, and management consultancies on how health plans actually buy, operate, and make decisions. 

Subscribe to the newsletter: https://upwardgrowth.substack.com/

Connect with Ryan on LinkedIn: https://www.linkedin.com/in/ryan-peterson-1a20866/

Learn more about Upward Growth: https://www.upwardgrowth.com

Transcript

SPEAKER_00 0:33

Hey everyone, welcome back to the Upward Growth Podcast. This is episode three. Today's episode pairs with the article that published Tuesday, June 23rd called Three Things MedPack Just Told Congress That Will Change What Health Plans Buy. And it's up on our Substack at Upwardgrowth.substack.com. So MedPak's June report to Congress dropped on June 15th, and there's three findings inside that could change which version of the MA buyer you're actually talking to for the rest of 2026. Background on MedPAC briefly. The Medicare Payment Advisory Commission is an independent body Congress chartered in 1997 to do the technical analysis on Medicare that CMS doesn't have the bandwidth to do. They provide two reports to Congress a year, one in March and one in June. Now, while the recommendations are not binding, they are often adopted at a high rate because Congress and CMS treat the work as the closest thing to a neutral technical read on what's working and what isn't. If you need a sense of the track record, MedPack is the reason site neutral payment policy exists. The reason the old Medicare sustainable growth rate formula finally got killed, and the reason the MA coding intensity adjustment is in the program at all. When they drop a report, it's definitely worth reading. One thing worth saying before I get into the findings, this June report runs over 300 pages and covers Medicare across the board. So hospital, post-acute care finances, hospice access, all of that's in there. So if you sell the health plans and you're short on time, the chapters worth your attention are the first three. Chapter one covers payment incentives, which is where the risk adjustment findings sit. Chapter two covers the complexity of Medicare enrollment for beneficiaries, which is where the member experience and broker channel pieces live. And Chapter 3 covers Medicare payment operations and improper payments, which is where the wiser model gets walked through. The three findings I'm walking through today come from those three chapters, and the article focuses there too. The three findings that we're going to cover. First, MedPAC attached $22 billion in higher than justified MA payments in 2026 to coding intensity alone. Second, $23.7 billion in improper MA payments for fiscal year 2025, plus a federal procurement infrastructure CMS is now using to attack that number directly. And third, an endorsement of technology as a fix for Medicare enrollment complexity, sitting in the same chapter that flagged the broker channel as part of the problem the technology is meant to solve. What I want to spend the next 15 minutes on is not the findings themselves. The article from earlier this week pretty much walks through those. What I want to focus on is what the report actually does to the MA market when you read it as one document. It splits MA plans into two groups that buy vendor products in completely different ways. Which group your prospect lands in changes which version of the pitch they're actually buying. The cleanest example is on the risk adjustment side, so that's where I'm going to start. The most important point in the MedPAC report is the one the commission has been saying in some form for years. About half of MA plans by plan count code above the CMS intensity adjustment, which means their actual coding intensity is higher than the floor CMS applies, and they keep the differences revenue. Those plans cover roughly 84% of all MA enrollees because they are concentrated in the large nationals and the PE-backed regionals. The other half of plans, by count, code below the adjustment, which means their actual coding intensity is lower than the floor, and they are effectively underpaid relative to plans on the other side of that line. They cover the remaining 16% of enrollees. The split runs about even by plan count and is heavily lopsided by lives covered. What changed this year is the enforcement posture sitting on top of that split. The OIG published its first MA-specific compliance program guidance in 26 years back in February. The Department of Justice recovered $6.8 billion in False Claims Act settlements last year, with MA risk adjustment named as a top enforcement priority. Elevance booked a $935 million risk adjustment accrual in May, which triggered every other publicly traded plan to run an internal audit pass against the same kind of exposure. Each of those facts has been discussed publicly, and I've covered them in other articles this year as well, but MedPAC just consolidated them into a single document, attached the $22 billion figure to it, and put it in front of Congress in the same week the bid cycle was closing. And that's worth slowing down on what that split actually looks like, because the line that divides plans does not run where most people assume. On the side coding above the adjustment, you mostly find two profiles. The first is the large nationals that built mature risk adjustment operations over a decade ago, and they often own provider assets that let them control documentation at the point of care. The second are regional plans owned by private equity or backed by PE style growth capital, where risk adjustment was built into the operating model from the start as the principal margin lever. The profile of the side coding below the adjustment is a little bit more fragmented. You get mid-size regional blues with conservative compliance postures, provider-sponsored plans whose physician networks push back on the documentation workflow burden, and dual eligible heavy plans whose populations are clinically complex but documented unevenly. The plans coding above the adjustment are not all in the same boat. Some of them got there by building a mature operation that pulls every legitimately documented HCC out of the chart. Their documentation holds up and they will pass audit. Others got there with documentation that doesn't hold up, and they're the ones that DOJ is currently auditing and the OIG is currently writing guidance against. And from the outside, you can't tell which is which without looking at the chart review methodology. And that's exactly why the procurement question inside these plans has changed. The plans coding below the adjustment, however, have a different problem. They're leaving documented complexity in the chart and not capturing the revenue, which their CFOs can no longer tolerate in this margin-thin environment. Neither group is the success story here. Both groups are buying differently than they were two years ago because of it. A plan coding above the adjustment has spent years building the operations that pulls HCCs out of the chart. The revenue is already in the door. What those plans are buying for now is audit defense. Compliance, legal, and the chief financial officer are at the table for vendor decisions in a way that they were not 12 to 18 months ago. They want to know the chart review methodology will hold up under an extrapolation-based audit, that it aligns with what the OIG flagged as low risk in the February guidance, and that the contract puts the audit liability on the vendor when something falls short. A plan coding below the adjustment is in a different spot. They look at the $22 billion number and see revenue their competitors are capturing and that they are not. And with margins where they are, that CFO is no longer comfortable leaving as much of that on the table. The complication is not that the DOJ is watching the work in real time, as we all know, Radvi looks backwards. The complication is that whatever capture work a plan stands up in 26 and 27 will eventually get audited, and the plan's own compliance team knows that. So they're going to scrutinize the methodology before any of the work starts, before anything gets bought. That kind of scrutiny didn't exist five years ago. The 2024 Rad V final Rule rewrote how the extrapolation methodology works, and the February OIG guidance reset what good documentation looks like. Both of those changes are now sitting in the compliance team's calculus from day one. So plans buying risk adjustment now want capture and defense built into the same workflow with one set of clinical documentation standards, one set of methodology, and one paper trail. The reason I spent this much time on risk adjustment is that it's the cleanest example of what MedPAC's report does to the MA market this year. The same kind of split is happening on the utilization management side and the member experience side. They're a little messier, but the shape is familiar. On utilization management, the development worth tracking is the wasteful and inappropriate service reduction model, or Wiser, which CMS launched this year. Wiser is a CMMI demonstration where CMS contracts directly with AI prior authorization vendors under a shared savings structure. Think about that for a moment. The agency itself is now a buyer of AI utilization management and fee-for-service Medicare under contract terms that mirror how MA plans have bought UM services for two decades. Wiser matters because it changes how vendors selling AI-driven UM can talk about their work. For most of 2025, the AI label was a problem for these vendors. Plans were nervous about how it would land politically, and there was no federal customer they could point to that legitimized the category. CMS just became that customer, and the contract language exists in a federal document. Even if the demonstration eventually ends the way several CMMI demonstrations have before, the precedence is set. What this opens up is something like I've been warning vendors about for over a year now. Stop selling AI like it's a new flavor of cereal. Like new improved flavor. Like the category does not need AI powered as a headline anymore. Lead with what the product actually delivers. Clinical appropriateness, audit defensible denial methodology, shared savings accountability. AI is how the work gets done, not what the work is. Plans want to buy outcomes they can defend to the same compliance teams now scrutinizing the risk adjustment side, and Wiser gives them the federal language to do it. The third place this market is splitting is member experience. The story here is sharper because it's more time-sensitive. CMS issued a guidance memo on June 17th confirming a narrow compliance posture with the Clover ruling from May. The agency recalculated 2026 star ratings on a better of basis, meaning a contract keeps the higher of its original rating or the recalculated one with no plan exposed to a downgrade. CMS removed the measures the court ruled it lacked authority to collect, but kept the measures the court flagged for rulemaking deficiencies, and it has until late July to file its notice of appeal. The agency is structuring the recalculation to absorb the court order without conceding the legal ground underneath the program. The effect this had on member experience vendors is that the ROI math underneath their pitch just got destabilized. Vendors whose math is mainly built on STARS uplift are now in front of a CFO who can't get a confident read from their own legal team or actuaries on what the STARS architecture will look like in 27 or 28. The work for vendors is to anchor the ROI conversation and outcomes that hold regardless of how the Clover litigation resolves. Member retention is one, cost of care reductions tied to earlier intervention is another, friction and enrollment windows is a third. Look, nobody knows when or how Clover lands, and health plans can't wait around to find out. They still have members to serve, gaps to close, and a quality program to run, all of which take real budget and real vendor relationships. The vendors who keep moving with them through this stretch are the ones who frame the work around what the plan needs to do, anyways. Before I close this out, three things worth tracking over the next 90 days. They're live questions the market's sitting with right now, and where each one lands changes what plans buy. The first is what CMS does on appeal. The agency has until late July to file its notice of appeal of the Clover ruling. Whether it files and how the 11th Circuit handles the case if it does will shape the STARS program for 27 and 2028. The second is what happens to UM as a category on the commercial side. As some of you may recall, Cygna placed EVACOR on strategic review at the end of April. EVACOR is the largest pure play utilization management asset in commercial health insurance, and whoever buys it sets the comp for UM category multiples for the next 18 months. Whether it goes to a strategic acquirer building an adjacent platform, a private equity sponsor building a vertical, or a recapitalized standalone changes the way the market reads on what UM as a category is actually worth. Every investor in the category and every UM vendor underwriting a fundraise needs that comp. The third is what CMS does on RAD v extrapolation. The agency is signals it intends to apply extrapolation methodology to recover overpayments at scale, but the specific documentation standards the audits will apply have not yet been published. And so until they are, every plan coding above the floor and every risk adjustment vendor working with them is sizing audit exposure without the actual yardstick CMS plans to use. When that yardstick gets published, it sets the bar for every risk adjustment vendor contract on the table right now, whether it's a renewal, a renegotiation, or a new one. I want to close out with a quick observation that's been on my mind since I published the article earlier this week. The federal government does not usually do vendors and investors a favor when it puts out an analysis like this, but this MedPack June report is an exception. Now hear me out. The commission spent the year doing the sorting work that vendors normally have to do for themselves. It named which plans are exposed and how, attached the dollar figures, and put it all in a document the boards and CFOs of every plan that you're going to be selling to will be reading through the summer. The work in front of you over the next 90 days is to do something with that. Read the report. Find your buyer in it. Look at the Q3 conversations you have coming up. Ask yourself whether what you're bringing is built for the version of the plan MedPAC just described. And if it's not, you still have time to rebuild. If you want to think through what any of this means for your positioning or your next renewal conversation, the easiest way to reach me is the contact form on the website at upwardgrowth.com or just message me directly on LinkedIn. I read all of them. And if you're getting value from this show, two things genuinely help. Hit subscribe wherever you're listening and leave a rating. That's it. I'm Ryan Peterson. Here's to Upward Growth.