The year 2025 presented both challenges and opportunities for health systems and provider organizations. Leaders across the industry have navigated persistent workforce shortages, shifting reimbursement models, and the rapid integration of digital health solutions, all while responding to evolving regulatory demands. These dynamics have underscored the need for strategic agility and innovation, prompting organizations to rethink care delivery, operational efficiency, and long-term sustainability.

As we look ahead to 2026, Milliman experts are focusing on six critical issues, each with the potential to redefine success and resilience for provider organizations.

1. New CMS payment models on the horizon

The year 2025 saw the introduction of several new mandatory payment models from the Centers for Medicare and Medicaid Services (CMS). These included TEAM (Transforming Episode Accountability Model) and ASM (Ambulatory Surgical Model), offering fresh opportunities and challenges for accountable care organizations in the selected regions. Understanding the structure, attribution, and risk-sharing elements of these programs will be key to strategic planning for these mandatory models. Voluntary models such as ACCESS (Advancing Chronic Care with Effective, Scalable Solutions) offer opportunities to test innovative approaches for organizations that have the necessary infrastructure and support to succeed.

2. The challenge of continuous improvement for healthcare organizations

As value-based programs become more established, providers are increasingly challenged by rising expectations year over year. Because many contracts that rely on historical experience reset baselines on a regular basis, strong prior performance reduces future benchmarks and makes additional savings harder to achieve. For high-performing organizations, sustaining results will require uncovering new strategies and efficiencies beyond the initial gains, making it progressively more difficult to stay ahead of an ever-moving target. Where possible, providers could consider contractual modifications to benchmark methodologies that move away from reliance on prior experience.

3. The ongoing push for VBC risk

In response to rising healthcare costs, payers are continuing to encourage, and in certain cases require, providers to take on meaningful downside risk in value-based arrangements. We see this phenomenon extending beyond primary care, with payers increasingly targeting high-cost specialty areas for risk-bearing models. As we move into 2026, we may see this accelerate, with payers linking a greater share of reimbursement to performance and providers assuming greater financial responsibility for patient outcomes.

4. Rate pressures from payer cost-containment initiatives

Payers are entering 2026 with an intensified focus on cost containment, creating mounting pressure on provider reimbursement rates. As medical and pharmacy costs continue to rise, plans are likely to tighten unit price growth, curb contract escalators, and seek greater alignment between rates and demonstrated value. These dynamics will make it harder for providers to secure favorable rate increases under fee-for-service, which may accelerate the movement toward value-based contracting to supplement traditional fee-for-service reimbursement.

5. Administrative and financial impacts of the new 340B Rebate Model Pilot Program

Earlier this year, the Health Resources and Services Administration announced a major update to the 340B Drug Pricing Program with the introduction of the 340B Rebate Model Pilot Program, effective January 2026.¹ Under this pilot, certain drugs will move away from the traditional upfront 340B discount model to a post-purchase rebate approach, where providers will pay the wholesale acquisition cost (WAC) at the time of purchase and then seek reimbursement through a rebate that reflects the statutory 340B ceiling price.² For eligible providers, particularly safety-net organizations, this shift has several operational implications. Providers may need to adjust cash flow expectations, ensure accurate claims and rebate submission, and account for the additional administrative burden due to the new process.

6. Medicare’s movement to site-neutral payment

In the 2026 Outpatient Prospective Payment System (OPPS) final rule, CMS announced that site-neutral payment would extend to drug administration services covered under Medicare Part B, where rates for off-campus hospital outpatient departments would match payment rates under the Medicare Physician Fee Schedule. There are operational and financial implications for provider organizations, particularly reductions in revenue for hospital outpatient departments and potential shifts in staffing allocations across sites. While there are exemptions for rural Sole Community Hospitals, other rural hospitals are subject to the site neutrality provision and may experience financial strain as reimbursement decreases for affected services.

In summary: How health systems and other providers can prepare for 2026 and beyond

As health systems and provider organizations prepare for 2026, the experiences and lessons of 2025 serve as a critical foundation for future success. Navigating new CMS payment models and policies, sustaining high performance in mature programs, embracing deeper value-based care risk, and responding to payer-driven rate pressures will require renewed strategic focus and adaptability. By proactively addressing these challenges and seizing opportunities for innovation, providers can position themselves for resilience and growth in an increasingly complex healthcare environment.

¹ Health Resources & Services Administration. (December 2025). 340B Rebate Model Pilot Program. Retrieved December 27, 2025, from https://www.hrsa.gov/opa/340b-model-pilot-program.

² Health Resources & Services Administration. (August 1, 2025). 340B Program Notice: Application Process for the 340B Rebate Model Pilot Program. Federal Register, 36163–36165. Retrieved December 27, 2025, from https://www.federalregister.gov/documents/2025/08/01/2025-14619/340b-program-notice-application-process-for-the-340b-rebate-model-pilot-program.