CMS: 2026 FIRST QUARTER REPORT

Apr 16

Leadership Shakeup, Tech Initiatives, Prior Auth, and Payment Models Dominate First Quarter at CMS

With the first quarter of 2026 behind us, leadership at the Centers for Medicare & Medicaid Services (CMS) has provided ample details on its approach and priorities for the agency’s future.

One notable development is that recent reports indicate CMS leadership wants to drop the term “Fee-for-Service (FFS) Medicare" and use "Traditional Medicare” instead. Perhaps for a more substantive, potentially controversial update, it has been reported that the administration is considering switching beneficiaries’ default enrollment from Traditional Medicare to Medicare Advantage (MA). The administration has framed this as wanting Medicare beneficiaries to be in accountable relationships (e.g., accountable care organizations (ACOs) or MA). This news was followed by the just-finalized and higher-than-expected 2027 update for MA plans (a 2.48% average rate increase, compared to the proposed 0.09% increase). As a result, some stakeholders question how tough the administration will be on MA plans.

Beyond MA, here are five key themes I have observed emerging from the agency’s Medicare activities in the first quarter of 2026. It was a busy quarter, so limiting it to five was hard – but here is my take on the first quarter of 2026 at CMS!

Q1-2026 Top Five

#1: Klomp is in charge, has big, ambitious plans, and is looking for data to drive policy change.

As part of a leadership shakeup at the Department of Health and Human Services (HHS) in February 2026, Chris Klomp, then Director of the Center for Medicare, was promoted to Chief Counselor at HHS, overseeing all department operations (he still maintains his roles at CMS). He has become the face of Medicare, not only in messaging but also in advancing its goals and priorities. In public remarks, Klomp has outlined an important strategy he and others are using to pursue rapid change. He aims to leverage the agency’s role as a “convener” to build consensus among stakeholders and to secure voluntary pledges to take action or make a change. This would circumvent the need to go to Congress or use other, more public and time-consuming methods. CMS has successfully secured such pledges from industry (e.g., payors, drug manufacturers) on multiple occasions. Reports indicate that he is engaged and action-oriented in meetings with stakeholders. Numerous profiles have been written about Klomp. They are generally consistent in describing him as ambitious, data-driven, and focused on cutting costs and modernizing the agency.

For stakeholders seeking to advance their policies on the Medicare Physician Fee Schedule (PFS), the key point is that he is focused on data-driven policy change. While CMS has historically relied heavily on data from the American Medical Association/RVS Update Committee, this administration is broadening the sources and types of data used for rate-setting. Stakeholders should take this into account when engaging with the agency.

#2: Prior authorization is not going away. “We’re fixing it,” CMS says.

In June 2025, when the Trump Administration sought a pledge from insurers on prior authorization (PA), including a goal to reduce the volume of services requiring PA, many stakeholders viewed this as an indication that CMS sought to reduce, not expand, PA use. Yet almost a year later, agency leadership's messaging is that they aim to “fix” prior authorization, which they view as a guardrail against low-value care. On January 1, 2026, CMS launched the Wasteful and Inappropriate Service Reduction (WISeR) Model, a PA model for Traditional Medicare, a sector that has historically had very limited PA. While WISeR is currently limited to six states and a handful of services, CMS could expand the model in the future. CMS has also indicated that insights gained from this model could inform future policymaking. For MA, CMS has launched a voluntary pilot with several plans and is collecting data on prior authorization within the MA environment.

It seems reasonable that CMS could explore expanding the use of PA in Traditional Medicare.

#3: CMS is strategically deploying technology to drive change in healthcare delivery, enhance the patient experience, and improve administrative efficiency.

Technology, including artificial intelligence (AI), underpins almost every initiative at the agency. The agency is rapidly deploying a range of technology-based solutions. A few examples are described below. In 2025, CMS announced the CMS Health Tech Ecosystem, a voluntary, industry-partnered collaborative effort to modernize the electronic exchange of health data. Many technology-related initiatives fall under this umbrella.

Claims processing: CMS is actively replacing its aging COBOL-based Medicare claims-processing systems with a modern, cloud-based platform, "ClaimsCore."
Beneficiary Resources: A Medicare app library was recently launched, providing digital health tools for beneficiaries.
Payment Models: Technology is integrated into several recently announced payment models. For example, WISeR uses AI. Another example is the Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) Model. It is a 10-year initiative launching this summer that pays providers for using telehealth, wearables, and digital apps to treat chronic diseases.
Provider Directory: CMS is developing a National Provider Directory with enhanced data-sharing capabilities. This will require interoperability between providers and payors.

Some concerns have been raised about whether technology is being deployed without adequate testing in some instances. In particular, concerns have been raised about the use of AI in the WISeR model and about the security of health data with the new Medicare app library.

#4: Agency prioritizes tackling fraud, waste, and abuse, but critics point to instances in which politics has muddied the waters.

As we often hear, tackling fraud, waste, and abuse is a top priority for the administration. CMS has established a war room that meets at least twice a week, and Dr. Oz is actively posting numerous videos on social media about the agency's wins in this area. On a substantive note, the agency has shifted from chasing dollars already paid out to preventing improper payments before they occur. Following its crackdown on fraud involving skin substitutes, which is expected to save CMS billions of dollars, the agency is now focusing on esketamine nasal spray, prescribed for severe depression. Its overall increased use and variation in utilization at the state level have raised concerns at CMS. Other examples of CMS initiatives in this area include a 6-month freeze on new enrollment of medical equipment suppliers into Medicare and efforts to target fraud in hospice care. Finally, the release of a new rule and several notices related to other fraud, waste, and abuse initiatives are all expected in the coming months.

Addressing fraud, waste, and abuse can save the Medicare Trust Fund money and generally has broad support. There have been reports that some critics and Democratic lawmakers have accused the administration of targeting anti-fraud efforts in Medicaid and other federal programs against political opponents and left-leaning states.

#5: Payment models, payment models, payment models … oh, and some more payment models.

In its second term, the Trump Administration has announced and launched an unprecedented number of payment models. The flurry began in 2025 and has continued into 2026. These models range from drug pricing, primary and specialty care, and the previously mentioned PA model. The mandatory nature of some of these models has been controversial, leading to opposition from some stakeholders. This administration is using the Center for Medicare and Medicaid Innovation to pursue meaningful change to the Medicare payment system at a pace and scope we have not previously witnessed. By using payment models and CMMI's authority to test them, it can circumvent Congress and, to some extent, the public comment process, which is not required for demonstration models that are not nationwide.

Stakeholders could see additional models announced this year, but perhaps just as importantly, as data from these models emerges, it may drive future model expansions or across-the-board policy changes.

Looking Ahead

As we head into spring and early summer 2026, the pressures of the upcoming midterm election and other political developments will inevitably affect CMS's work and messaging.

HHS Secretary Robert F. Kennedy, Jr. has announced a campaign tour to support Republican candidates. With the upcoming election, it is expected that Kennedy will focus on the more popular aspects of the Make America Healthy Again agenda (e.g., chronic care, lowering healthcare costs) rather than on more controversial policies, such as vaccines.
Healthcare will likely be a target as Republicans seek savings and payfors to fund the Iraq war and the Department of Homeland Security, while pushing for a second reconciliation bill. This could create challenges for stakeholders working on physician payment reform, which will have significant costs to enact.

We may also see further progress on payment models and CMS technology initiatives. AI policies will continue to be addressed, and we may gain a better understanding of how the agency is approaching the 2027 Medicare PFS.

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For more information and questions, please contact:

Sheila Madhani

Madhani Healthcare Consulting

Email: smadhani@madhani-health.com

Tel: (202) 679-2977