The Crucial MA Crossroads, and How CFOs Are Taking the Wheel

As CMS reins in Medicare Advantage payments and provider tensions rise, CFOs are rethinking MA strategy, risk exposure, and long-term financial alignment.

Once a largely insurer-driven alternative to traditional Medicare, Medicare Advantage has become an increasingly contentious force in the healthcare finance landscape.

Rapid enrollment growth and large federal payments have made MA a critical component of payer mix for health systems, and also a central focus for CFOs. But recent policy shifts, provider frustration, and strategic reconfigurations are forcing CFOs to rethink how they manage risk, contracts and long-term sustainability.

The Shift

At the heart of the current tension is the Centers for Medicare & Medicaid Services’ (CMS) proposed payment framework for 2027, which makes for a virtually flat 0.09% increase in capitation rates for MA plans. This is a striking slowdown after a $25 billion boost to payments in  2026. CFOs across health systems see this as an indicator for reduced future growth within MA revenue streams and, on top of that, heightened cost pressure.

CMS has signaled that the proposed minimal increase aims to realign payments with the clinical reality and curb controversial billing practices, such as “chart reviews” that pick out new diagnoses post-encounter to inflate risk scores and increase government payments to plans. The policy would prohibit these unlinked chart review diagnoses from risk adjustment, effective in 2027.

While regulators tout this as improving accuracy and protecting federal expenses, the healthcare financial community sees deeper implications for provider reimbursement negotiations and revenue predictability.

The CFO Lens

For providers, persistent frustration with MA plans are more operational than theoretical. Hospitals and physician groups are grappling with delayed payments, preauthorization burdens, denials, narrow networks, and complex risk-adjustment disputes. Many see the proposed payment slowdown as reinforcing misaligned incentives: Plans benefit from coding and utilization controls, while providers absorb the administrative friction and financial uncertainty.

The degree of MA-provider conflict has even pushed some health systems into the novel strategy of launching their own Medicare Advantage plans. Health systems like Mass General Brigham, UCLA Health and Baylor Scott & White are entering the MA market directly, and are seeking to reduce dependency on commercial payers while fostering better alignment between insurance design and care delivery.

Another example of this is Peak Health, which is partnering with WVU Medicine and Marshall Health to offer a provider-led Medicare Advantage plan. The program launched in 2023 and has now reached more than 10,000 enrollees.

These system-owned plans promise greater continuity for patients and more stable contracts for providers, though they require scale to be financially viable.

The Strategies

For CFOs, the developments within MA now demand a recalibration of financial planning and risk management. One strategy is refining payer mix analytics and scenario modeling. CFOs have stepped up scenario modeling and analytics in the wake of Medicaid cuts, and now must apply a similar strategy for MA by integrating more sophisticated forecasting tools that incorporate variable MA payment outcomes, utilization trends and contract performance metrics. These types of models help assess the financial impact of payment slowdowns, coding audit risk and utilization management on operating margins.

CFOs must also bolster their strategic contracting and risk-sharing arrangements. Traditional fee-for-service contracts are giving way to value-based, shared-risk agreements with MA plans, and in some cases, directly marketed MA products. By collaborating with payers on care coordination and quality incentives, health systems can aim to mitigate volatility and align financial incentives more closely with outcomes.

Lastly, CFOs must prioritize operational investments to manage MA administrative burden. Given the ongoing challenges with prior authorizations, denials and documentation disputes, providers are investing in staff, analytics and automation to reduce revenue cycle friction. Some are leveraging external partners for risk-adjustment coding compliance, appeals management, and payer relations to protect margins in this tightening MA environment.