2026: The End of Business as Usual in Healthcare Payment

Why the next phase of healthcare reimbursement will demand more than incremental change

For more than a decade, healthcare has been moving away from fee-for-service toward models that reward value, outcomes, and efficiency. In 2026, that shift becomes far more concrete.

New federal policy, growing financial pressure on health systems, the fast-paced adoption of new AI and technology, and rising patient expectations are converging to accelerate the transition. What was once an experiment in alternative payment models is quickly becoming the default direction of U.S. healthcare. For hospital and health system leaders, the question is no longer whether value-based care will expand. It is whether organizations are prepared to operate successfully within it.

From Volume to Value: A Structural Shift

The core premise of value-based care is simple: payment should reflect outcomes, not volume. The operational implications, however, are far more complex.

The 2026 Physician Fee Schedule Final Rule signals a clear recalibration of incentives. CMS continues to move reimbursement away from high-volume, episodic care and toward longitudinal models that reward coordination and measurable improvement in patient outcomes. According to analysis from MedInsight, this rule accelerates the shift toward risk-bearing models in Medicare, reinforcing the expectation that providers manage both quality and total cost of care.

Why 2026 Matters More Than Prior Years

Several forces are converging to make 2026 a true inflection point rather than another incremental step.

First, the Rural Health Transformation Program, established under Public Law 119-21, begins its $50 billion rollout. According to CMS, this initiative provides $10 billion annually through 2030 to modernize rural facilities and transition them toward sustainable payment models. This is an unprecedented federal investment designed to stabilize rural health systems while mandating a shift away from legacy volume-based models.

Second, the expiration of enhanced ACA subsidies is creating a massive coverage cliff. The Kaiser Family Foundation (KFF) reports that average premium payments for marketplace coverage are expected to rise by 114 percent in 2026. This rate shock, combined with Medicaid cuts and the removal of tax liability caps under the OBBBA, will likely result in millions of Americans losing coverage or facing prohibitive out of pocket costs.

Third, technology has matured. Advanced analytics and AI-driven risk stratification now allow care teams to identify high-risk patients earlier and intervene more efficiently. This shift is reflected in industry sentiment: Fierce Healthcare reports that most health systems expect to significantly expand their value-based care participation in 2026 and 2027.

Shifting from Payer Value to Patient Outcomes

While the term value-based care is often used in a regulatory context, there is a growing distinction between value for the payer and outcomes for the patient. For a payer, value is often defined as a reduction in the total cost of care. For a patient, however, value is found in tangible outcomes like accessibility, comfort, and calm.

True outcome-based payments go beyond meeting administrative metrics. They require a system that delivers care based on how patients actually experience their health. Research in the Annals of Internal Medicine suggests that while many payment mechanisms have historically adopted a payer perspective, the next generation of models must prioritize the patient point of view to be effective. This means measuring success by a patient’s ability to return to work, their level of daily pain, or their ability to manage a chronic condition without constant emergency room visits.

What Value-Based Care Looks Like in Practice

The next generation of care is defined by continuous engagement across the care continuum. It is not limited to shared savings programs or retrospective reporting.

Effective models focus on proactive identification of high-risk patients, early intervention, and coordinated follow-up. This approach is especially critical in post-acute and transitional care, where breakdowns in communication often lead to avoidable readmissions. Research from UnitedHealth Group suggests that value-based models can reduce emergency department visits and hospitalizations by 15 to 20 percent for certain populations.

Successful programs consistently prioritize three key operational shifts:

• Transition from episodic intervention to longitudinal care coordination.
• Deploy hybrid care models that merge in-person and virtual touchpoints.
• Implement real-time data sharing across all clinical teams.

What Health System Leaders Should Be Asking Now

As 2026 approaches, health system leaders should be assessing readiness across several dimensions:

• Do we have the data infrastructure to manage risk effectively?
• Are our care teams equipped for longitudinal patient management?
• Can we identify and intervene with high-risk patients early?
• Do our technology partners support value-based workflows?

Looking Ahead

By 2026, value-based care will no longer be optional or experimental. It will define how care is evaluated, delivered, and reimbursed. Health systems that invest now in data, coordination, and patient-centered models will be best positioned to succeed. 

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Sources

• CMS Announces $50 Billion in Awards to Strengthen Rural Health, CMS.
• ACA Marketplace Premium Payments Would More than Double If Enhanced Tax Credits Expire, KFF.
• 4 Big Beautiful Bill Changes That Will Reshape Care in 2026, American Medical Association.
• CMS 2026 Physician Fee Schedule Final Rule Accelerates Shift to Value and Risk, MedInsight.
• Value-Based Health Care Meets Cost-Effectiveness Analysis, Annals of Internal Medicine.
• Advancing Value-Based Care in the U.S. Health Care System, UnitedHealth Group.