So far, 2026 has been a year defined by insurer retrenchment, including market exits across product lines and other strategic realignments.
A slew of policy changes has reshaped markets: the expiration of enhanced premium tax credits and tighter prior authorization rules, to name a few. Some states have also been acting early on looming Medicaid changes that were born out of HR 1, hinting at what 2027 could look like more broadly.
Here are the federal and state policies payers need to look out for in 2027:
ACA Marketplace, Medicare Advantage and Medicaid
1. ACA marketplace overhaul: CMS’ 2027 payment rule has provisions set to take effect over the coming years. Some that become relevant in 2027 include limiting tax credit eligibility to citizens and some lawful immigrants under HR 1 and implementing lower user fees for plans on federal exchanges. HHS has been facing a lawsuit from some cities, physicians and small businesses over aspects of the rule.
2. CMS’ 2027 MA and Part D rule: The rule, finalized in the spring, shakes up star ratings, dropping the Excellent Health Outcomes for All reward — previously called the Health Equity Index — and eventually removing 11 measures.
3. CMS to lower some drug costs under Medicare Part D: Effective Jan. 1, CMS is updating the maximum fair prices for 15 costly prescriptions under Medicare Part D, adding to the list of 10 previously negotiated drugs. The newly included drugs treat cancer, Type 2 diabetes and asthma.
4. Medicaid work requirements: Under HR 1, states that expanded Medicaid or have an aligned section 1115 demonstration will need to implement work requirements for most of those adults by Jan. 1, 2027. These adults will need to work, perform community service or attend school for at least 80 hours per month to retain coverage. States will also check for Medicaid eligibility every six months, rather than every year, for this population, as well.
Prior Authorization
5. Electronic prior auth takes off: The next stage of CMS’ push for prior authorization reform takes place in 2027. CMS Administrator Mehmet Oz, MD, broadened efforts beyond insurers to engage providers, EHR vendors and digital health developers. Payers must build out application programming interface capabilities by Jan. 1, addressing patient access, provider access, payer-to-payer record transfers and electronic prior authorization submission and response.
6. Proposed extension to pharmacy prior auth: While not set in stone, CMS pitched that Medicaid, CHIP and ACA plans back three pharmacy data standards beginning Oct. 1, 2027, aligning with requirements for Medicare Part D sponsors. The rule would shorten prior authorization decision timeframes and expand public reporting of relevant metrics for drugs.
State Policies
7. Colorado: Under HB 1139, effective Jan. 1, organizations that use AI systems for utilization review, including insurers, must ensure determinations are based on medical history and not solely derived from group data without referencing an individual’s profile. These systems must be periodically reviewed, and companies must disclose the AI system’s functions to the state’s relevant department or division. Human review will be necessary for denials. Payers also cannot cover psychotherapy provided to clients by an AI system.
8. Georgia: Similar to Colorado’s law, Georgia’s SB 444 bars coverage decisions based entirely on AI, effective Jan. 1.
9. Utah: SB 319, effective Jan. 1, will require insurers, beyond just government-backed payers, to post prior authorization requirements and statistics. Insurers must inform the state, providers and enrollees when AI is used to review requests. The law also sets minimum periods for the validity of chronic or long-term care requests.
10. New York: The state will limit cost-sharing for asthma inhalers in 2027.
11. California: While some plans already had to comply with capped insulin copayments of $35 per 30-day supply, individual and small group plans will need to follow suit by Jan. 1.
At the Becker's 5th Annual Fall Payer Issues Roundtable, taking place November 2–3 in Chicago, payer executives and healthcare leaders will come together to discuss value-based care, regulatory changes, cost management strategies and innovations shaping the future of payer-provider collaboration. Apply for complimentary registration now.
