How Optum Health's CEO Is Reading Federal Signals on Future of Medicare

In a recent webinar, Krista Nelson, CEO of Optum Health, discussed the direction that the Centers for Medicare & Medicaid Services (CMS) are pushing for in the future of Medicare. Nelson emphasized that the CMS's intention is to ensure that every Medicare-eligible person has access to value-based care, not only through Medicare Advantage but also for those enrolled in traditional Medicare.

CMS has been advocating for a shift in Medicare's payment system from rewarding volume to rewarding quality of care. Beginning in 2026, physicians who participate in Advanced Alternative Payment Models will receive a higher annual increase in the Medicare Physician Fee Schedule update (0.75%) compared to clinicians who do not (0.25%).

Furthermore, the CMS Innovation Center is calling for future models to expand prospective payments and advanced shared savings, moving beneficiaries toward accountable care arrangements where providers assume global financial risk. In 2027, the proposed Medicare Physician Fee Schedule aims to expand participation in accountable care organizations and move clinicians away from traditional MIPS reporting towards more meaningful value-based pathways.

Nelson highlighted the variation in value-based care performance across markets, influenced by factors such as patient populations, payer relationships, physician practices, and the maturity of local models. She provided an example of Optum Health's Houston market, which has achieved a 15 to 30 percent reduction in total cost of care and a 90 net promoter score, reflecting low provider attrition numbers.

Nelson emphasized the quadruple aim of value-based care: improving quality outcomes while lowering costs and enhancing patient and clinician experiences. While research supports some aspects of this approach, results have varied across programs and providers. Nevertheless, the CMS's commitment to value-based care continues to shape the future of Medicare.