October 15, 2026

UnitedHealth raised its 2026 adjusted earnings guidance for the third time this year after third-quarter profits increased 75% to $4.1 billion, despite revenue declining slightly, driven by plan cuts and a lower medical loss ratio. The company is improving margins by shedding less-profitable Medicare Advantage members and expanding special needs plans, though lower star ratings could reduce future revenue. UnitedHealth also faces ongoing cost pressures from Medicaid utilization, specialty drugs, and No Surprises Act arbitration awards, which executives say are driving billions in excess costs.

Alignment Healthcare is suing CMS over its 2027 Medicare Advantage star ratings, arguing that the agency’s methodology is illegal because it used measures that were not implemented through formal rulemaking. The insurer’s share of members enrolled in plans rated at least four stars fell from 98% to 25%, potentially costing more than $200 million in 2028 payments. The lawsuit seeks to overturn the ratings and require recalculation, potentially paving the way for similar challenges from other insurers.

Hospital groups, including the American Hospital Association and Maine Hospital Association, are suing to block HRSA’s revised 340B drug rebate pilot, arguing that the agency underestimated administrative costs and failed to adequately consider hospitals’ concerns. The 340B program provides safety-net providers with discounted outpatient drugs, but drugmakers argue it’s enabled excessive profits, with purchases reaching $100 billion in 2025. Hospitals warn the rebate model could cost more than $1 billion annually, strain already limited finances, and threaten access to care for vulnerable populations.

CMS will reduce Medicare payments to 80% of hospitals (2,334 facilities) in fiscal year 2027 under the Hospital Readmissions Reduction Program, up from 78% in 2026. The penalties, now incorporating Medicare Advantage beneficiaries for the first time, aim to reduce avoidable readmissions but remain controversial due to concerns about their impact on safety-net hospitals and whether reduced readmissions reflect genuine improvements in care.

Increased data matching around duplicate coverage could have meaningful implications for ACA enrollment and subsidies as CMS continues its efforts to reduce improper payments.