Payer Policy Pulse: October 2026

Payers are navigating a steady stream of new rules, enforcement actions, and market shifts. Payer Policy Pulse is Cotiviti’s monthly look at the news out of Washington and beyond that matters most to health plans, with concise summaries and key takeaways to help you anticipate change and strengthen payment accuracy, compliance, and quality performance.

In our inaugural edition, we cover AI-driven billing complexity, the pending CMS prior authorization deadline, new fraud detection initiatives, and a push for outcome-based quality measurement. Read on and get up to speed on what these latest developments could mean for your organization.

AI may be driving higher spending

Artificial intelligence improves coding efficiency and completeness but may also be inflating bills.

In March of 2026, Blue Health Intelligence® raised concerns that AI-assisted clinical documentation and coding tools may be driving increased billing complexity as submitted by providers and RCM companies on their behalf. This month, the Blue Cross Blue Shield Association (BCBSA) reported that more patients are documented as medically complex, despite what the report characterized as little evidence of corresponding changes in the care delivered. The findings add to the debate over AI in clinical documentation and coding as payers examine whether the identification of additional diagnoses by AI is driving higher reimbursements. This is consistent with Cotiviti’s own analysis of inpatient claims as previously published, which demonstrated a subset of providers whose billing showed a sharp jump in complex DRGs.

Key takeaways include:

• Higher-complexity coding accounted for an increase of approximately $942 million in healthcare spending between 2023 and 2025.
• 60% of hospitals reportedly use AI coding tools, and 70% of additional costs were tied to secondary diagnosis that shifted patients into higher-reimbursement categories.
• Payment integrity programs designed to identify unusual billing patterns, validate coding accuracy, and ensure reimbursement-care alignment are more important than ever.

Will CMS enforce its 0057-F API deadline?

The AMA is urging CMS to take a hard line with 0057-F enforcement.

The January 1, 2027, deadline for electronic prior authorizations (ePA) isn’t moving, but in a September letter to the U.S. Centers for Medicare and Medicaid Services (CMS), AMA President John Whyte, M.D., urged the agency to “reject broad enforcement discretion during 2027.” Whyte went on to say that CMS “should stay the course and remain steadfast in its commitment to ‘axe the fax’ and make ePA a reality for physicians and patients.” The question remains whether CMS will broadly enforce its 0057-F Final Rule with payers, which the AMA argues are overstating implementation challenges to justify delay.

Key takeaways include:

• Physicians argue they are not unwilling to adopt ePA but aren’t receiving the education and support they need from payers.
• 29 healthcare organizations signed on as early adopters of ePA, but only 33% of physicians surveyed believe the pledge will bring significant change.
• CMS expects 0057-F to save $15 billion in healthcare administrative costs over the next 10 years.

New anti-fraud initiative reinforces value of data sharing and collaboration

The U.S. Department of Justice (DOJ) is using shared data and advanced analytics to combat fraud.

A prosecutor-led, multi-agency team is solving the historical lack of cross-program visibility that has hindered efforts to deter fraud on taxpayer-funded programs. Assistant Attorney General Colin McDonald stated that the National Fraud Detection Center (NFDC) launched in August 2026 “marks a decisive shift in how the federal government detects and investigates complex fraud.” He goes on to state, “By breaking down institutional silos, embedding analysts from across the IG community, and leveraging shared technology, the NFDC is actively closing the window of opportunity for bad actors.”

Key takeaways include:

• This represents a partnership across federal and state government to break down silos and work collaboratively in a whole-of-government approach to eliminate fraud.
• Inaugural members represent an extensive cross-entity collaboration including FBI, IRS, Homeland Security, HUD, Veterans Affairs, SBA, and the Social Security Administration.
• The effort reinforces the value of cross-payer visibility into fraud, waste, and abuse patterns that may otherwise be difficult to detect within one payer’s data alone.

A shift towards outcome-based quality improvement

Nearly 75% of states have pledged to join CMS and streamline quality measurement.

“For too long, Medicaid has measured whether boxes are checked instead of whether patients are getting healthier. That must change,” said CMS Administrator Dr. Mehmet Oz last month. Thirty-seven states agree and have pledged as founding members of the CMS initiative to move to outcome-based quality management measures. By aligning quality measurements around meaningful health outcomes, rather than the volume of reporting requirements, CMS and its partners aim to reduce reporting burden while improving accountability for better health.

Key takeaways include:

• The initiative prioritizes outcomes over processes and rationalizes measures without sacrificing accountability.
• Goals include modernizing quality measurement with near-real-time data as the default approach.
• CMS seeks to align financial accountability to outcome measures to reward performance.