Healthcare is at a crossroads. For independent practices and laboratories, the coming year will be one of the most complex and consequential periods in recent memory. The pressures of rising costs, shrinking reimbursements, and relentless compliance mandates are compounded by structural challenges — from workforce shortages to the uneven adoption of artificial intelligence.
At ADS, we believe resilience is not achieved in isolation. It is built through strong partnerships that combine technology, expertise, and operational support. Our goal is to help practices and laboratories not only survive the turbulence of 2026 but thrive within it.
This report is our most comprehensive analysis yet: a forward-looking guide to reimbursement, compliance, and operational change. It blends data, regulatory updates, case examples, and prescriptive strategies into one framework for resilience.
Bottom line: The next 24 months represent a tipping point. Practices and laboratories that fail to prepare will face revenue erosion, compliance penalties, and operational breakdowns. Those who invest in resilience — automation, compliance infrastructure, and staffing partnerships — can not only withstand the turbulence but emerge stronger.
At the same time, CMS implemented a 2.83% cut to the Medicare conversion factor in 2025. For many practices, this equated to six-figure losses in revenue.
Strategic implication: The gap between costs and reimbursement is not sustainable. Incremental efficiencies will not be enough. Practices must rethink workflows, adopt automation, and explore new staffing models.
A 12-provider orthopedic group failed to train clinicians on new documentation requirements. Within 60 days of the update, their denial rate for musculoskeletal claims rose 12%, resulting in $150,000 in lost revenue.
Budget neutrality adjustments and “efficiency” cuts are expected to continue, likely resulting in another 1.5–2% cut in 2026.
Practices that fail to integrate MIPS into daily workflows face a “double penalty” — fee schedule cuts compounded by MIPS reductions.
A multispecialty group scored 68 points in 2025. With no workflow changes, they project a 7% revenue reduction in 2026. On $10M revenue, that equals $700,000 lost.
Providers face increased documentation requirements, variable payer policies, and greater risk of denied claims.
A regional lab with $2.5M annual Medicare revenue faces a potential $375K loss from PAMA cuts. Without offsetting efficiencies, staff layoffs are likely.
Both Medicare and MA are reshaping prior authorization. Practices in WISeR states will face additional administrative burdens and cash flow delays if unprepared.
Without governance, AI adoption can introduce compliance risks and errors.
A nine-provider pain group lost two coders in 2025. Claims backlog reached 45 days in AR; monthly collections dropped 18%.
Specialty |
Top 2026 Risk |
Recommended Focus |
Orthopedics |
ICD-10 documentation; WISeR PA |
Coding audits; PA automation |
Pain Management |
WISeR scrutiny of injections/stimulators |
Denial prevention; workflow redesign |
Podiatry |
ICD-10 detail expansion |
Real-time AI prompts |
Laboratories |
PAMA cuts; reporting |
Automated compliance; scenario modeling |
Primary Care |
MIPS thresholds; shrinking reimbursement |
Workflow-integrated MIPS capture |
Scenario Planning
Best Case
Impact: -3% margin |
||
Base Case
Impact: -6% margin |
||
Worst Case
Impact: -10% margin |
The coming 24 months will not be business as usual. They represent a compressed window of change in which reimbursement cuts, compliance deadlines, prior authorization reforms, and workforce pressures collide. Practices and laboratories that react piecemeal will find themselves constantly behind; those that plan deliberately will be positioned to weather the turbulence.
The key is to translate policy shifts into a clear sequence of operational actions — knowing what to do, and when to do it. That is why we’ve built a quarter-by-quarter roadmap: a practical guide to help you anticipate deadlines, prioritize investments, and align your teams with the realities of 2026 and 2027.
This quarter is about foundation-setting: auditing ICD-10 documentation, training staff on MIPS 2026 requirements, and beginning to redesign prior authorization workflows before reforms go live.
The first quarter of 2026 should focus on early execution — piloting denial prevention AI, implementing new Medicare Advantage prior authorization rules, and modeling the financial impact of PAMA-driven reimbursement cuts.
By spring, attention must shift to compliance deadlines and pilot launches: submitting PAMA private payer data, preparing teams in WISeR pilot states, and conducting a comprehensive cybersecurity risk assessment.
Mid-year is the time to evaluate and adjust: track PA turnaround times, recalibrate staffing models to address delays, and benchmark performance against resilience frameworks to course-correct before year-end.
Resilience doesn’t come from reacting to each new regulation or reimbursement cut as it arrives. It comes from having a structured, repeatable framework that ties technology, compliance, staffing, and financial strategy together. At ADS, we’ve developed a five-part Resilience Framework designed specifically for practices and laboratories facing the 2026–2027 landscape.
This framework goes beyond tools — it’s about aligning operations with the realities of today while preparing for tomorrow, so your organization can thrive no matter what changes lie ahead.
The 2026–2027 period represents a pivotal moment. Reimbursement, compliance, and workforce pressures will converge to test the resilience of every independent practice and laboratory.
Resilience is possible — but it requires preparation, foresight, and partnership. ADS stands ready to help organizations thrive through turbulence with automation, compliance expertise, and operational support.
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Centers for Medicare & Medicaid Services (CMS). (2025, July). WISeR Model Overview. Retrieved from https://www.cms.gov/priorities/innovation/innovation-models/wiser
Centers for Medicare & Medicaid Services (CMS). (2025, July). Wasteful and Inappropriate Service Reduction (WISeR) Model: Request for Applications. Retrieved from https://www.cms.gov/files/document/wiser-model-rfa.pdf
Centers for Medicare & Medicaid Services (CMS). (2025, July 22). CMS Launches New Model to Target Wasteful, Inappropriate Services in Original Medicare. CMS Newsroom. Retrieved from https://www.cms.gov/newsroom/press-releases/cms-launches-new-model-target-wasteful-inappropriate-services-original-medicare
MGMA. (2025, June). Medical practice operating costs are still rising in 2025 — here’s how to control them. Medical Group Management Association. Retrieved from https://www.mgma.com/mgma-stat/medical-practice-operating-costs-are-still-rising-in-2025-heres-how-to-control-them
MGMA. (2025, May). Drug supplies, IT expenses are fastest-growing costs for medical practices outside of staffing. MGMA Stat. Retrieved from https://www.mgma.com/mgma-stat/drug-supplies-it-expenses-are-fastest-growing-costs-for-medical-practices-outside-of-staffing
Physicians Practice. (2025, February). 2025’s medical practice challenges: Prior authorizations, a staffing squeeze and rising costs. Retrieved from https://www.physicianspractice.com/view/2025-s-medical-practice-challenges-prior-authorizations-a-staffing-squeeze-and-rising-costs
Becker’s Hospital Review. (2025, July). CMS to add prior authorization for traditional Medicare services. Becker’s Finance. Retrieved from https://www.beckershospitalreview.com/finance/cms-to-add-prior-authorization-for-traditional-medicare-services
Kiplinger. (2025, August). Prior Authorization Coming to Traditional Medicare Starting in 2026. Kiplinger Retirement. Retrieved from https://www.kiplinger.com/retirement/medicare/prior-authorization-coming-to-traditional-medicare
Essential Hospitals. (2025, July). CMS to Test Prior Authorization Model for Traditional Medicare. Retrieved from https://essentialhospitals.org/cms-to-test-prior-authorization-model-for-traditional-medicare
Georgetown University, Center on Health Insurance Reforms. (2025, August). New CMS WISeR Model Revives Concerns of Prior Authorization and Artificial Intelligence. Medicare Policy Blog. Retrieved from https://medicare.chir.georgetown.edu/new-cms-wiser-model-revives-concerns-of-prior-authorization-and-artificial-intelligence
Dentons Health Law. (2025, July). CMS Announces Prior Authorization Innovation Model in Traditional Medicare. Retrieved from https://www.dentonshealthlaw.com/cms-announces-prior-authorization-innovation-model-in-traditional-medicare
Jones Day. (2025, August). Coming January 2026: CMS Launches AI Program to Screen Prior Authorization Requests for Treatments. Retrieved from https://www.jonesday.com/en/insights/2025/08/coming-january-2026-cms-launches-ai-program-to-screen-prior-authorization-requests-for-treatments
Mondaq. (2025, July). CMS Unveils New Prior Authorization ‘WISeR’ Model for Electrical Nerve Stimulators, Skin and Tissue Substitutes, and Knee Arthroscopy. Retrieved from https://www.mondaq.com/unitedstates/healthcare/1646872/cms-unveils-new-prior-authorization-wiser-model-for-electrical-nerve-stimulators-skin-and-tissue-substitutes-and-knee-arthroscopy
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