A new report issued on July 6 by ATI Advisory points to “renewed” opportunities for regional and local health plans in the Medicare Advantage (MA) market.

Authored by Rose Mollitor, a managing director at ATI, the report said as national carriers continue to retrench from select markets amid mounting financial pressure, regional and local organizations have continued to grow, with enrollment increasing by 3.5 and 9 percent, respectively, in 2026.

“In some cases, that growth reflects deliberate strategic moves by the plan; in others, it is the result of fewer alternatives being available to members as national carriers exit. Across the board, regional plan growth builds on the deep community ties, strong provider relationships, and fine-tuned understanding of member needs that have long differentiated regional plans,” the study said.

She said the same forces reshaping the overall MA market are raising the stakes for regional players. These include elevated utilization, phase-in of V28 risk adjustment, Star Ratings methodology changes, Part D redesign under the Inflation Reduction Act, and tighter benchmarking. All of these factors continue to compress margins across the industry.

“While national carriers can often absorb these pressures via scale, diversified revenue streams, and centralized operations, regional and local plans typically have fewer resources and less room for error,” the report said.

Mirroring National Plans

The report said there are practices that smaller-scale plans should consider adopting from national plans, including clinical documentation and Stars discipline.

“These two disciplines reinforce each other; when regional plans maximize member access through their provider relationships, they drive better diagnosis capture and management, as well as stronger Stars performance. This combination results in more stable and sustainable revenue,” the report.

There is also the opportunity for regional plans to consider Chronic Condition Special Needs Plans (C-SNPs) to retain members. “For regional plans currently managing moderate-to-high acuity members, C-SNPs can be a strong tool for growth and competitive retention,” the report said.

“As national carriers expand their C-SNP offerings into regional markets, plans that have built enrollment among higher-acuity members risk losing them to a specialized product designed to serve their needs more directly.

A regional plan that waits until a C-SNP appears in its market will have less time to design intentionally, build provider relationships around the population, and develop the infrastructure needed for sustainable margins.

The report said C-SNPs require strong clinical documentation capabilities to be financially viable, as their members only generate appropriate reimbursement when their conditions are fully and accurately documented.

“Plans evaluating C-SNPs benefit from doing so with full awareness of both the competitive dynamics and the financial and operational requirements of serving a complex population well,” the author said.

Other steps national plans take that regional plans can borrow are supplemental benefit analytics and county and product portfolio management.

Keeping Regional Plans Regional

On the other side of the coin, the report said there are attributes to being a regional plan that makes sense to keep in the MA market.

One example is to have an integrated Dual Eligible Special Needs Plan (D-SNP) strategy.

“Through D-SNPs, regional plans can use local market knowledge and provider relationships to create advantages that national competitors may struggle to replicate. They represent an important growth, margin, and quality opportunity,” the report said.

“When Medicare and Medicaid benefits are better integrated, plans capture more value through improved coordination across services, resulting in a less fragmented experience for members. This opportunity is especially strong in states where policy supports more integrated models. Regional plans are well-positioned to build the Medicaid agency relationships these models require and design around the specific needs of local dual-eligible populations.”

The report noted that timing matters. The D-SNP look-alike threshold drops to 60 percent in 2026, and beginning in 2027, CMS will further limit how many D-SNPs an organization with an affiliated Medicaid managed care plan can offer and which members may enroll.

Thus, regional plans that define their integrated strategy ahead of that transition will have more room to design deliberately without the pressure of a looming compliance deadline.

Hyper-local benefit design

Other regional-centric strategies to keep include hyper-local benefit design, customized marketing and member services, and Operational efficiency without losing local advantage.

Comments or questions on this article? Contact Patrick Connole at pconnole@parkplacelive.com.