Payments to Medicare Advantage plans are expected to increase an average by 4.33 percent, or over $21 billion, from 2025 to 2026, as proposed.
The Centers for Medicare & Medicaid Services (CMS) late Friday released proposed payment policies for the Calendar Year (CY) 2026 Advance Notice for the Medicare Advantage (MA) and the Medicare Part D Prescription Drug Programs.
“Today’s Advance Notice continues CMS’ efforts to provide access to affordable, high-quality care in Medicare Advantage while being a good steward of taxpayer dollars,” CMS Administrator Chiquita Brooks-LaSure said in the announcement. “We are also continuing implementation of the Inflation Reduction Act, ensuring people with Medicare Part D have more affordable coverage for their medications.”
The Advance Notice proposes annual technical updates to MA and Part D to ensure payments to plans are up-to-date and accurate. CMS said it plans to complete its implementation of a three-year phase-in of improvements to the MA risk adjustment model and growth rate calculation related to medical education costs. This plan was originally described in the calendar year 2024 rate announcements. In 2023, CMS said it planned to complete this phase-in over three years.
The federal government is expected to spend $9.2 trillion over the next decade on MA payments to plans—$1.3 trillion of those MA payments are MA rebate dollars used for MA supplemental benefits and premium buy-downs—and it is crucial these payments are accurate to prevent wasteful spending.
CMS said that for 2025, MA offerings for people with Medicare remained stable—including premiums, supplemental benefits, and coverage options. MA rebates have also stayed stable at more than $2,400 annually per person on average, which indicates that MA payment has remained adequate during the phase-in of these updates.
Pausing the risk adjustment model phase-in would result in $3.4 billion in additional payments to MA plans, and pausing the technical adjustment to growth rates regarding medical education costs would add $7.0 billion, which, combined, would result in an additional $10.4 billion in payments to MA plans in 2026 that are not necessary to support stability in the program.
“The Advance Notice continues a data-driven approach that ensures MA payment is accurate, drives competition, and supports accountable care, shifting the focus to managing care and improving outcomes,” said CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani, M.D., Ph.D. in the announcement.
In addition to the Advance Notice, CMS also released the Draft CY 2026 Part D Redesign Program Instructions that continue to implement the redesign of the Medicare Part D program. Public comments will be accepted through Feb. 10. The final rate announcement and redesign program
RISE will provide a more thorough look at the proposed changes in the upcoming week and industry experts will be reviewing the changes at RISE National, March 11-14, in San Antonio.