The Centers for Medicare & Medicaid Services (CMS) announced Friday that it expects payments to Medicare Advantage (MA) plans to increase by 4.33 percent on average (a $21 billion increase) from 2025 to 2026.
CMS said in the 2026 MA and Part D Advance Notice that the increase includes growth rates of underlying costs, 2025 Star ratings for 2026 quality bonus payments, continued phase-in of the risk adjustment model updates that were implemented in calendar year 2024 and 2025, and increases in risk scores.
RELATED: CMS releases the 2026 Medicare Advantage and Part D Advance Notice
The 181-page Advance Notice also outlines the following proposed changes:
Net payment impact
In a fact sheet, CMS said it expects:
- Medicare costs to grow by 5.93 percent in 2026
- MA plans will see a 4.33 percent change in revenue
- The average increase in risk scores will be 2.10 percent (the figure doesn't account for normalization and MA coding adjustments)
Part C risk adjustment model
CMS proposes to complete its three-year phase-in of the updated Part C Risk Adjustment Model in 2026 by calculating 100 percent of the risk score using only the 2024 CMS-HCC model.
The three-year phase-in began in 2023, and CMS said plans and providers have implemented the model smoothly and risk adjustment and payment levels have remained stable. If the agency paused the phase-in, MA plans would receive an additional $3.4 billion in payments in 2025, which isn’t necessary to support stability in the program.
“The federal government is expected to spend $9.2 trillion over the next decade on MA payments to plans—$1.3 trillion of it on MA supplemental benefits and premium buy-downs—and it is crucial these payments are accurate to prevent wasteful spending,” CMS said in the fact sheet.
Furthermore, CMS said that it is working to calibrate the risk adjustment model using MA encounter data (diagnosis, cost, and use data submitted to CMS by MA plans), and the agency will have the option to start phasing in an encounter data-based risk adjustment model as early as 2027.
Part C and D Star ratings
The Advance Notice outlines the eligible disasters for adjustment for 2026 Star ratings.
CMS also said it continues plans to move toward a building block approach to streamline quality measures across CMS quality and value-based care programs. As such, CMS is seeking feedback on the following measures and measure concepts:
- Additional ways to simplify and refocus the Universal Foundation measure set to focus more on clinical care, outcomes, and patient experience of care measures
- Updates to display measures
- The addition of geography (for example, rural or urban) to the Health Equity Index reward
- Potential retirement of the following measures:
- Medication Therapy Management (MTM) Program Completion Rate for Comprehensive Medication Review
- Special Needs Plan Care Management
- The Care for Older Adults – Pain Assessment measure (Part C)
- Care for Older Adults – Medication Review and Care for Older Adults – Functional Status Assessment
- Medicare Plan Finder Price Accuracy (Part D)
- Complaints about the Health and Drug Plan (Part C and D
- Call Center – Foreign Language Interpreter and TTY Availability
Part D risk adjustment
CMS said proposed updates to the Part D risk adjustment model reflect the Inflation Reduction Act’s changes to the Part D benefit for 2026, including the continued implementation of the Manufacturer Discount Program and the updated out-of-pocket threshold, the new Medicare Drug Price Negotiation Program, and calibrating the model using more recent data years (2022 diagnoses and 2023 costs).
The updates are essential for plan sponsors to develop accurate bids for calendar year 2026, CMS said. In addition, the Advance Notice proposes to use a more sophisticated multiple linear regression methodology to calculate normalization factors for the model being proposed for MA and Program of All-Inclusive Care for the Elderly (PACE) organizations, aligning with the methodology finalized for 2025 for the Part C risk adjustment models.
CMS will accept comments about the provisions included in the Advance Notice through February 10 and issue final policies by April 7. Learn more about the proposed changes at RISE National, March 11-14, in San Antonio.