CMS is proposing a more generous increase in payments to Medicare Advantage plans in 2026 than in previous years.
The agency published its advance notice for payments to Medicare Advantage plans Jan. 10. CMS estimates payment rates will increase by 4.33%, or $21 billion, to MA plans in 2026.
Here are 10 things to know about the proposed rule:
- The projected increase is higher than in years past. In 2024, CMS estimated payments to MA plans would increase by 3.32% in 2024, and by 3.7% in 2025.
- The agency will complete the three-year phase-in of risk adjustment changes in 2026. The changes shift MA's diagnosing coding from ICD-9 to ICD-10 and remove certain codes from the hierarchical condition categories model. In 2026, the final year of the phase-in, the shift will result in a 3% decrease in payments to plan.
- The decrease will be offset by a 5.93% increase in the effective growth rate, and a 2.1% increase in risk score trends, according to CMS estimates.
- Payers opposed the changes in risk adjustment, saying they amounted to a cut in payments.
- CMS estimated that star-rating bonus payments to plans will decrease by 0.7% in 2026.
- CMS Administrator Chiquita Brooks-LaSure said the rate notice "continues CMS' efforts to provide access to affordable, high-quality care in Medicare Advantage while being a good steward of taxpayer dollars."
- Share prices for the three largest MA insurers — UnitedHealth Group, Humana and CVS Health — rose following the rate notice, Bloomberg reported Jan. 10.
- The rate notice is the last to be issued by the Biden administration. The incoming Trump administration will have final say over how the proposed rate notice is finalized. "There is some optimism that rates could improve under a Trump CMS," JPMorgan analyst Lisa Gill wrote in a research note, according to Bloomberg.
- CMS expects to spend $9.2 trillion in payments to MA plans over the next decade.
- The proposal is open for public comment until Feb. 10. The final notice will be published on or before April 7.