2026 MA Proposed Rate Announced
The outgoing Biden administration has released its Advance Notice for 2026 rates and other policy changes. I quickly reviewed the 180-page Advance Notice, the CMS Fact Sheet, and CMS Press Release. Here are some highlights and Healthcare Labyrinth will have more information on rates and Star changes next week.
My summary: The announcement is progress for MA plans and will be a bit of a relief for insurers and investors. But this still is a very skimpy increase given all the MA world is facing. It could mean a third year in MA benefit cuts.
Details:
— CMS says MA rates go up by 4.33%. But plans will take issue with including a risk score trend of 2.1% in the calculation. Plans will say they will get closer to a 2.23% because plans do not count the coding increase as a real revenue increase. They see it as offsetting a rise in risk/costs.
— While this is progress from 2024 and 2025, MA plans ultimately will see this as inadequate. It means MA rates will have gone up just 0.95% over 3 years when the industry is battling a return of utilization, inflation, and increased costs due to new laws and regulations (e.g., PA restrictions and IRA Part D costs).
— With just a real 2.23% increase in 2026, we can expect more contraction of benefits and choice and increases in cost-sharing and premiums. Big, publicly traded plans will have to contract again to hit long-term margins promised to investors.
— CMS said suspending the final year of the risk model phase-in or medical education changes would have added $10.4 billion to costs. The increase alone will cost about $21 billion.
— A much higher growth rate drove most of the hike. This was largely due to growth in costs in the FFS program (5.67%) and MA (7.70%) for non-ESRD populations.
— But this was largely offset by a -0.69% loss of revenue due to poor Star performance and the risk model and normalization changes of -3.01%.
— The minimum statutory coding pattern adjustment stayed at a -5.90%, resulting in no difference from year to year.
— The incoming Trump administration may offer some relief on the risk model.
CMS release and fact sheet: https://www.cms.gov/newsroom/fact-sheets/2026-medicare-advantage-and-part-d-advance-notice-fact-sheet and https://www.cms.gov/newsroom/press-releases/cms-releases-proposed-2026-payment-policy-updates-medicare-advantage-and-part-d-programs
Additional articles: https://www.beckerspayer.com/policy-updates/cms-proposes-21b-payment-increase-for-medicare-advantage-in-2026-10-notes.html
#cms #medicareadvantage #healthplans #rates
