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
Walgreens Claws Back
Walgreens is slowly turning around its financial malaise. It is making progress renegotiating contracts with pharmacy benefit managers (PBMs) and selling its VillageMD stake. It also closed 70 underperforming stores.
It continues to pare its operations and costs. It still had a $265 million net loss, but investors saw reason for optimism.
Additional article: https://www.healthcaredive.com/news/walgreens-q1-2025-pharmacy-turnaround/737003/
(Some articles may require a subscription.)
#walgreens #pharmacies
https://www.modernhealthcare.com/providers/walgreens-tim-wentworth-villagemd-sale-pbm-contracts
Some Predict Digital Health To Rebound; Others See Bankruptcies
While some have predicted a rebound for digital health, other analysts predict that digital health failures and bankruptcies will continue.
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#digitalhealth #healthcare
https://www.modernhealthcare.com/digital-health/investors-venture-capital-startup-bankruptcies-2025
Advocacy Groups Urge Trump To Keep Proposed Obesity Coverage In Medicare
Over 70 groups are pressing the incoming Trump administration to finalize the Biden administration’s proposal to cover anti-obesity medications in Medicare and Medicaid. But with Trump searching for dollars to pay for continuation of tax cuts, he is likely to rescind the proposal.
(Article may require a subscription.)
#glp1s #weightlossdrugs #drugpricing #branddrugmakers #medicare #partd #medicareadvantage #pdp
AARP Looks At Drug Price Hikes
A study by senior advocacy group AARP finds that list prices for the top 25 most expensive Medicare Part D drugs not selected for Medicare price negotiation have risen by an average of 98% since the drugs first entered the market. The group says it shows how important the drug negotiation law is.
(Article may require a subscription.)
#ira #drugpricing #branddrugmakers #medicare #partd #pdp #medicareadvantage
Supreme Court To Hear ACA Preventive Services Case
The Supreme Court will hear a case determining the fate of free preventive services under the Affordable Care Act (ACA). The provision of such services has been partially struck in a lower court.
#prevention #preventivebenefits #aca #obamacare #supremecourt
https://thehill.com/policy/healthcare/5080442-supreme-court-decision-free-preventive-services
Biden Issues AI Plan
The Department of Health and Human Services (HHS) published an Artificial Intelligence Strategic Plan that calls for sharing national health AI-specific guidelines, creating sandboxes for industry collaboration, evaluating quality assurance, and improving cybersecurity. The goal is to promote the safe, responsible, and effective use of AI in healthcare. The Trump administration is likely to take a very different approach overall to AI.
(Article may require a subscription.)
#ai #biden #trump #regulation
— Marc S. Ryan
