CMS releases CY 2026 Medicare Advantage payment policies

Medicare Advantage payments are expected to increase by an average of 5.06% next year, according to the recently released 2026 Rate Announcement for the Medicare Advantage and Medicare Part D Prescription Drug Programs. 

CMS released the Rate Announcement for calendar year (CY) 2026 yesterday, promising to also protect MA and the Medicare Part Programs from waste, fraud and abuse. The final policies in the latest Rate Announcement are projected to boost payments from the federal government to MA plans by about $25 billion in CY 2026. 

CMS said the MA payment increase of 2.83 percentage points compared to the CY 2026 Advance Notice is mainly because of the increase in the MA growth rate. The effective growth rate is currently 9.04%, higher than the estimated 5.93% in the Advance Notice. CMS used additional fee-for-service expenditure data, including payment data through the fourth quarter of 2024, resulting in a higher growth rate. 

The CY 2026 Rate Announcement will also complete the phase-in of changes to the MA risk adjustment model finalized in the CY 2024 Rate Announcement and the removal of medical education costs from growth rate calculations. CMS said the changes will protect beneficiaries and taxpayers from fraud, waste and abuse by supporting more sustainable MA program practices although payers have criticized the risk adjustment modifications. 

The changes to MA risk adjustment include a reduction in the number of diagnosis codes included, breakout of some hierarchical condition categories (HCCs) and changes in the weights of HCC demographic elements. CMS expects this new model to better represent the actual acuity of Medicare beneficiaries. However, the average risk adjustment factor is expected to decrease while new-to-Medicare members should see a slight increase in their risk adjustment factors, per PwC. 

America's Health Insurance Plans (AHIP), which has been critical of risk adjustment changes to MA, was relatively quiet about the CY 2026 Rate Announcement. 

"Medicare Advantage is vital to the health and wellbeing of 34 million Americans, who count on the program for better care and protection from steadily rising medical costs," AHIP President and CEO Mike Tuffin said in an official statement yesterday.  

"As health plans review the new policies released in the last two days, they will continue to focus on helping seniors stay healthy, closing gaps in care and supporting those with chronic illness," Tuffin continued. 

Meanwhile, the Better Medicare Alliance (BMA), a research and advocacy organization supporting MA beneficiaries, applauded the Trump administration for increasing MA rates in CY 2026. 

"After two years of Medicare Advantage cuts, this payment rate will provide stability for millions of beneficiaries who have faced plan closures, higher costs, and reduced benefits," said Mary Beth Donahue, president and CEO of BMA.  

"Protecting this program has never been more important. We look forward to continuing to work with the Trump Administration, CMS Administrator Oz, and Congress to advance policies that will strengthen Medicare Advantage for seniors and taxpayers," Donahue added. 

CMS also released the final CY 2026 Part D Redesign Program Instructions alongside the Rate Announcement. The policy will establish the annual out-of-pocket threshold at $2,100. 

The federal agency also recently released its Contract Year 2026 MA and Part D final rule this week, rejecting a Biden-era policy that would have Medicare and Medicaid cover anti-obesity drugs.  

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.