The Biden administration’s last Advance Notice on the Medicare Advantage program proposed a 4.3% hike on average to MA reimbursement, which would result in $21 billion in additional payments to insurers next year. The rule increases the average benchmark payment to MA plans by 2.2%, with insurers’ coding for member sicknesses making up the rest of the projected payment jump. The rule also completes the phase-in of changes to insurers’ coding practices that are unpopular with the industry. Still, the proposal could be tweaked by the Trump administration before it’s finalized in the spring.
More on Advanced Notice
CMS projects an average payment increase of 4.33% for MA plans from 2025 to 2026, translating to over $21 billion in additional payments. These changes reflect ongoing refinements to ensure accurate, up-to-date reimbursement structures that support high-quality, affordable care for Medicare enrollees. CMS highlighted the overall increase after adjusting payments based on patient population health. For 2026, the proposed base rate is 2.23%, with a total increase of 4.33% when factoring in health risk scores.
A key component of the 2026 Advance Notice is the completion of a three-year phase-in of updates to the MA risk adjustment model and growth rate calculations. Originally outlined in the 2024 Rate Announcement, these updates account for medical education costs and other technical improvements. CMS’s phased approach aims to balance predictability for plans and providers while enhancing the accuracy and integrity of MA payments.
For 2025, MA offerings remained stable, with consistent premiums, supplemental benefits, and plan options. Rebates averaged more than $2,400 per person annually, demonstrating that payment levels have been adequate under the phased implementation. These results support CMS’s strategy of responsible, data-driven adjustments to MA payment policies.
Concurrently, CMS has released Draft CY 2026 Part D Redesign Program Instructions. This guidance advances implementation of the Inflation Reduction Act’s prescription drug cost reforms. Key provisions include the first-ever cap on annual out-of-pocket prescription drug costs, set at $2,100 for 2026, adjusted from the $2,000 cap in 2025 for inflation. It also continued efforts to improve affordability and access for Medicare beneficiaries.
Medicare Advantage Scrutiny and Trump Administration Prospects
Despite its growth and popularity, Medicare Advantage faces increasing scrutiny from Congress. Key concerns include a high rate of care denials and restrictive cost-control mechanisms. Plans often maintain narrow networks, requiring enrollees to pay out-of-pocket for out-of-network care, and impose prior authorization rules that require provider approval before certain services or prescriptions are delivered.
While Medicare Advantage did not receive significant attention on the campaign trail, the Trump administration often provided favorable payment updates during his first term. Trump’s nominated CMS Administrator, Mehmet Oz, praised the program, which allows older Americans to purchase private plans offering benefits beyond traditional Medicare, such as dental, hearing, food deliveries, and transportation to medical appointments.