2026 Final Rate Notice Offers ‘Short-Term Relief’ to Medicare Advantage Insurers
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Apr 17, 2025
In its final payment update for Medicare Advantage and Part D plans, CMS under President Donald Trump projected a higher-than-expected revenue increase of 5.06% — which can be even higher depending on plans’ risk scores — providing much-needed relief for MA insurers that have struggled to keep up with elevated costs and maintain margins. But industry experts caution plans against getting too comfortable, as the increase was driven by higher fee-for-service (FFS) Medicare costs that may continue to rise.
Released on April 7 as part of CMS’s Announcement of Calendar Year (CY) 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, the rate increase is the “strongest in the last 10+ years,” just barely exceeding the prior high of 5.00% in 2023, wrote Bank of America Global Research analyst Joanna Gajuk in an April 7 research note. But rather than considering an estimated 7.16% increase with underlying coding trend, she suggested relying on 5.06% as the “cleaner number” given that “coding lift…can vary significantly by company.” Like the Advance Notice released by CMS in January under President Joe Biden, the final rate notice also estimated an average risk score increase of 2.10%. “[W]e have historically assumed a 1-2% lift from coding,” wrote Gajuk.
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