Biden Admin’s Parting Gift to Medicare Advantage Plans: Proposed Pay Boost of 4.33%
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Jan 16, 2025
As Medicare Advantage insurers pursue margin recovery after experiencing higher-than-expected medical cost growth, CMS on Jan. 10 provided a bit of good news with its preliminary rate notice for next year. Posting the so-called Advance Notice three weeks early, CMS estimated that MA plans on average will see a revenue increase of 4.33% in 2026, which experts say could be even higher if the incoming administration applies more recent cost data to its final estimates.
CMS’s projected revenue change for 2026 was based on an effective growth rate of 5.93% (which is largely driven by growth in fee-for-service [FFS] per capita costs) and an average risk score increase of 2.10% increase in risk scores. Take off -0.69% due to Star Ratings changes and -3.01% due to FFS normalization and risk adjustment model updates, and plans could see an estimated 4.33% increase, according to a fact sheet on the 2026 Advance Notice of Methodological Changes for MA Capitation Rates and Part C and Part D Payment Policies.
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