Radar on Medicare Advantage

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.

Dayton, Ohio-based CareSource, one of the largest not-for-profit operators of managed Medicaid plans, has acquired Commonwealth Care Alliance (CCA), a not-for-profit insurer based in Boston with a long history of serving Medicare-Medicaid dual eligibles. The deal will enable struggling CCA to meet state funding requirements and “move forward to strengthen and enhance care for CCA’s members and patients,” a CareSource spokesperson tells AIS Health, a division of MMIT.

“As nonprofit, mission-driven organizations, CareSource and CCA share a commitment to putting members at the center of everything they do,” says the spokesperson. “CareSource will bring its strong business fundamentals, operational efficiency, scale and complex care capabilities alongside CCA’s deep expertise in delivering community-centered, disability-competent care in Massachusetts to improve health outcomes for individuals with complex health needs.”

In a move cheered by health insurers, President Donald Trump’s administration said on April 4 that it decided not to implement the part of a proposed rule that would have significantly expanded Medicare and Medicaid coverage of weight-loss medications. But whether the administration will ever reconsider its stance is anyone’s guess, experts say. 

In its proposed Medicare Advantage and Part D rule for the 2026 contract year, issued in November 2024, former President Joe Biden’s administration sought to reinterpret the Social Security Act’s longstanding, statutory Part D coverage exclusion of drugs “used for anorexia, weight loss, or weight gain.” In doing so, drugs used to treat obesity — like the GLP-1 Wegovy (semaglutide) — would then have to be covered by Medicaid. 

Via a slew of program audit notices issued this month, CMS placed Medicare Advantage startup eternalHealth, Inc. on an enrollment freeze and said it intends to fine 10 other organizations for program violations such as inappropriately rejecting covered Part D medications. Molina Healthcare, Inc. was asked to pay the largest of penalties, $285,000, after a program audit found the insurer did not properly administer Part D formulary and benefits to enrollees in contract H5649. According to an April 1 letter to the insurer, CMS found that “programming errors” resulted in inaccurate eligibility files sent to Molina’s PBM, which then inappropriately voided enrollees’ active coverage and rejected claims for enrollees who were still covered. The agency noted that such failures result in delayed access to medications, unnecessary out-of-pocket costs for medications, or beneficiaries never receiving medications. CMS is also seeking a civil monetary penalty of more than $20,000 from Centene Corp. for its failure to comply with Part D Coverage Determinations, Appeals, and Grievances, and a penalty of nearly $56,000 from Point32Health for Part D program violations in the areas of CDAG and formulary and benefits administration. The agency also issued penalty notices to three providers of Programs of All-Inclusive Care for the Elderly. Meanwhile, CMS informed Boston-based eternalHealth that it must stop enrolling and marketing to Medicare beneficiaries, mirroring a separate order from the Massachusetts Office of Consumer Affairs and Business Regulations after the insurer failed to meet state financial solvency requirements. 

Medicare Advantage insurers in recent years have launched tailored plans, sometimes referred to as affinity plans, designed to serve the unique needs of a community within their service area. Veterans increasingly fall into this category, yet little is known about their health care utilization in MA versus the Veterans Administration (VA). AIS Health, a division of MMIT, estimates that approximately 897,000 individuals were enrolled in veteran-targeted plans as of February.

Featuring military-associated words like Courage, Liberty, Patriot, Salute and Valor in their names, these plans promote extra benefits that “wrap around” enrollees’ VA coverage and the freedom to see more doctors and pharmacies outside the VA. Using February 2025 enrollment data from CMS, cross-referenced with insurer websites, press releases and benefits summaries, AIS Health identified at least 330 plans that were clearly designed for or marketed to veterans.