The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (PDF). The advance notice, issued annually, proposes updates to MA payment rates and technical updates to keep MA payments up to date and accurate. The proposals would result in a net increase of 4.33% in MA payments to plans on average, resulting in over $21 billion in additional payments for CY 2026.
Most notable for CY 2026, the agency is proposing to complete the phase-in of two technical changes. The first is the completion of the three-year phase-in of the 2024 CMS-Hierarchical Condition Category updated risk adjustment model. The second is completion of the introduction of technical adjustment to the per capita cost calculations used for determining the effective growth rate. Specifically, the technical adjustment is related to how indirect medical education and direct graduate medical education costs are included in that calculation. The CMS points out that if they were to pause the phase-in of these policies, it would result in an additional $10.4 billion in payments to MA plans that are not necessary to support stability in the program. However, the agency warns that it is critical to ensure accurate payments in MA as the program continues to grow. Lastly, the agency stated it will have the ability to phase-in an encounter data-based risk adjustment model beginning in 2027 and may explore doing so in future rulemaking.
Comments are due Feb. 10, and the final rate announcement for CY 2026 must be announced by April 7.