The increase takes effect in 2026
of ConsumerAffairsApril 8, 2025
The Centers for Medicare & Medicaid Services (CMS) has released funding information for calendar year 2026 for Medicare Advantage and Medicare Part D Prescription Drug Programs, increasing the amount previously proposed.
Government payments to Medicare Advantage plans are projected to rise by an average of 5.06% from 2025 to 2026, a notable increase of 2.83 percentage points compared to the initial estimate in the CY 2026 Advance Notice. The adjustment reflects updated data that has influenced the effective growth rate, which is now set at 9.04%, up from the prior estimate of 5.93%.
The increase is largely attributed to the incorporation of more complete fee-for-service expenditure data, including payment records through the fourth quarter of 2024, which were previously unavailable due to the early publication of the Advance Notice.
Mary Beth Donahue, CEO of Better Medicare Alliance, an advocacy group, said Medicare Advantage enrolleesshould benefit from the change.
As we continue to review the final rule, we are encouraged that the administration took a measured approach and declined to make major changes at this time, Donahue said in a statement.
With millions of Medicare Advantage beneficiaries still facing significant impacts from two years of Medicare Advantage cuts and other policy changes, this is the right decision to protect seniors and the Medicare Advantage program.
Two major technical changes
CMS is finalizing the phase-in of two major technical changes that began in 2024:
-
Medical education cost adjustment: The agency is completing a three-year process to remove medical education costs related to MA enrollee services from the FFS expenditure baseline. For CY 2026, 100% of the adjustment will be applied, ensuring a more accurate reflection of expenditures used to set payment benchmarks.
-
Risk adjustment model update: CY 2026 marks the second year in CMSs phased implementation of a refined MA risk adjustment model, which aims to improve payment accuracy based on enrollee health status and utilization patterns. The agency emphasized that these changes are critical for advancing fair and efficient funding of Medicare services.
In tandem with the rate announcement, CMS has issued the Final CY 2026 Part D Redesign Program Instructions, detailing the next steps in the ongoing transformation of the Medicare Part D drug benefit. These instructions provide stakeholders with updated guidance on benefit changes and implementation processes slated for the 2026 plan year.
CMS officials say the redesign initiative aims to improve drug affordability and access for seniors, aligning with broader efforts to modernize and streamline Medicares prescription drug offerings.
Sign up below for The Daily Consumer, our newsletter on the latest consumer news, including recalls, scams, lawsuits and more.
.newsletter-form {
display: flex;
max-width: 400px;
margin: 20px auto;
background: #f8f9fa;
padding: 10px;
border-radius: 8px;
box-shadow: 0 4px 6px rgba(0, 0, 0, 0.1);
}
.newsletter-input {
flex: 1;
padding: 10px;
border: 1px solid #ccc;
border-radius: 5px 0 0 5px;
font-size: 16px;
outline: none;
}
.newsletter-input:focus {
border-color: #007bff;
}
.newsletter-button {
background: #2976D1;
color: white;
border: none;
padding: 10px 15px;
font-size: 16px;
border-radius: 0 5px 5px 0;
cursor: pointer;
transition: background 0.3s ease;
}
.newsletter-button:hover {
background: #0056b3;
}
#Trump #administration #allocates #increased #funding #Medicare #Advantage