2026 CMS Rate Updates: 3 Key Changes
- Medicare Advantage (MA) plans are anticipated to receive a payment increase in 2026,according to the Centers for Medicare & Medicaid Services (CMS).
- MA advocates have reacted positively to the final Rate Announcement,which confirms an expected average revenue increase of 5.06%, totaling more than $25 billion for MA plans.
- the agency also noted that the expected average change in revenue does not account for adjustments in underlying MA coding trends, which are projected to increase risk scores...
Medicare Advantage (MA) plans are poised for a payment increase in 2026, according to the latest CMS updates. This means notable changes are coming,with an expected average revenue boost of 5.06%, a marked rise from initial projections. The 2024 CMS-HCC risk adjustment model will also be fully implemented. Furthermore, the Star Ratings health Equity Index will undergo a review and renaming. these key changes in Medicare Advantage payments, risk adjustment, and star ratings detailed in the final announcement from the Centers for Medicare & Medicaid services represent major shifts, impacting MA plans and over half of all Medicare enrollees as they strategize for future growth and operational efficacy. News Directory 3 is on top of the announcements. Discover what’s next as CMS considers additional factors for the Excellent Health outcomes for All (EHO4all) reward.
Medicare Advantage Plans Projected for Payment Increase in 2026
Updated June 04,2025
Medicare Advantage (MA) plans are anticipated to receive a payment increase in 2026,according to the Centers for Medicare & Medicaid Services (CMS). The Final Medicare Advantage and Part D Rate Announcement outlines policy and payment updates for MA plans,which currently serve over half of all Medicare enrollees. This announcement details key changes from the Advance Notice, providing crucial insights for MA plans as they strategize for the future. The CMS update focuses on Medicare Advantage payment, risk adjustment and star ratings.
MA advocates have reacted positively to the final Rate Announcement,which confirms an expected average revenue increase of 5.06%, totaling more than $25 billion for MA plans. This marks a meaningful rise from the 2.23% (over $21 billion) projected in the Advance Notice released in January. CMS attributed the change to the inclusion of additional data on fee-for-service (FFS) expenditures, including payment data through the fourth quarter of 2024.
the agency also noted that the expected average change in revenue does not account for adjustments in underlying MA coding trends, which are projected to increase risk scores by an average of 2.10%.
| Impact | 2026 Rate Announcement | 2026 Advance Notice |
|---|---|---|
| Effective growth rate | 9.04% | 5.93% |
| Change in Star Ratings | -0.69% | -0.69% |
| MA coding pattern adjustment | 0.00% | 0.00% |
| Risk model revision and FFS normalization | -3.01% | -3.01% |
| Expected average change in revenue | 5.06% | 2.23% |
CMS has finalized plans to fully implement the 2024 CMS-HCC risk adjustment model, as initially proposed in the Advance Notice. For the 2026 calendar year, risk scores will be calculated entirely using the 2024 CMS-HCC model. This transition aligns with the continued use of multiple linear regression methodology, which was implemented in 2025 for the FFS normalization factor. This adjustment to risk scores is designed to reflect the actual risk by accounting for the anticipated growth in the average FFS risk score over time.
The agency anticipates a 0.69% decrease in overall Star Ratings quality bonus payments. However, CMS deferred action on most proposed Star Ratings changes in the Final Rule, with the exception of expanding the Breast Cancer Screening measure to include ages 40–49, starting in the 2029 Star Ratings.
CMS also announced plans to review the Health Equity Index reward, which is currently scheduled for implementation in the 2027 Star Ratings. This review will ensure consistency with Executive Order 14192, as well as other regulations and policies. The agency is also renaming the Health Equity Index to Excellent Health outcomes for All (EHO4all), stating that the new name “better captures the goal of ensuring exceptional care for all enrollees.”
What’s next
CMS will consider adding factors beyond dual eligibility,receipt of the low-income subsidy and disability to determine the EHO4all reward. Geography, such as urban or rural areas, is one potential factor under consideration.