Payments to Medicare Advantage plans would rise 4.33% next year under a policy the Centers for Medicare and Medicaid Services unveiled Friday.
The advance notice, which will be finalized under the incoming administration of President-elect Donald Trump, is likely President Joe Biden's last word on Medicare Advantage after implementing significant changes to the program during his term. Medicare Advantage insurers endured a small rate cut for 2025.
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CMS laid out the final steps to implement the Medicare Advantage risk-adjustment system it introduced in 2023. Medicare Advantage carriers have complained that the system is inadequate but CMS rejected calls to pause the phase-in, citing excess costs. On Friday, CMS proposed updating the data used for Medicare Part D risk adjustment.
The agency also announced plans to consider the effects of natural disasters on Medicare Advantage and Part D star ratings. Last month, Florida Blue sued CMS, arguing the agency should have factored in flooding in Broward County in 2023 and awarded the insurer a higher score.
On Friday, CMS said it would continue adapting the Star Ratings program to align with the Universal Foundation, its initiative to simplify quality measurement.
“The data-driven, commonsense policies in the advanced notice, paired with the proposals in the 2026 MA and Part D proposed rule that we released in November and the draft calendar year 2026 Part D redesign program instruction, together ensure that beneficiaries can access the benefits and services they are entitled to,” Center for Medicare Director Dr. Meena Seshamani said during a news conference Friday.
CMS will accept comments through Feb. 10. The final Medicare Advantage and Part D rate notice will appear by April 7, the agency said.
"President Trump can immediately deliver on his promise to protect Medicare for seniors by examining these policies, including ensuring the rates keep up with increasing medical costs and that the final rate notice provides much needed stability for seniors,” Better Medicare Alliance President and CEO Mary Beth Donahue said in a news release.
“We are carefully reviewing this proposal," the health insurance trade group AHIP said in a statement. "With seniors already experiencing higher costs, reduced benefits and fewer coverage choices as a result of two consecutive years of cuts to Medicare Advantage, it is critical that policymakers provide stability for the 34 million Americans who choose and rely upon the program."
