CMS Finalizes 2026 Medicare Advantage and Part D Policies, Boosts Payments

The Centers for Medicare & Medicaid Services (CMS) has announced finalized policies for the 2026 Medicare Advantage (MA) and Part D Prescription Drug Programs, revealing significant shifts in the payment structures. Highlighted by an average 5.06% increase in Medicare Advantage payment rates, this substantial rise from the earlier proposed 2.2% increase in January is more than double, reflecting a marked adjustment from a slight decrease in 2025. This development, based on updated insurer cost data from 2024, suggests a strategic response to escalating healthcare expenditures in these plans.

The new policies also initiate the next phase of a three-year implementation of an enhanced risk adjustment model, first revealed in the 2024 rate notice. This model is designed to more accurately assess patient needs and enables fair compensation for insurers who manage higher-risk populations. As a result of these changes, key players like UnitedHealth Group, Humana, CVS Health, and Elevance Health have experienced a boost in market confidence, as indicated by a rise in their stock prices following the announcement.

These updates from CMS aim to strengthen the Medicare Advantage program by combatting fraud, improving service delivery, and ensuring the program's sustainability and efficiency, which underscores the government's ongoing commitment to high-quality and accessible healthcare for seniors and those with disabilities.