The Centers for Medicare & Medicaid Services (CMS) on April 7 released the Contract Year 2026 Medicare Advantage (MA) and Medicare Part D Rate Notice (PDF). The rate notice, issued annually, provides updates to MA payment rates and technical updates to keep MA payments up to date and accurate. Originally, in the 2026 Advance Notice, the CMS had proposed an effective growth rate of 5.93%, resulting in an expected average change of 4.33% or 2.23% without accounting for the MA risk score trend [refer to Washington Highlights, Jan. 17]. However, due to additional fee-for-service (FFS) data from the fourth quarter of 2024 not available at the time of the Advance Notice, the agency is finalizing a new effective growth rate of 9.04% for an expected increase in revenue of 5.06% without the risk score trend for CY 2026. This is significantly higher than what MA plans have received in recent years and is expected to result in $25 billion more in payments to plans in 2026.
The agency will also complete the phase-in of two technical changes, including the completion of the three-year phase-in of the 2024 CMS-Hierarchical Condition Category updated risk adjustment model. This finalizes the shift in MA’s diagnosing coding from ICD-9 to ICD-10 and removes certain codes from the hierarchical condition categories model. Additionally, the agency is finishing the final phase of its implementation of a technical adjustment to the per capita cost calculations used for determining the effective growth rate. This adjustment is specifically related to how indirect medical education and direct graduate medical education costs are included in that calculation.