The Centers for Medicare & Medicaid Services (CMS) has concluded its three-year adjustment to Medicare Advantage payment rates with a larger-than-expected increase. The agency aims to narrow the gap between rising treatment costs and government benchmark payments.
In a statement, CMS emphasized that the annual adjustments to Medicare Advantage and Medicare Part D Prescription Drug Programs are designed to protect beneficiaries and taxpayers from waste, fraud, and abuse.
These adjustments will ensure that Medicare Advantage continues to provide access to essential health services efficiently and responsibly, strengthening the program's ability to serve beneficiaries, the statement said.
How much is the increase?
In its Advance Notice last January, the government announced a 2.83% increase, but it has now opted for a 5.06% hike. The change stems from a higher-than-expected growth rate-9.04% compared to the initial 5.93% projection.
The revised rate is primarily due to additional data on fee-for-service expenditures, including payment records through the fourth quarter of 2024, which were not factored into the initial estimate.
This adjustment translates to an estimated $25 billion increase in total government payments to Medicare Advantage plans in 2026-funded by taxpayer dollars.
Impact on beneficiaries
The 5.06% increase reflects an average adjustment, meaning actual payments to individual plans may vary. While beneficiaries won't experience immediate effects, the higher rates could influence premium costs, benefit structures, and plan availability in the upcoming enrollment period.
Critics of the measure argue that the increase may favor insurers more than beneficiaries. They urge consumers to carefully assess their options this fall, as plans adjust to the new reimbursement levels.