On January 10, 2025, CMS released the 2026 Medicare Advantage (MA) and Part D Advance Notice. The Advance Notice proposes technical updates that impact capitated rates for MA organizations (MAOs). The final Rate Announcement will be published by April 7, 2025. CMS is accepting comments on the Advance Notice through February 10, 2025.
If finalized, the proposed policies included in the Advance Notice would increase payments to MA plans in calendar year (CY) 2026 by $21 billion (4.33% on average) compared to CY 2025. MA plan sponsors should review the Advance Notice carefully as they begin pricing bids for CY 2026.
Given that the outgoing Biden administration issued the Advance Notice and the Trump administration will finalize the Rate Announcement, it is possible there will be changes to the technical updates impacting capitated rates.
What Changes Are Proposed in the Advance Notice?
Below is a summary of key updates included in the Advance Notice.
- Part C Risk Adjustment Model – Non-PACE Organizations: For MAOs that are not Program of All-Inclusive Care for the Elderly (PACE) organizations, CMS proposes completing the phase-in of the CMS-HCC 2024 risk adjustment model by using it to calculate 100% of MA risk scores in CY 2026.
- Part C Risk Adjustment Model – PACE Organizations: For MAOs that are PACE organizations, CMS will begin phasing in the CMS-HCC 2024 risk adjustment model. In CY 2026, the agency proposes calculating risk scores based on a blend using 10% of the CMS-HCC 2024 model and diagnoses from encounter data and fee-for-service (FFS) claims only and 90% of the CMS-HCC 2017 model and diagnoses from the Risk Adjustment Processing System (RAPS), encounter data, and FFS claims.
- Part C Risk Adjustment Model – ESRD Enrollees: CMS proposes continuing to use the 2023 End-Stage Renal Disease (ESRD) CMS-HCC models to calculate risk scores for beneficiaries in dialysis, transplant, and post-graft status.
- MA Risk Score Trend: CMS proposes calculating the risk score trend for CY 2026 using two years of data based on 2021 and 2022 dates of service rather than using the three most recent continuous years of risk score data. This would exclude dates of service in 2020, which include utilization data impacted by the COVID-19 public health emergency. The resulting risk score trend is 2.10% (compared to 3.86% for CY 2025). For CY 2027, CMS announces its intention to use data from a three-year period to calculate the MA risk score trend.
- Medical Education Phased Out: As initially finalized in the CY 2024 MA Rate Announcement, CMS proposes fully removing the per capita indirect and direct medical education costs from the MA benchmarks. This change lowers the 2026 non-ESRD Medicare FFS United States Per Capita Costs (USPCC) and the corresponding non-ESRD FFS growth percentage by 1.42%. This growth percentage is used to calculate the benchmark amount in all counties. CMS does not anticipate this change will impact the 2026 dialysis ESRD USPCC.
- CY 2026 Star Ratings Update: CMS notes it is adding one new measure (Kidney Health Evaluation for Patients With Diabetes) to the CY 2026 Star Ratings used to assess the quality of MA and Part D plans. It is also returning two other measures (Improving or Maintaining Physical Health and Improving or Maintaining Mental Health) after substantive specification changes.
- In 2026, the new measure will have a weight of one. The two returning measures will have a weight of one for the 2026 Star Ratings, which will increase to a weight of three beginning with the 2027 Star Ratings.
- In addition, the CY 2026 Advance Notice provides a list of eligible natural disasters that qualify measures for adjustment, a list of non-substantive measure specification updates, and a list of Part C and D Improvement measures and the Categorical Adjustment Index for the CY 2026 Star Ratings.
- CY 2026 Star Ratings Deadlines: Requests for reviews of Complaint Tracking Module data must be submitted by May 30, 2025. All contracts must submit requests for review of 2024 appeals data by June 30, 2025.
The 2023 Medicare FFS county-level cost data, used in the development of the 2026 ratebook, is available here. CMS’ fact sheet on the Advance Notice is available here.
How Forvis Mazars Can Help
Forvis Mazars helps MA plans and other payors develop regulatory excellence to strategically navigate evolving policies and support your pursuit of achieving health for your organization and those you serve. If you have questions about the CY 2026 MA Advance Notice and how it may impact your organization, please reach out to our professionals.