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CMS Releases Proposed 2026 Payment Policy Updates for Medicare Advantage and Part D Programs

Centers for Medicare & Medicaid ServicesNewsroom




FOR IMMEDIATE RELEASE
January 10, 2025

Contact: CMS Media Relations
(202) 690-6145 | CMS Media Inquiries [ https://www.cms.gov/About-CMS/Public-Affairs/PressContacts/Media-inquiries1.html ]

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*CMS Releases Proposed 2026 Payment Policy Updates for Medicare Advantage and Part D Programs *

" Proposed policies would continue to keep Medicare Advantage and Part D stable "

Today, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Advance Notice for the Medicare Advantage (MA) and the Medicare Part D Prescription Drug Programs that would update payment policies for these programs. This release complements the Contract Year 2026 MA and Part D proposed rule that CMS released in November 2024 [ https://www.cms.gov/newsroom/fact-sheets/contract-year-2026-policy-and-technical-changes-medicare-advantage-program-medicare-prescription#:~:text=The%20Contract%20Year%20(CY)%202026,need%20when%20they%20need%20it. ]. If finalized, these policies and updates would continue commonsense, fiscally responsible technical updates to MA payments. Payments from the government to MA plans are expected to increase on average by 4.33%, or over $21 billion, from 2025 to 2026, as proposed.

“CMS has worked to ensure that people with Medicare Advantage and Medicare Part D have access to stable and affordable offerings,” said CMS Administrator Chiquita Brooks-LaSure. “Today’s Advance Notice continues CMS’ efforts to provide access to affordable, high-quality care in Medicare Advantage while being a good steward of taxpayer dollars. We are also continuing implementation of the Inflation Reduction Act, ensuring people with Medicare Part D have more affordable coverage for their medications.”

The CY 2026 Advance Notice proposes annual, technical updates to MA and Part D to ensure payments to plans are up-to-date and accurate. CMS proposes to complete its implementation of a three-year phase-in of improvements to the MA risk adjustment model and growth rate calculation related to medical education costs as described in the CY 2024 Rate Announcement, as well as other technical improvements. In 2023, CMS announced its plan to complete this phase-in over three years to provide a glide path and predictability for plans and providers while implementing important updates to ensure people with MA can continue to access the care they need and that taxpayer dollars are well spent.

The federal government is expected to spend $9.2 trillion over the next decade on MA payments to plans—$1.3 trillion of those MA payments are MA rebate dollars used for MA supplemental benefits and premium buy-downs—and it is crucial these payments are accurate to prevent wasteful spending. For 2025, MA offerings for people with Medicare remained stable—including premiums, supplemental benefits, and coverage options. Additionally, MA rebates have stayed stable at more than $2,400 annually per person on average, which indicates that MA payment has remained adequate during the phase-in of these updates. Pausing the risk adjustment model phase-in would result in $3.4 billion in additional payments to MA plans, and pausing the technical adjustment to growth rates regarding medical education costs would add $7.0 billion, which, combined, would result in an additional $10.4 billion in payments to MA plans in 2026 that are not necessary to support stability in the program.

“The Advance Notice continues a data-driven approach that ensures MA payment is accurate,  drives competition, and supports accountable care, shifting the focus to managing care and improving outcomes,” said CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani, MD, Ph.D.

CMS is concurrently releasing the Draft CY 2026 Part D Redesign Program Instructions that continue to implement the redesign of the Medicare Part D program. The Inflation Reduction Act redesigned Medicare Part D to reduce prescription drug costs and improve benefits for Medicare enrollees, including the first-ever cap on annual out-of-pocket prescription drug costs for all people with Medicare prescription drug coverage that went into effect on January 1, 2025. Thanks to the Inflation Reduction Act, annual out-of-pocket costs will be capped at $2,100 in 2026 for people with Medicare Part D, which is the 2025 out-of-pocket cap of $2,000 indexed for inflation.

The CY 2026 Advance Notice and Draft CY 2026 Part D Redesign Program Instructions are open for public comment, and CMS will accept comments through 11:59 PM Eastern Time on February 10, 2025. The CY 2026 Rate Announcement and the CY 2026 Part D Redesign Program Instructions will be published no later than April 7, 2025.

The CY 2026 Advance Notice may be viewed at https://www.cms.gov/files/document/2026-advance-notice.pdf.

A fact sheet discussing the provisions of the CY 2026 Advance Notice can be viewed at https://www.cms.gov/newsroom/fact-sheets/2026-medicare-advantage-and-part-d-advance-notice-fact-sheet.

The Draft CY 2026 Part D Redesign Program Instructions can be found at https://www.cms.gov/files/document/draft-cy-2026-part-d-redesign-program-instructions.pdf.

A fact sheet discussing the provisions of the Draft CY 2026 Part D Redesign Program Instructions can be viewed at https://www.cms.gov/newsroom/fact-sheets/draft-cy-2026-part-d-redesign-program-instructions-fact-sheet.

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