In the CY 2026 MA and Part D Advance Notice, CMS proposed updates to payment factors for CY 2026 and received a wide variety of comments on our proposals. CMS appreciates the submitted comments. We considered applicable comments as we finalized the policies contained in the CY 2026 Rate Announcement. The final policies in the CY 2026 Rate Announcement are projected to result in an increase of 5.06%, or over $25 billion, in MA payments to plans in CY 2026.

This fact sheet discusses the provisions of the Rate Announcement, which can be viewed by going to: https://www.cms.gov/medicare/payment/medicare-advantage-rates-statistics/announcements-and-documents and selecting “2026 Announcement.”

Net Payment Impact
The table below indicates the expected average impact of the policy changes and updates on MA plan payment parameters relative to last year. 

Year-to-Year Percentage Change in Payment

¹ Rebasing/re-pricing impact is dependent on finalization of the average geographic adjustment index, which was not available with the publication of the CY 2026 Advance Notice.

² Change in Star Ratings reflects the estimated effect of changes in the Quality Bonus Payments for the upcoming payment year.

³ The impact of the update to the Fee-for-Service (FFS) normalization factors for MA risk adjustment is not shown in the fact sheet separately because there is considerable interaction between the impact of the MA risk adjustment model updates and the normalization factor update. Therefore, the combined impact is shown in the fact sheet. 

⁴ The total does not include an adjustment for underlying coding trend in MA. For CY 2026, CMS expects the underlying coding trend to increase risk scores, on average, by 2.10%. 

Growth Rates
The Effective Growth Rate reflects the current estimate of the growth in benchmarks used to determine payment for MA plans. This growth rate is largely driven by the growth in Medicare Fee-For-Service (FFS) per capita costs, as estimated by the Office of the Actuary. Each year for the Rate Announcement, CMS updates the growth rates to be based on the most current estimate of per capita costs, based on the available historical program experience and projected trend assumptions at that time. The growth rates change between proposed and final as CMS incorporates updated data and assumptions. This year, the change in growth rates from the Advance Notice to the Rate Announcement is due primarily to the incorporation of additional FFS payment data, including through the fourth quarter of 2024. 

Included in the 2026 growth rate estimate is a technical adjustment to the per capita cost calculations related to indirect and direct medical education costs associated with services furnished to MA enrollees. CMS will complete the phase-in of this technical adjustment and apply 100% of the adjustment in CY 2026. 

Part C Risk Adjustment Model
CMS finalized an updated Part C Risk Adjustment Model (for organizations other than Program of All-Inclusive Care for the Elderly (PACE) Organizations) and announced a three-year phase-in of the use of that model, referred to as the 2024 CMS-HCC risk adjustment model, starting with CY 2024, as described in the CY 2024 Rate Announcement.^[1] CMS continued phasing in the 2024 CMS-HCC risk adjustment model for CY 2025 and, as proposed for CY 2026, CMS is completing the three-year phase-in of the 2024 CMS-HCC risk adjustment model. The agency is calculating 100% of the risk scores using only the 2024 CMS-HCC model. Additionally, CMS is continuing to use the multiple linear regression methodology implemented in CY 2025 for the FFS normalization factor. The FFS normalization factor is an adjustment to risk scores calculated using the models for CY 2026 payment to account for the expected growth in the average FFS risk score over time.

Part C Risk Adjustment Model for PACE Organizations
In the CY 2025 Rate Announcement, released April 1, 2024, CMS noted our intention to assist PACE organizations to fully transition to encounter data submissions and implementation of the same CMS-HCC model used for MA organizations. In January 2024, CMS released technical instructions to PACE organizations on the submission of risk adjustment data to the Encounter Data System (EDS) to begin transitioning all PACE organizations to submitting risk adjustment data to the EDS rather than the Risk Adjustment Processing System (RAPS). With the release of these technical instructions, CMS expects that PACE organizations are now submitting fulsome diagnosis data to the EDS. Since then, CMS has monitored PACE encounter data submissions and provided technical assistance to PACE plans to support the transition. While CMS anticipates that PACE organizations will be able to submit a full diagnostic profile to the EDS for their beneficiaries for 2025 dates of service for use for CY 2026 risk adjustment, CMS is finalizing a blended risk score for CY 2026 to further support the transition. For CY 2026, CMS is beginning this transition by calculating risk scores for PACE organizations as a blend of 10% of the risk score calculated using the 2024 CMS-HCC model and 90% of the risk score calculated using the 2017 CMS-HCC model. A full transition will further increase payment accuracy and reduce data submission burden on PACE organizations.

Puerto Rico
Policies specific to Puerto Rico that CMS is finalizing today include basing the MA county rates in Puerto Rico on the relatively higher costs of individuals in FFS who have both Medicare Parts A and B and applying an adjustment regarding the proportion of individuals with zero claims. For future years, CMS plans to continue to evaluate the methodology for calculating rates for Puerto Rico plans to ensure the rates are based on the best estimates of Medicare FFS per capita costs in Puerto Rico and reassess the need for ongoing special adjustments.

Inflation Reduction Act of 2022 (IRA) Updates for 2026
The IRA made several amendments and additions to the defined standard Part D drug benefit for CY 2023 and subsequent years. Part D benefit-related IRA updates will be in place for CY 2026 and are described in the CY 2026 Rate Announcement and the related Final CY 2026 Part D Redesign Program Instructions, including the establishment of the selected drug subsidy program and guidance on the successor regulation exception to the IRA’s formulary inclusion requirement for selected drugs under the Medicare Drug Price Negotiation Program. Other previously implemented IRA benefits will continue, including no cost sharing for enrollees in the catastrophic phase, which for 2026 begins after an annual out-of-pocket threshold of $2,100 is reached; a cap on enrollee cost sharing for a month’s supply of each covered insulin product, which, beginning in CY 2026, is the lesser of $35, 25% of the maximum fair price established under the Medicare Drug Price Negotiation Program, or 25% of the negotiated price under the prescription drug plan (PDP) or Medicare Advantage prescription drug (MA-PD) plan; no cost sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices that are covered under Part D; and the requirement for Part D sponsors to offer the Medicare Prescription Payment Plan. For more details, please see the Fact Sheet for the Final CY 2026 Part D Redesign Program Instructions available at https://www.cms.gov/newsroom/fact-sheets/final-cy-2026-part-d-redesign-program-instructions.

Part D Risk Adjustment 
CMS will implement updates to the Part D risk adjustment models for CY 2026 that reflect the IRA’s changes to the Part D benefit for CY 2026. This includes the continued implementation of the Manufacturer Discount Program, the updated out-of-pocket threshold, and negotiated prices for selected drugs for initial price applicability year 2026, taking effect under the Medicare Drug Price Negotiation Program. Updates to the Part D risk adjustment models for CY 2026 also include using more recent data years — 2022 diagnoses and 2023 costs. These updates to the Part D risk adjustment models are essential for plan sponsors to develop accurate bids for CY 2026. In addition, CMS finalized using the multiple linear regression methodology to calculate separate Part D normalization factors, in alignment with what we have started doing in CY 2025 for the Part C risk adjustment models. 

Part C and D Star Ratings
In the Advance Notice, CMS provided information and updates in accordance with the Star Ratings regulations at 42 C.F.R. §§ 422.164, 422.166, 423.184, and 423.186. We appreciate commenters’ suggestions on future measures and concepts as we continue to enhance the Star Ratings over time. 

Star Ratings updates finalized in the CY 2026 Rate Announcement include providing the list of eligible disasters for adjustment, non-substantive measure specification updates, and the list of measures included in the Part C and Part D Improvement measures and Categorical Adjustment Index for the 2026 Star Ratings. In the CY 2026 Advance Notice, we also solicited initial feedback on substantive measure specification updates and comments on new measure concepts. As the Part C and Part D Star Ratings program continues to evolve and align with the measures included in the Universal Foundation, we asked for feedback on ways to simplify and refocus the measure set to focus more on clinical care, outcomes, and patient experience of care measures. We will consider these comments as we contemplate proposing future changes to the measures. All substantive measure specification changes, the addition of new measures, and methodological changes must go through rulemaking.