WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services (CMS) has unveiled the Calendar Year (CY) 2026 Advance Notice for the Medicare Advantage (MA) and Medicare Part D Prescription Drug Programs. The proposed updates aim to ensure accurate payments, fiscal responsibility, and expanded benefits for Medicare enrollees while continuing efforts to implement the Inflation Reduction Act.
The CY 2026 Advance Notice outlines an average payment increase of 4.33%, translating to over $21 billion in additional funding for MA plans between 2025 and 2026. This proposed adjustment supports CMS’s commitment to maintaining stability and affordability in Medicare offerings, including premiums and supplemental benefits.
“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. “Last week’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.”
Central to the updates is the completion of a three-year phase-in of improvements to the MA risk adjustment model and growth rate calculations that account for medical education costs. Initially introduced in 2023, this phase-in approach provides predictability for plans and providers while ensuring MA enrollees maintain needed access to care. Pausing these adjustments would have resulted in over $10 billion in additional payments to MA plans in 2026 without supporting program stability, according to CMS estimates.
The federal government is projected to allocate approximately $9.2 trillion toward MA payments over the next decade. Of that, $1.3 trillion constitutes MA rebate dollars that fund supplemental benefits and premium buy-downs. Deputy Administrator and Director of the Center for Medicare, Dr. Meena Seshamani, emphasized the significance of these updates, stating, “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.”
Additionally, CMS released the Draft CY 2026 Part D Redesign Program Instructions as part of its ongoing work under the Inflation Reduction Act. The redesign introduces new benefits for Medicare enrollees, including the first-ever cap on annual out-of-pocket prescription drug costs. After an initial $2,000 cap in 2025, the limit is set to rise to $2,100 in 2026, indexed for inflation. These reforms aim to reduce prescription drug expenses and improve affordability across the board for Medicare Part D beneficiaries.
The proposed changes are now open for public comment, with CMS accepting feedback until 11:59 PM Eastern Time on February 10, 2025. The final CY 2026 Rate Announcement and Part D Redesign Program Instructions will be published no later than April 7, 2025.
Through these updates, CMS continues to prioritize access to high-quality care and strives for fiscal accountability, cementing its role in providing sustainable and equitable solutions for Medicare’s growing beneficiary population.
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