On April 7, 2025, CMS finalized the 2026 Medicare Advantage & Part D Rate Announcement, locking in payment policy changes and final growth rates that could directly impact plan designs, client benefits, and your sales strategies for the coming year.

Here’s a breakdown of what’s new—and why it matters.

CMS expects an average +5.06% increase in payments to Medicare Advantage (MA) plans—up significantly from the +2.23% projected in the Advance Notice. That translates to over $25 billion in additional payments across the market.

What’s Driving the Increase:

• Effective Growth Rate jumped from 5.93% to 9.04%, thanks to updated Medicare FFS spending data.
• Rebasing/Repricing finalized at -0.28%
• No changes to the MA Coding Pattern Adjustment (remains 0.00%)
• Continued impact from risk model revisions and Star Ratings updates

Starting in 2026, CMS will use 100% of the 2024 CMS-HCC risk adjustment model for Medicare Advantage risk scoring. This marks the final year of a three-year transition.

• For MA: All risk scores use the new model
• For PACE: Blended risk scores (90% 2017 model, 10% 2024 model) to ease the transition
• FFS Normalization Factor: Continues using multiple regression method

These updates aim to better reflect enrollee health risk and spending patterns.

CMS is rolling out more Inflation Reduction Act (IRA) changes in Part D, along with updates to risk adjustment and the Part D redesign:

Key Updates for 2026:

• $2,100 out-of-pocket cap triggers catastrophic phase—no cost-sharing after that point
• Insulin cost-sharing cap remains at the lesser of $35/month, 25% of plan price, or 25% of max fair price
• Free adult vaccines (ACIP-recommended) remain covered
• Risk model updated using 2022 diagnosis data and 2023 costs

CMS is also continuing changes tied to the Drug Price Negotiation Program and the Manufacturer Discount Program.

CMS finalized updates to Part C & Part D Star Ratings, with a focus on:

• Improvement measures and disaster response adjustments
• Categorical Adjustment Index updates
• More emphasis on clinical care, outcomes, and patient experience

Agents should keep an eye on these shifts, as plans with lower Star Ratings may offer fewer bonus-funded benefits in 2026.

These updates bring new opportunities—but also a need to stay sharp. Here’s how to stay ahead:

• Adjust your sales strategy based on increased funding and benefit flexibility
• Educate clients on out-of-pocket drug savings, especially insulin and vaccine coverage
• Support dual-eligible and high-needs populations as plans evolve
• Keep tabs on Star Ratings when comparing plans for clients

At Insurance Advisors Direct, we’re here to make sure you stay ahead of the curve with tools, training, and real support. Whether you’re prepping for AEP or just want to stay sharp, IAD has your back—every step of the way.

Need additional assistance, contact us today!