Decoding the 2026 CMS Advance Notice: Three Essential Insights for Healthcare Providers and Plans

Medicare Advantage Plans Face Revenue Boost and Shifting Quality Metrics in 2026

Washington D.C. – The Centers for Medicare & Medicaid Services (CMS) recently released its 2026 Advance Notice, outlining notable changes for Medicare Advantage (MA) and Part D plans. The updates, unveiled earlier than in previous years, propose substantial revenue increases for MA plans alongside modifications to risk adjustment and quality measurement methodologies. These adjustments are poised to reshape the landscape of Medicare Advantage, affecting both healthcare providers and the millions of beneficiaries who rely on these plans.

Significant Revenue Increase Anticipated for MA Plans

According to the CMS projections, Medicare Advantage plans could see an average revenue increase exceeding 4.3%, translating to over $21 billion. this substantial bump is primarily driven by projected growth in Medicare Fee-For-Service (FFS) per capita costs. Several factors contribute to this increase, including quality bonus payments, adjustments to the risk adjustment model, and demographic shifts impacting risk scores.

Impact	2026 Advance Notice	2025 Final Rate Declaration
Effective growth rate	5.93%	2.44%
Change in Star Ratings	-0.69%	-0.15%
MA coding pattern adjustment	0.00%	0.00%
Risk model revision and FFS normalization	-3.01%	-2.45%
MA risk score trend	2.10%	3.86%
Expected average change in revenue	4.33%	3.70%

CMS-HCC Risk adjustment Model Fully Phased In

The transition to the new CMS-HCC risk adjustment model, initiated in 2024, will be completed in 2026.This model utilizes the ICD-10 coding system and updated Fee-For-Service data to more accurately reflect patient health status and associated costs.CMS believes the smooth implementation thus far justifies completing the phase-in,maintaining payment stability and accuracy. Pausing the phase-in would allegedly create needless additional payments to plans.

Star Ratings and Quality Bonus payments Decreasing

Changes to the Star Ratings program will lead to a 0.69% decline in overall quality bonus payments in 2026,intensifying a downward trend that began in 2025 wiht a 0.15% decrease. CMS is introducing new measures focused on crucial areas like adult immunizations for COVID-19 and RSV, diabetes management, cancer screenings, and addressing social determinants of health such as intimate partner violence and disability equity. The Health Equity Index (HEI) will also become a factor in reward calculations starting in 2027, possibly incorporating geographic location as a social risk factor.

Did You no? the Medicare Advantage program currently serves over 30 million Americans, representing more than 40% of all Medicare beneficiaries, according to data from the Kaiser Family Foundation.

CMS is soliciting public comment on the 2026 Advance Notice until February 10, 2025, with the final Rate Announcement expected by April 7, 2025. This period gives stakeholders an importent prospect to provide feedback and shape the future of Medicare Advantage.

Pro Tip: Healthcare organizations should closely review the proposed changes and proactively assess their impact on revenue,quality reporting,and overall strategy.

Understanding Medicare Advantage

medicare Advantage plans offer an option to Original Medicare, providing benefits through private insurance companies approved by Medicare. These plans typically include prescription drug coverage, and many offer additional benefits like vision, dental, and hearing care.The goal is to enhance care coordination and potentially lower out-of-pocket costs for beneficiaries.though, it’s crucial for individuals to carefully compare plans to find the best fit for their individual needs and healthcare preferences.

Frequently Asked Questions about the 2026 Medicare Advantage Updates

What are your thoughts on these proposed changes to Medicare Advantage? How will these changes impact the care you receive?

What specific steps can healthcare plans take to prepare for the expanded use of encounter data in risk adjustment, as outlined in the 2026 Advance Notice?

Understanding the Shift Towards Value-Based Care in 2026

The Centers for Medicare & Medicaid Services (CMS) recently released it’s 2026 advance Notice, outlining proposed changes to the Medicare Advantage (MA) and Part D programs.This notice isn’t just a bureaucratic update; it signals a continued and accelerating shift towards value-based care,increased scrutiny of risk adjustment,and a focus on health equity. For healthcare providers and plans, proactively understanding these changes is crucial for financial stability and delivering high-quality patient care. Here are three essential insights to navigate the evolving landscape.

Insight #1: Enhanced Focus on Risk Adjustment Data Validation

CMS is significantly increasing its efforts to validate risk adjustment data submitted by MA organizations.This is a direct response to concerns about inaccurate coding practices inflating risk scores and, consequently, plan payments. Expect heightened audit activity and stricter methodologies for identifying and correcting errors.

Key Changes:

Expanded Use of Encounter Data: CMS will place greater reliance on encounter data for risk adjustment, moving beyond diagnosis data submitted on the 837 claim form. This means a more comprehensive review of actual services provided.

Increased audit Scope: audits will expand to include a wider range of diagnoses and a more detailed review of medical record documentation.

Potential for Financial Penalties: Plans found to have consistently inaccurate risk adjustment data could face financial penalties, including recoupment of overpayments.

Actionable Steps for Providers:

Documentation Integrity: Ensure all diagnoses are accurately and wholly documented in the medical record, supporting the services provided. Focus on specificity.

Coding Accuracy: invest in ongoing coding education and training for staff to ensure compliance with current coding guidelines (ICD-10-CM).

Chart Review Programs: Implement robust chart review programs to proactively identify and correct potential coding errors before audits occur.

Relevant Keywords: Risk Adjustment, CMS audits, ICD-10 Coding, Medicare Advantage Compliance, Encounter Data, HCC Coding, Medical Record Documentation.

Insight #2: strengthening Requirements for Health Equity Initiatives

The 2026 Advance Notice emphasizes a stronger commitment to addressing health disparities and promoting health equity. CMS is proposing several changes designed to incentivize plans to implement targeted interventions for underserved populations.

Proposed Changes:

Expanded Supplemental Benefits: CMS is considering allowing plans to offer more supplemental benefits focused on addressing social determinants of health (SDOH) for vulnerable populations. This could include transportation assistance, food security programs, and housing support.

Enhanced Star Ratings for Health Equity: CMS is exploring ways to incorporate health equity measures into the Star Ratings system, rewarding plans that demonstrate improved outcomes for underserved groups.

Increased Scrutiny of network Adequacy: Plans will face increased scrutiny regarding network adequacy, especially in areas with limited access to care for vulnerable populations.

Practical Tips for Plans:

Data Stratification: Analyze member data to identify health disparities and target interventions accordingly.

Community Partnerships: Collaborate with community-based organizations to address SDOH and improve access to care.

Culturally Competent Care: Ensure providers are trained in culturally competent care to effectively serve diverse populations.

Relevant Keywords: Health Equity, Social Determinants of Health (SDOH), Medicare Advantage Star Ratings, Health Disparities, Network Adequacy, Supplemental Benefits, Vulnerable Populations.

Insight #3: Continued Refinement of Value-Based Payment Models

CMS continues to refine its value-based payment models, aiming to reward plans and providers for delivering high-quality, cost-effective care. The 2026 Advance Notice signals a move towards more sophisticated models that incorporate a broader range of quality measures and patient-reported outcomes.

Key areas of Focus:

Digital Health Integration: CMS is encouraging the use of digital