5% Medicare Advantage Payment Increase: What It Means for Beneficiaries

Chalk-drawn money bag on green chalkboard symbolizing Medicare Advantage payment increase.

Significant Pay Increase for Medicare Advantage Plans

The Center for Medicare and Medicaid Services (CMS) has announced a significant increase in payments to Medicare Advantage (MA) plans, which will rise by 5.06%—the equivalent of $25 billion—from 2025 to 2026. This decision has garnered applause from payer advocates, marking a shift from a previously proposed increase of just 2.23% by the Biden administration earlier this year. The increase can primarily be attributed to the adjusted growth rate, which now stands at 9.04%, demonstrating a positive trend in Medicare costs.

Payer Advocates Respond

Mary Beth Donahue, president of the Better Medicare Alliance, expressed relief that this payment spike will stabilize the market for millions of beneficiaries who have experienced cutbacks in their plans over the past two years. She noted that protecting the Medicare Advantage program is imperative, especially as it caters to over half of Medicare beneficiaries seeking enhanced care and health outcomes.

Impact on Community Health Plans

The Alliance of Community Health Plans (ACHP) also praised the new payment strategy. The organization welcomed CMS’s completion of the three-year phase-in of the updated risk adjustment model, a crucial mechanism that ensures MA plans are compensated more accurately based on the health status of their members. Ceci Connolly, CEO of ACHP, emphasized that these developments will lead to a healthier competitive landscape in the Medicare Advantage sector.

A Celebrated Step Towards Healthcare Stability

Both payer advocates and health plans view this rate adjustment as a pivotal moment for improving care delivery in Medicare Advantage. This shift is especially notable at a time when many beneficiaries have faced disruptions in their care options. As we await further developments, stakeholders are encouraged to remain proactive to ensure that Medicare Advantage continues evolving to meet the needs of seniors and taxpayers alike.

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5% Medicare Advantage Payment Increase: What It Means for Beneficiaries

Significant Pay Increase for Medicare Advantage Plans

Payer Advocates Respond

Impact on Community Health Plans

A Celebrated Step Towards Healthcare Stability

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