Updated: Monday, January 13 at 11:35 a.m. ET
Docs outraged over MA payment hike
CMS is facing renewed pushback from doctors who say insurers are getting preferential treatment.
With Medicare Advantage plans set to receive a 4.33% payment increase from 2025 to 2026, the American Medical Association (AMA) highlighted how physicians treating Medicare patients are seeing cuts for the fifth straight year.
"It's unbelievable they're giving insurance companies that had record profits an increase while at the same time cutting payment to physician practices that are struggling to survive," said AMA President Bruce Scott, M.D., in a statement. "This contrast highlights the urgent need for Congress to prioritize linking payment to physician practices to the cost of providing care."
Physicians thought Congress could swoop in at the eleventh hour and reverse the bulk of this year's physician cuts in a lame duck health package, but that policy was an unintended casualty stemming from Republican lawmakers and Elon Musk's desire to pass a leaner spending bill.
The 2.23% effective increase for insurers, however, is likely stronger than health plans expected, said strategy firm Capstone in a note released Friday. The advance notice also did not include coding intensity adjustments or changes to in-home health risk assessments. In October, the Department of Health and Human Services Office of Inspector General released a report finding MA insurers pocketed $7.5 billion from risk-adjusted payments in 2023.
MA may escape legislative scrutiny in this year's reconciliation bill as well. A "menu" of potential cuts name-checks Medicaid, site-neutral payments and the Affordable Care Act as areas to reform, but seems to make no mention of pharmacy benefit managers and MA, reported Politico.
All public insurers are trading up on Monday.
Updated: Friday, January 10 at 5:00 p.m. ET
CMS proposes increasing Medicare Advantage benchmark payments by 2.2%, or $21B
Medicare Advantage (MA) benchmark payments are poised to increase by an effective growth rate of 2.23%, the Centers for Medicare & Medicaid Services (CMS) proposed in a Friday afternoon advance notice.
The rate hike represents a significant increase year over year from the federal government to MA health plans, compared to the previous year’s 0.16% dip.
Payments from the federal government to MA plans will increase by $21 billion, or 4.33%, on average. Implementation of the MA risk adjustment model will also continue, the agency said.
“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 in a news release. “Today’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.”
The government said it expects to spend $9.2 trillion over the next decade on MA payments to health plans. About $1.3 trillion will be utilized for supplemental benefits and premium buy-downs. The CMS chose not to pause growth rates related to medical education costs or the risk adjustment model phase-in, which would have resulted in $10.4 billion more for MA plans in 2026.
Because the MA program is stable—with premiums, supplemental benefits and coverage options staying similar since last year—these changes were not necessary, the CMS explained.
Most insurers were not happy at the CMS when it followed through with a 0.16% cut to MA benchmark payments. At the time, the CMS said the average payment increase was 3.7% and a $16 billion increase over the previous year.
Today’s announcement appears to be more favorable toward national payers. UnitedHealth, CVS Health, Humana and Centene stock all rose in after-hours trading.
“This expected increase includes consideration of the various elements that impact MA payment, such as growth rates of underlying costs, 2025 Star Ratings for 2026 quality bonus payments, continued phase-in of risk adjustment model updates that were implemented in CY 2024 and CY 2025, and increases to risk scores because of MA risk score trend, which can be driven by a number of factors including MA demographics and coding patterns,” the agency said in a fact sheet.
Starting Jan. 1, annual out-of-pocket prescription drug costs are capped at $2,000 for enrollees. The cap increases to $2,100 for 2026.
The CMS is accepting comments on the proposal until Feb. 10.