CY 2026 Medicare Advantage Policies and Their Impact on Claims Pricing and Reimbursement
- Micro-Dyn
- 6 days ago
- 3 min read
The Centers for Medicare & Medicaid Services (CMS) recently released its CY 2026 Advance Notice for Medicare Advantage (MA) capitation rates and Part C/D payment policies. This annual announcement sets the stage for sweeping changes in reimbursement structures, risk adjustment models, and plan expectations for MA organizations.
For providers, payers, and healthcare business leaders, understanding these updates is crucial. CMS is steering policy in ways that influence patient care, population health data capture, and revenue optimization.
This blog offers an in-depth, editorial-style review of the major changes proposed in the CY 2026 announcement, the rationale behind them, and what healthcare organizations must prepare for.
📋 Summary of Key Updates in CY 2026
CMS proposes multiple changes impacting how Medicare Advantage Organizations (MAOs) will receive payment. Key highlights include:
A growth rate adjustment with an expected effective growth rate of 2.44%
Continuation of the three-year phase-in of the V28 Risk Adjustment Model
A shift to 100% encounter data for risk score calculation
Emphasis on social risk factors and data integrity
Updates to Star Ratings and Quality Bonus Payments (QBPs)
Each of these elements affects how providers document care, how MA plans are structured, and ultimately how reimbursement is calculated.
1. 💰 Medicare Advantage Capitation Rates for 2026
The capitation rate refers to the per-member-per-month payment CMS provides to MAOs. These payments are risk-adjusted and based on county benchmarks.
CMS estimates an average 3.70% increase in revenue for MAOs in 2026.
The Effective Growth Rate is projected at 2.44%, compared to 2.28% in 2025.
Benchmark updates are influenced by factors like fee-for-service costs and coding intensity.
Implication: Providers contracted with MAOs will likely see modest increases in reimbursement, but variability by region and population acuity will remain a significant factor.
2. 🔄 Transition to 100% Encounter Data for Risk Adjustment
CMS proposes a full transition to 100% encounter data for calculating risk scores in 2026.
Historically, CMS blended data from:
Encounter Data System (EDS)
Risk Adjustment Processing System (RAPS)
But in 2026, only EDS-submitted diagnoses will be used.
Implication for Providers:
Timely and accurate encounter data submission becomes non-negotiable.
Requires close coordination with MAOs and clearinghouses.
Undocumented or poorly coded services can severely underrepresent patient risk.
Fact: Incomplete encounter submissions lead to risk score understatements, which can reduce MAO payments and indirectly affect provider compensation.
3. 📊 Continued Implementation of the V28 Risk Adjustment Model
CMS is in year two of a three-year phase-in of the Version 28 (V28) Hierarchical Condition Category (HCC) risk adjustment model.
In 2026:
CMS will weight risk scores: 67% V28 and 33% V24.
This is up from 33% V28 weighting in 2024 and 67% in 2025.
The V28 model introduces:
More clinically accurate HCC groupings.
Reduced use of certain non-specific diagnoses.
Increased emphasis on chronic condition capture.
Provider Impact:
Coding teams must be trained on V28 documentation.
EMR systems may need updates to reflect grouping changes.
4. 🌍 Addressing Social Risk and Health Equity
CMS continues to build its commitment to health equity into MA policy by examining the effects of social risk factors on care delivery.
New initiatives for 2026:
Continued evaluation of SDOH data capture (Social Determinants of Health).
Exploration of dual-eligible and disabled enrollee adjustments.
Possible incorporation into Star Ratings in future years.
Takeaway: Organizations serving high-risk, underserved populations need robust data collection mechanisms to ensure proper risk adjustment and equity-related incentives.
5. ⭐ Star Ratings and Quality Bonus Payments (QBPs)
The Star Ratings system directly affects the quality bonus payments (QBPs) MA plans receive. CMS is:
Reviewing existing measures for alignment with current care practices.
Considering updates to patient experience and access metrics.
Looking to add or refine HEDIS and CAHPS measures.
Providers play a direct role in many Star measures, including:
Diabetes management.
Preventive screenings.
Patient satisfaction scores.
Fact: MA plans with a 4-star rating or higher receive a 5% bonus payment from CMS. These bonuses often fund value-based provider incentives.
✅ How Providers Should Prepare
To stay ahead of CY 2026 changes, healthcare organizations should:
Audit and update coding practices in alignment with V28.
Work with MA plans to ensure EDS data is submitted cleanly and completely.
Train teams on the implications of SDOH and encounter data accuracy.
Align care delivery with metrics influencing Star Ratings.
Organizations with a strong revenue integrity team and a modern RCM system will be best positioned to thrive under these changes.
🔮 Looking Ahead
CY 2026 marks a continued evolution toward data-driven, risk-adjusted, and equity-informed payment structures.
CMS is making it clear: data integrity, patient complexity capture, and quality performance are non-negotiables in the MA landscape.
Organizations that proactively adapt will not only protect their reimbursement but will also be better aligned with national goals for population health and accountable care.
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