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- 2026 MA Rate Announcement đź“Ł
2026 MA Rate Announcement đź“Ł
Revenues are going up 5% (on average). We look at the historical numbers and what it means for the future.
Jared Strock
April 10, 2025
This week’s newsletter is Sponsored By: Medicare Market Insights +
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Here is what you’ll find in this week’s newsletter!
Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.
Deep Dive đź“š - 2026 MA Rate Announcement đź“Ł
Sponsor Snapshot 🚀 - brought to you by MMI+
Compliance Chatter 📢 - Take a look at the latest Regulatory Updates!
It’s only a 5 minute read, but it will make you 10x smarter.
Here are IMPORTANT LINKS đź”— for the week:
Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program - (link)
2026 Medicare Advantage and Part D Rate Announcement - (link)
Dr. Oz Pushed for AI Health Care in First Medicare Agency Town Hall - (link)
DOGE Plans to Rebuild SSA Code Base in Months, Risking Benefits and System Collapse - (link)
Rural hospitals question whether they can afford Medicare Advantage contracts - (link)
Accuracy of Medicare Information Provided by State Health Insurance Assistance Programs - (link)
Virgina and Utah implement “birthday rule” - (link)
Medicarians Sessions (Medicarians happened last week in Las Vegas, check out some of the sessions below):
Video đź“Ľ - The State Of Medicare Today - (link) - this is a must watch!
Video đź“Ľ - Running a Profitable MA Distributor at Scale - (link)
Video đź“Ľ - Sustainable and Strategic Growth - (link)
Video đź“Ľ - The Ai PDP Reshopper And How A - (link)
Video 📼 - The CMS 2026 MA/PD Proposed Rule… - (link)
Video đź“Ľ - Aligning Customer Acquisition with Lifetime Value - (link)
Jared’s recent LinkedIn posts:
DEEP DIVE đź“š
2026 MA Rate Announcement đź“Ł
MA Rates Are Going Up
This past week CMS finalized 2026 MA Capitation rates in the 2026 Medicare Advantage and Part D Rate Announcement.
The headline number: the average change in MA revenue from 2025 to 2026 is 5.06%, up from 2.23% in the Advance Notice.
That’s a big jump, and notably higher than the past two years. In fact, 5.06% is the highest average revenue increase in recent history.
The chart below shows the average change (excluding MA risk score trend) for both Advance and Final Notices over the past 9 years.
—
A Drastic Jump from the Advance Notice
It’s common for the Final Rate to come in higher than the Advance Notice - but the 2026 jump is far above normal.
Year | Final vs. Advanced Notice Lift |
|---|---|
2018 | 0.20% |
2019 | 1.56% |
2020 | 0.94% |
2021 | 0.73% |
2022 | 1.26% |
2023 | 0.52% |
2024 | 1.15% |
2025 | 0.00% |
2026 | 2.83% |
📌 The average lift from 2018–2025 was just 0.8%.
đź“Ś The 2026 lift is 2.83% - more than 3x the typical increase.
—
Why the Big Change?
Here is what CMS says:
“Each year for the Rate Announcement, CMS updates the growth rates to be based on the most current estimate of per capita costs, based on the available historical program experience and projected trend assumptions at that time. The growth rates change between proposed and final as CMS incorporates updated data and assumptions. This year, the change in growth rates from the Advance Notice to the Rate Announcement is due primarily to the incorporation of additional FFS payment data, including through the fourth quarter of 2024.”
While some headlines attribute this jump to politics (“Trump is boosting MA”), the primary driver is more straightforward: higher actual cost trends in the Medicare market.
And these higher trends are consistent with what MA and Med Supp carriers have been experiencing - as we’ve reported in previous issues - with elevated loss ratios and rate pressure across the board.
—
What the Effective Growth Rate Tells Us
While the overall average rate change is 5.06%, the Effective Growth rate is much higher - 9.04%.
So why the gap?
The biggest drag is the risk model revision and FFS normalization, which together subtract -3.01% from the final revenue calculation.
But let’s take a step back — what exactly is the Effective Growth Rate?
“The Effective Growth Rate reflects the current estimate of the growth in benchmarks used to determine payment for MA plans. This growth rate is largely driven by the growth in Medicare Fee-For-Service (FFS) per capita costs, as estimated by the Office of the Actuary.”
It’s a key indicator of overall healthcare cost trends in the Medicare market.
The chart below displays the effective growth rate over the past 9 years.
The 2026 Effective Growth rate of 9.04% is significantly higher than the prior 8 years!
What does this tell us?
It validates why Medicare carriers have seen high loss ratios, which led to a crazy AEP, and why Medicare Supplement plans have been taking double digit rate increases.
The math is finally catching up with the market reality.
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What This Means for the MA Market?
CMS estimates MA payments will increase over $25 billion in Calendar Year 2026.
đź“Ś (That implies MA payments in 2025 are projected at roughly $494 billion.)
This infusion will help carriers absorb higher medical trends — but only if those trends are lower than 5.06%, the average revenue increase.
If claims costs continue to grow faster than revenue, loss ratios won’t improve, even with the rate bump.
This rate lift may impact:
2026 product designs
Service area decisions
Market exits or re-entries
With stronger-than-expected rate increases, some carriers may reconsider previous decisions to pull back.
It will be fascinating to watch how carriers respond in the coming months.
__
Thanks for reading!
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