On April 7, the Centers for Medicare & Medicaid Services (CMS) released the final 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. This notice confirms key updates to risk adjustment, plan payments, and program requirements, solidifying several proposals from the earlier CMS Advance Notice.
Here’s what health plans need to know, and how to prepare for what’s ahead.
CMS finalized a 5.06% payment increase, up from 2.23% in the Advance Notice—but rising complexity and coding accuracy challenges will determine how much of that plans can actually capture.
V28 Risk Adjustment Model Implementation
For CY 2026, CMS will fully implement the CMS-HCC V28 risk adjustment model, using 2025 dates of service to calculate 100% of risk scores. This finalizes the transition from the blended model used in previous years.
The V28 model introduces significant structural changes:
- Removal of over 2,000 previously accepted diagnosis codes
- Reclassification of several Hierarchical Condition Categories (HCCs), particularly for conditions like diabetes, depression, and vascular disease
- Updated diagnosis and cost data to improve predictive accuracy
Plans must ensure their risk adjustment strategies are fully aligned with V28, from documentation and chart reviews to coding audits and provider engagement. Without proactive alignment, plans could face reduced risk scores, increased over-read discrepancies, and potential revenue loss.
No more blended scoring—plans must now exclusively operate under V28, which introduces new HCC categories and excludes 2,000+ diagnosis codes previously used under V24.
Medicare Advantage Payment Growth: $25 Billion Increase
CMS finalized a 5.06% average payment increase for MA plans in CY 2026, totaling more than $25 billion in additional payments. This boost was largely driven by a revised Effective Growth Rate of 9.04%, up from 5.93%, based on updated Medicare Fee-for-Service (FFS) data.
However, this increase includes several downward adjustments:
- -3.01% from the V28 model and FFS normalization factor
- -0.69% from changes in Star Ratings
- -0.28% from rebasing and re-pricing
CMS also expects that MA plan coding increases will result in a 2.1% increase in risk adjustment scores, meaning plans must exceed that benchmark to see actual gains from coding improvements.
Summary of 2026 CMS Final Notice Impacts on Health Plans
| Category | Finalized Value | What It Means for Health Plans |
|---|---|---|
| MA Payment Increase | +5.06% | Up from 2.23% in the Advance Notice; driven by higher growth rate |
| Effective Growth Rate | 9.04% | Based on updated FFS data; highest contributor to payment increase |
| Risk Model & Normalization Impact | -3.01% | Reflects V28 implementation + FFS normalization; may reduce risk scores |
| Star Ratings Impact | -0.69% | Revenue reduction tied to Star performance; highlights importance of quality strategy |
| Expected Coding Trend | +2.10% | Plans must exceed this to realize net revenue gains from coding |
| Risk Adjustment Model | 100% V28 | Full implementation; blended scoring no longer used |
| Part D Model Updates | IRA-aligned, 2022/2023 data used | Reflects $2,100 OOP cap, insulin pricing, and drug negotiation impacts |
Part D Risk Adjustment Impact
To align with IRA policy changes, CMS finalized updates to the Part D risk adjustment model for CY 2026, including:
- A new $2,100 annual out-of-pocket cap
- Continued $35 monthly insulin cap, or 25% of negotiated/fair pricing
- Zero cost-sharing for adult vaccines
- Integration of negotiated drug prices for selected drugs
- Use of 2022 diagnoses and 2023 drug cost data
These updates increase financial exposure for plans and heighten the importance of accurate RxHCC coding and integrated pharmacy data. Plans offering Part D coverage will need tight coordination across risk adjustment, clinical quality, and pharmacy functions.
Star Ratings & Quality Improvement Impact
While CMS did not introduce major methodological changes to the Star Ratings program for CY 2026, they did finalize several technical updates, including measure specification changes, disaster adjustment guidance, and updates to the Categorical Adjustment Index.
The projected -0.69% average revenue impact tied to Star Ratings reinforces just how financially significant even small shifts in performance can be. CMS also reiterated its longer-term direction to evolve Star Ratings with greater focus on clinical outcomes, patient experience, and alignment with the Universal Foundation measure set.
Plans should view this year’s limited updates not as a pause, but as a clear signal to prioritize long-term quality improvement strategies. Star Ratings remain a critical driver of bonus eligibility and member satisfaction.
CMS continues to modernize Medicare Advantage, with the full adoption of the V28 model and a sharper focus on accurate, timely data across both risk and quality programs. While the 5.06% average payment increase offers opportunity, the operational burden to see real results is higher than ever.
— Jimmy Liu, Vice President of Analytics and MRR Solutions at Advantmed
Conclusion
The 2026 CMS Final Notice creates new opportunities for Medicare Advantage plans, but with those opportunities come higher expectations. The full transition to V28, combined with revenue sensitivity around coding, quality, and risk scores, will demand greater precision across operations.
At Advantmed, we help plans proactively manage risk adjustment, quality, coding, and member engagement strategies to meet these demands. Whether you’re preparing for V28, improving coding accuracy, or optimizing program performance, our team is here to support your success in the evolving Medicare Advantage landscape.
Learn more about how Advantmed’s risk adjustment solutions can help your health plan adapt to the latest CMS changes.