CMS Bumps MA Rate Increase to 2.48% After Record Lobbying Blitz — But the Reprieve May Be Temporary

After proposing an effectively flat Medicare Advantage rate increase in January, CMS reversed course and finalized a 2.48% bump, sending payer stock prices surging roughly 10% and adding more than $13 billion in projected MA payments for next year.

The about-face followed a record-breaking 47,000 public comments and a lobbying effort that mobilized beneficiaries, funded research, and ran targeted ads across social media and streaming platforms.

A key driver of the increase is CMS's decision to delay an update to its risk adjustment model, keeping it calibrated on older 2018–2019 data. Medicare Director Chris Klomp said the agency is not abandoning the model entirely, leaving the door open for future recalibrations that could tighten payments.

In a midterm year where policymakers are especially attentive to seniors, the MA lobby's political leverage was on full display — but conventional wisdom backed by MedPAC's recent analysis that MA costs remain disproportionately high relative to traditional Medicare suggests this reprieve may not last.

Days before the rate announcement, CMS also overhauled the MA star ratings system, removing metrics tied to administrative processes like call-center performance, appeals timeliness, and provider complaints in favor of clinical quality metrics: outcomes, medication adherence, and patient experience. That refocusing likely benefits provider-sponsored health plans (PSHPs) — 86% of PSHP members were already in 4+ star plans, reflecting these providers’ greater capability to directly influence and monitor clinical quality measures.

But CMS also removed measures on appeals timeliness and outcomes, potentially reducing the ratings-linked incentive for plans to handle coverage disputes fairly.

So What?

• Higher MA rates may ease some financial pressure that was pushing payers toward aggressive utilization management. For example, AHIP and the Blue Cross Blue Shield association recently touted an 11% reduction in prior authorization requests — a positive signal, though far from transformative. But even with a boosted rate, carriers still face tighter margins than a few years ago and may redirect cost-cutting energy toward more aggressive contract negotiations with health systems, or toward downcoding policies now drawing legal challenges (see story below).

• On the policy horizon, policymakers may pursue other avenues to boost MA enrollment — including proposals to auto-enroll new beneficiaries in the lowest-premium MA plan unless they opt out. If MA's beneficiary share continues rising, the payer mix health systems face will keep shifting.

• The star ratings overhaul is a double-edged sword. PSHPs are likely well-positioned on the metrics that now matter most, but the removal of appeals-related measures means plans face fewer consequences for aggressive denial practices. That’s a real concern: A 2018 HHS OIG report found MA plans were overturning 75% of their own denials on appeal, suggesting many initial denials weren't clinically warranted in the first place.