Of all stocks, you might have noticed CVS Health Corporation (CVS) having a great start to the year:
Improved rates should be a positive for most in the Medicare Advantage space (CVS included). Proposed rates were released earlier this year and final rates should be out in about a month. We need to monitor medical utilization and a couple other factors, but this industry has not seen rate improvements in quite some time, so this is definitely part of the thesis.
From 1/10/2025: the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the CY 2026 Advance Notice). CMS will accept comments on the CY 2026 Advance Notice through 11:59 PM Eastern Time on February 10, 2025, before publishing the final Rate Announcement on or before April 7, 2025.
Each year, CMS is required to update MA payment rates and regularly conducts technical updates to make improvements needed to keep MA payments up-to-date and accurate. CMS makes technical updates and improvements through the proposed Advance Notice and final Rate Announcement process for this purpose. Per statute, the Rate Announcement must be released by the first Monday in April, which is April 7, 2025. If finalized, the proposed policies in the CY 2026 Advance Notice are projected to result in a net increase of 4.33%, or over $21 billion, in MA payments to plans on average year-over-year in CY 2026. We also proposed updates, where applicable, to reflect the Part D redesign as required by the Inflation Reduction Act of 2022. The FAQs below support the public’s understanding of the release.
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