As CMS Proposes 4.33% Medicare Advantage Pay Increase, Experts See Better Negotiation Outlook for Nursing Homes

The Centers for Medicare and Medicaid Services (CMS) proposed a 4.33% increase in payments to Medicare Advantage plans for 2026, which could have an overall positive trickle-down effect on nursing homes.

Expected to be finalized under President-elect Donald Trump’s administration, this slight payment boost comes after MA providers faced a modest rate reduction for 2025.

The federal agency on Friday noted that the proposed MA payment increase complements the Contract Year 2026 MA and Part D proposed rule that CMS released in November 2024. If finalized, the proposed rate increase would amount to $21 billion in payments from the government to MA plans from 2025 to 2026.

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“[The] Advance Notice continues CMS’ efforts to provide access to affordable, high-quality care in Medicare Advantage while being a good steward of taxpayer dollars. We are also continuing implementation of the Inflation Reduction Act, ensuring people with Medicare Part D have more affordable coverage for their medications,” said CMS Administrator Chiquita Brooks-LaSure.

Meanwhile, nursing home advocacy groups said given the proposed increase, that it is incumbent that MA plans must fairly account for the higher acuity needs of residents in skilled nursing facilities.

“With the projected 4.33% increase, it is essential that Medicare Advantage plan payments are appropriately adjusted to ensure nursing home providers receive adequate reimbursement that reflect the increasing complexity of residents who need skilled care,” Nisha Hammel, ‪vice president of reimbursement policy and population health at the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), told Skilled Nursing News in an emailed statement. “This will safeguard seniors’ access to care and ensure providers have the necessary resources to meet the needs of their residents.”

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Other sector experts view the proposed MA payment increase as having a positive impact on the SNF sector.

“It’s a true rate increase, which will be welcome by the industry,” Fred Bentley, managing director for the post-acute and long-term care and senior living practice at ATI Advisory, told SNN.

Based on Bentley’s own experience in working with clients, MA plans have become more difficult to negotiate with because they haven’t been receiving the rate increases they expected in previous years, which has led to lower profitability for them. And so an increase – even a small one – could help matters.

“To some extent, I could see a situation where there’s slightly less downward pressure on rates, or possibly a somewhat more favorable environment for negotiations if plans are receiving higher payments,” said Bentley. “That said, it’s important to note that this won’t lead to significant rate increases or make negotiations with MA plans any easier. However, if [MA plans] are not under the same financial strain they’ve been facing over the past two years, that could make a difference.”

One of the highest increases came post-pandemic when payments to MA plans were increased by 8.4%, he said.

“[The latest proposed payment rate hike] is not of that magnitude, but it’s certainly much more favorable than what they’ve had in the past two years,” Bentley said.

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