The Medicare Statute requires CMS to reduce risk adjustment payments to Medicare Advantage (MA) plans by at least 5.9% to reflect differences in coding patterns between MA and fee-for-service (FFS) Medicare. Notably, in the recent CY 2026 MA and Part D Rate Notice, CMS announced it would keep the coding intensity adjustment at the statutory minimum of 5.9%. In doing so, CMS effectively rebutted estimates by MedPAC and others that coding intensity is much higher in MA.
MedPAC’s Estimates
In its March 2025 Report, MedPAC measured coding intensity in MA at about 16% above comparable FFS beneficiaries. After subtracting the 5.9% coding intensity adjustment, MedPAC concludes that “[t]he net effect is a 10 percent increase in MA risk scores due to coding intensity.”
CMS’ Analysis
In the Rate Notice, CMS acknowledged they had received comments recommending a higher coding intensity adjustment. CMS said, “a few commenters highlighted analyses from MedPAC that the MA coding pattern adjustment factor should be several percentage points higher.”
CMS explained that it analyzed the coding pattern differences between the programs, and in fact do so every year to determine the appropriate coding pattern adjustment. Based on its analysis, CMS concluded that “the minimum adjustment, applied uniformly is sufficient to reflect differences in coding patterns between MA plans and providers under FFS Parts A and B.” In other words, CMS effectively rejected the higher MedPAC estimates of coding intensity based on its own rigorous data analysis.
Policy Implications
CMS’s analysis undermines MedPAC’s estimate that moving enrollees from MA to FFS would result in significant savings – or any savings at all. MedPAC’s March 2025 Report asserts that in 2025 Medicare is paying MA plans 20% more than it would spend if those enrollees were covered under FFS. The coding intensity calculation is a material component of that calculation. Critics of the MA program often refer to the MedPAC estimate in advocating for deep cuts to the part of Medicare preferred by a majority of beneficiaries. The Rate Notice now adds to the growing body of research raising serious methodological questions about MedPAC’s extrapolations and would-be implications for the MA program.
Cuts to MA risk adjustment payments hurt Medicare beneficiaries by potentially raising MA premiums and/or reducing supplemental benefits. Policymakers simply cannot rely on MedPAC’s flawed estimates when considering changes to this vital part of the Medicare program that provides better care at lower cost to nearly 35 million seniors and people with disabilities who actively choose it over fee-for-service.