Federal spending on the Medicare Advantage quality bonus program will rise to $13.4 billion in 2026 from $12.7 billion in 2025, according to a new report from KFF. This is four times higher than in 2015.
The quality bonus program provides higher payments to MA plans that have a star rating of at least four out of five stars. Medicare Advantage Star Ratings evaluate plans based on care quality, customer service and patient experiences. Plans can use these bonus payments for supplemental benefits, such as reduced cost sharing and lower premiums.
However, there have been calls to reform or end the quality bonus program due to concerns that the system is not measuring quality effectively, amongst other reasons, according to KFF. A 2018 Congressional Budget Office report estimated that eliminating the program would lower federal spending by almost $100 billion over 10 years.
KFF’s report analyzed trends in Medicare spending, enrollment in plans with bonus status and how measures vary across plan types. It found that 68% of MA enrollees are in plans that qualify for the quality bonus program in 2026, down from 75% in 2025. This is the lowest share since 2018.
In addition, KFF found that employer and union-sponsored MA plans had the highest average increase in payment per enrollee because of the quality bonus program ($466), while special needs plans had the lowest ($318).
Lastly, KFF found that the Quality Bonus Program’s payments vary by insurer, with UnitedHealth Group receiving the largest increase in total payments ($3.9 billion) and Kaiser Foundation Health Plans receiving the largest increase in payments per enrollee ($577).
“The variation in total bonus spending across firms corresponds to differences in the share of enrollees in plans that are eligible for the quality bonus program, which is based on the ratings of those plans. … Differences also reflect variation in the star ratings of plans that qualify for the quality bonus program, because plans with at least 4.5 stars get a larger increase,” the report said.
The report comes after CMS finalized changes to the MA Star Ratings that will remove multiple administrative measures, like making timely decisions about appeals.
“Though this change is a step toward simplifying the quality measurement system, because it is not combined with other changes to the Medicare Advantage payment system, the change is projected to increase Medicare Advantage spending by $18.6 billion over the next 10 years,” KFF said. “That increase in spending is in part because more Medicare Advantage plans are expected to qualify for a payment increase under the quality bonus program as a result of the changes.”
CMS has also faced some lawsuits related to star ratings, most recently from Clover Health. A judge found CMS improperly calculated Clover’s ratings, which led CMS to announce that it is voluntarily recalculating its 2026 Star Ratings for some plans.
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