Medicare Advantage (MA) plans entered 2026 facing a complex regulatory and market environment that demands strategic foresight and operational agility. With enrollment continuing to grow and the Centers for Medicare and Medicaid Services (CMS) proposing significant policy changes, MA plans this year must navigate evolving payment methodologies, quality requirements, and member expectations while maintaining financial sustainability. Success in this dynamic landscape requires proactive monitoring of key regulatory developments, market trends, and operational priorities that will shape the competitive environment.

Several forces are converging that will shape the MA landscape heading into 2026:

1. Medicare spending growth is putting pressure on MA plans

Medicare spending growth remained elevated from 2023 through 2025, intensifying financial pressures on MA plans going into 2026. This effect was particularly apparent in drug spending in the first half of 2025.¹ Rising program expenditures create fiscal constraints that may influence future payment and regulatory decisions affecting MA plans. In this environment, insofar as MA spending outpaces fee-for-service trends, benchmark growth may lag underlying cost trends for some plans, putting pressure on margins and increasing the importance of disciplined benefit design, provider contracting, and administrative cost control. This dynamic heightens the need for precise actuarial forecasting and sustained attention to quality performance as plans seek to manage financial risk under continued spending growth.

2. Market consolidation and increased prevalence of SNPs

For 2026, the MA and PDP markets are expecting notable consolidation. Some insurers are exiting markets entirely, increasing market share for those that remain.^2,3 This trend may reflect the cumulative effects of regulatory and financial pressures on MA plans, which can increase the importance of scale and operational efficiency. Alongside this consolidation, special needs plans (SNPs) represent an increasing share of enrollees.⁴ The most significant growth is occurring in chronic condition SNPs (C-SNPs), which serve beneficiaries with specific chronic illnesses. This rise may reflect both evolving member needs and plan strategies, as C-SNPs can offer more tailored benefits and care coordination for those with complex health conditions. As the market adapts, both consolidation and enrollment shifts are likely to shape the competitive landscape.

3. Risk adjustment changes on the horizon for Medicare Advantage plans

Beginning in payment year 2026, MA plans will transition fully to the CMS-HCC V28 risk adjustment model.⁵ This change eliminates blended models and relies solely on updated diagnosis and cost data, which CMS states will improve predictive accuracy and better align payments with members’ actual health statuses.⁶ In addition, the 2026 RxHCC model introduces normalization factors that impact PDP and MA-PD populations independently, generating added financial pressure for MA-PD plans. Meanwhile, although the extrapolation methodology for Risk Adjustment Data Validation (RADV) audits was vacated, the ruling has not yet taken effect because CMS has appealed the decision. Together, these developments will require MA plans to adjust their risk adjustment strategies to manage both financial impact and regulatory exposure.

4. MA Star Ratings are changing again in 2026 and 2027

In November 2025, CMS announced the 2027 proposed rule, which eliminates the anticipated Excellent Health Outcomes for All (EHO4All) reward factor (the former Health Equity Index (HEI)) and retains the current reward system prioritizing consistent high scoring across all measures.⁷ Additionally, the proposed rule removes 12 measures where plans uniformly performed well historically, shifting focus to measures with more variable results across plans. If finalized, the 2027 proposed rule will bring significant changes to Star Ratings. Due to the lag between the measurement period for Star Ratings and plan payment for the performance during that measurement period, plans may need to adjust their business strategies now to accommodate these anticipated changes. While the EHO4All may be in the rear view, MA plans cannot afford to take their eyes off the road.

5. Part D market dynamics in flux: IRA, MFP drugs, and TrumpRx

Drug costs were front and center in 2025 as plans faced significant changes in the Medicare Part D space. The first year of the full Part D benefit redesign under the Inflation Reduction Act (IRA), the introduction of new maximum fair price (MFP) drugs, and emerging policies emphasizing international reference pricing and direct-to-consumer drug purchasing models, such as TrumpRx, all contributed to a rapidly evolving environment.^8,9 These developments carry major implications for benefit design, pricing, pharmacy benefit manager (PBM) economics, and formulary strategy. MA plans are navigating lower member out-of-pocket caps (which are driving meaningful changes in members’ drug utilization patterns), further manufacturer negotiations, and additional IRA-related regulations around specialty tier management and liability, all while balancing member satisfaction and compliance. As pharmacy dynamics continue to evolve, plans will need to focus on comprehensive pharmacy analytics to succeed.

6. The impact on MA plans of anti-obesity medications is still unfolding

Rapid uptake of and expanding indications for anti-obesity medications (AOMs) have made them a central concern for MA plans. While these therapies offer potential long-term health benefits, they also pose immediate challenges related to cost and utilization management. Although coverage is not mandated in the proposed 2026 final rule, MA plans must carefully consider coverage decisions, prior authorization strategies, and their impact on risk adjustment to balance clinical value with financial sustainability. In addition, new complexities around costs and access are emerging, driven by Medicare drug price negotiation, TrumpRx, and the Trump administration’s recently announced directly negotiated deals around AOMs¹⁰, as well as recently announced CMS Innovation Center drug pricing pilots.¹¹ AOMs are expected to remain an important consideration in 2026, warranting continued monitoring and evaluation.

In Summary: Top concerns for Medicare Advantage plans in 2026

The MA landscape for 2026 presents both significant challenges and substantial opportunities for plans that proactively monitor and adapt to changing conditions. Success requires a comprehensive approach that aligns financial sustainability with member value, balances operational efficiency with quality improvement, and prioritizes both regulatory compliance and strategic innovation. Plans that excel in tracking these critical areas while maintaining organizational agility will be best positioned to thrive in an increasingly complex market. By staying agile and informed, MA plans are well positioned to navigate these challenges and to continue delivering value to their members in 2026 and beyond.

¹ Feller, M., Madden, R., & Holcomb, K. (September 8, 2025). Milliman MedIntel Part D trend insights. Milliman white paper. Retrieved January 16, 2026, from https://www.milliman.com/en/insight/medicare-medintel-part-d-trend-insights-halfyear-2025.

² Hnath, J., McWilliams, J.M., & Chernew, M. (December 2024). Medicare Advantage: National carriers expand market share while regional carriers without affiliation decline, 2012–23. Health Affairs, 43(12), Retrieved January 16, 2026, from https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2024.00577.

³ Zhu, N., Fuglesten Biniek, J., Sroczynski N., & Neuman, T. (July 14, 2024). Most Medicare Advantage markets are dominated by one or two insurers. KFF. Retrieved January 16, 2026, from https://www.kff.org/medicare/most-medicare-advantage-markets-are-dominated-by-one-or-two-insurers/.

⁴ Ochieng, N., Freed, M., Fuglesten Biniek, J., Damico, A., & Neuman, T. (July 28, 2025). Medicare Advantage in 2025: Enrollment update and key trends. KFF. Retrieved January 16, 2026, from https://www.kff.org/medicare/medicare-advantage-enrollment-update-and-key-trends/.

⁵ CMS. Announcement of calendar year (CY) 2026 Medicare Advantage (MA) capitation rates and Part C and Part D payment policies, pp. 4. (April 7, 2025). Retrieved January 16, 2026, from https://www.cms.gov/files/document/2026-announcement.pdf.

⁶ CMS. HHS updates 2024 Medicare Advantage program and Part D payment policies. (March 31, 2023). Retrieved January 16, 2026, from https://www.cms.gov/newsroom/press-releases/hhs-updates-2024-medicare-advantage-program-and-part-d-payment-policies.

⁷ CMS. CMS proposes new policies to strengthen quality, access and competition in Medicare Advantage and Part D. (November 25, 2025). Retrieved January 16, 2026, from https://www.cms.gov/newsroom/press-releases/cms-proposes-new-policies-strengthen-quality-access-competition-medicare-advantage-part-d.

⁸ CMS. GLOBE (Global Benchmark for Efficient Drug Pricing) model. Retrieved January 16, 2026, from https://www.cms.gov/priorities/innovation/innovation-models/globe.

⁹ CMS. GUARD (Guarding U.S. Medicare Against Rising Drug Costs) model. Retrieved January 16, 2026, from https://www.cms.gov/priorities/innovation/innovation-models/guard.

¹⁰ The White House. Fact sheet: President Donald J. Trump announces major developments in bringing most-favored-nation pricing to American patients. (November 6, 2025). Retrieved January 16, 2026, from https://www.whitehouse.gov/fact-sheets/2025/11/fact-sheet-president-donald-j-trump-announces-major-developments-in-bringing-most-favored-nation-pricing-to-american-patients/.

¹¹ CMS. BALANCE (Better Approaches to Lifestyle and Nutrition for Comprehensive Health) model. Retrieved January 16, 2026, from https://www.cms.gov/priorities/innovation/innovation-models/balance.