Medicare Advantage Plans to Receive $13.4 Billion in Quality Bonuses for 2026
Federal agencies are set to distribute at least $13.4 billion in Medicare-grade bonuses this year, marking a slight increase from last year and highlighting a significant surge in spending over the past decade, according to a recent report from the Kaiser Family Foundation (KFF).
Rising Quality Payments and Historical Context
According to KFF’s analysis, the spending on quality payments was $12.7 billion in 2025. The projected $13.4 billion for 2026 is over four times the $3 billion that was distributed in 2015. This escalation underscores the rapid growth in the Medicare Advantage (MA) program.
Approximately 68% of MA beneficiaries are enrolled in plans eligible for bonus payments this year. This figure has decreased from 75% in 2025 and is the lowest since 2018. These quality bonus payments are linked to the Centers for Medicare & Medicaid Services’ (CMS) annual star rating program, where contracts with four or more stars secure additional payments.
Debate Around the Quality Bonus Program
While the program aims to incentivize better healthcare services, critics have debated its efficacy. The Congressional Budget Office (CBO) estimated in 2018 that eliminating the program could save the government nearly $100 billion over a decade. However, the KFF researchers argue that with the growing enrollment in Medicare Advantage—now at 35 million, 5 million more than the 2018 CBO estimate—the potential savings from discontinuing the bonuses could be even greater.
Future Projections and Organizational Impacts
CMS has finalized changes to the star rating system, effective in 2027, though KFF suggests these changes are unlikely to reduce spending. Projections indicate that MA spending might increase by $18.6 billion over the next decade.
The report also highlights differences in quality bonus payments across various Medicare Advantage organizations. UnitedHealth Group, covering 26% of MA enrollees, is poised to receive $3.9 billion, accounting for 29% of the bonus payments. In contrast, Humana, which insures around 20% of enrollees, will receive a smaller share of $1.5 billion due to a decline in its average star rating in 2025.
Kaiser Permanente, known for consistently high star ratings, is expected to see a $577 increase in per-enrollee payments in 2026, as nearly all of its members are in plans with four or more stars.
For more detailed insights, you can access the full report here.
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