Medicare Advantage Quality Bonus Program in 2026
The Medicare Advantage quality bonus program, established by the Affordable Care Act, increases Medicare payments to Medicare Advantage plans that qualify by having a star rating of 4 or above. Plans may, but are not required to, use the increase in payments to cover the cost of supplemental benefits, including reduced cost sharing, extra benefits not covered by traditional Medicare, lowering Part B premiums, and/or subsidizing Part D prescription drug coverage. The star ratings are intended to help consumers make informed decisions when choosing among Medicare Advantage plans and the potential for additional funding is intended to encourage plans to improve quality. However, the Medicare Payment Advisory Commission and others have suggested that the star ratings incorporate too many measures, do not adequately account for social risk factors, and may not be a useful indicator of quality because star ratings are reported at the contract rather than the plan level. Medicare Advantage contracts typically include multiple plans, which may have different benefits, costs, networks, service areas, and enroll different populations.
Critiques of the quality bonus program have led to calls to replace, reform or end the program. In 2018, the Congressional Budget Office estimated that eliminating the quality bonus program would lower federal spending by almost $100 billion over ten years. Given the sharp increase in both actual and projected Medicare Advantage enrollment since CBO’s analysis, the savings from eliminating the quality bonus program could be substantially higher. For example, 35 million people are enrolled in Medicare Advantage in 2026, which is 5 million more than CBO projected at the time of the analysis. The degree to which changes to the quality bonus program would impact plan quality or the availability of supplemental benefits would depend on the specifics of any proposal and how insurers modified plan offerings in response.
Estimated federal spending on the Medicare Advantage quality bonus program will total at least $13.4 billion in 2026, somewhat more than 2025 ($12.7 billion). Spending on the quality bonus program has increased sharply since the program started, more than quadrupling from $3.0 billion in 2015 to $13.4 billion in 2026. Total spending on the quality bonus program is 2.3% of the projected payments to Medicare Advantage plans in 2026 ($574 billion).