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MA benchmarks in Puerto Rico to reflect the disproportionate representation of dually eligible beneficiaries in the Puerto Rico FFS population. Commenters made other suggestions including considering the Part B premium buy-downs in Dual Eligible Special Needs Plans (D-SNPs) to be part of A/B bids for Puerto Rico plans and adopting alternative methods for applying the quartile adjustment to reduce disparities caused by tying the adjustment to FFS spending at the county level. Response: CMS thanks the commenters for their thoughtful comments. We appreciate the suggestions and recommendations submitted by commenters. However, we note that section 1853 of the Act prescribes the general approach that FFS per capita costs be used in developing MA rates and CMS has limited discretion to incorporate targeted adjustments or exceptions. As noted in prior Advance Notices, the law requires that MA benchmarks be based on a county’s average Medicare FFS per capita costs, and there is no evidence that FFS costs in Puerto Rico are higher than the costs observed in the FFS claims data and, thus, no basis for overhauling Puerto Rico’s MA benchmarks. Section 1853(c)(1)(D) requires an estimate of the per capita costs for services covered under Parts A and B for individuals who are not enrolled in an MA plan. We believe that using data pertaining to actual Medicare FFS costs in Puerto Rico is the best approach to developing the estimate of FFS per capita costs for the contract year, and we have not seen evidence to suggest that Medicare FFS costs in another jurisdiction are a reliable proxy. As we stated in the CYs 2017 and 2018 Rate Announcements and based on the number of FFS beneficiaries used in development of the ratebook FFS rate, we have determined that the FFS data in Puerto Rico is sufficient for establishing accurate MA benchmarks. As noted on page 39 of the CY 2026 Advance Notice, the credibility adjustment is used for counties that have certain levels of FFS beneficiaries. For the past nine years, the Secretary has directed OACT to adjust the FFS experience for beneficiaries in Puerto Rico to reflect the propensity of nationwide propensity of beneficiaries with zero claims. For the CY 2026 ratebook development, the Secretary has directed OACT to adjust the FFS experience for beneficiaries in Puerto Rico to reflect the nationwide propensity of beneficiaries with zero claims. For purposes of making this adjustment, consistent with the Secretary’s instructions, OACT evaluated experience exclusively for beneficiaries that are enrolled in both Part A and Part B and are not also eligible for VA coverage. The updated study analyzed experience for calendar years 2019 through 2023, using the cohort of FFS beneficiaries enrolled mid-year (i.e., enrolled in both Part A and Part B as of the mid-year dates used for the study) to approximate the average enrollment for the year. On average, 13.8 percent of Puerto Rico FFS beneficiaries with both Part A and Part B were found to have no Medicare claim reimbursements per year. This compares to a nationwide, non-territory proportion of 6.0 percent of FFS beneficiaries without Medicare spending. These results were applied to the Puerto Rico FFS experience by adjusting the weighting of the enrollment and risk scores for the zero-claim cohort to reflect the nationwide proportion of zero-claim beneficiaries.