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2026 RATE ANNOUNCEMENT Announcement of Calendar Year (CY) 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies ..............................................................................1 Key Updates from the CY 2026 Advance Notice ......................................................................2 Policies Adopted as Described ...................................................................................................2 Attachment I. Final Estimates of the National Per Capita Growth Percentage and the National Medicare Fee-for-Service Growth Percentage for CY 2026 ...............................11 Attachment II. Key Assumptions and Financial Information ........................................................13 Attachment III. Responses to Public Comments on Part C Payment Policy .................................34 Section A. General Comments .................................................................................................34 Section B. Estimates of the MA and FFS Growth Percentages for CY 2026 ..........................36 Section C. MA Benchmark, Quality Bonus Payments, and Rebate ........................................46 Section D. Calculation of Fee-for-Service Costs .....................................................................47 Section E. Direct Graduate Medical Education .......................................................................54 Section F. Organ Acquisition Costs for Kidney Transplants ...................................................54 Section G. IME Phase Out .......................................................................................................55 Section H. MA ESRD Rates ....................................................................................................56 Section I. MA EGWPs .............................................................................................................58 Section J. CMS-HCC Risk Adjustment Model for CY 2026 ..................................................60 Section K. ESRD Risk Adjustment Models for CY 2026 .......................................................65 Section L. Frailty Adjustment for PACE Organizations and FIDE SNPs ...............................66 Section M. MA Coding Pattern Difference Adjustment ..........................................................69 Section N. Normalization Factors for the CMS-HCC Risk Adjustment Models ....................73 Section O. Sources of Diagnoses for Risk Score Calculation for CY 2026 ............................75 Attachment IV. Responses to Public Comments on Part D Payment Policy.................................77 Section A. Annual Adjustments to Medicare Part D Benefit Parameters in 2026 ..................77 Section B. Part D Premium Stabilization .................................................................................77 Section C. Part D Calendar Year EGWP Prospective Reinsurance Amount ..........................77 Section D. Part D Risk Sharing................................................................................................77 Section E. Retiree Drug Subsidy Amount ...............................................................................78 Section F. RxHCC Risk Adjustment Model ............................................................................78 Section G. Normalization for the RxHCC Risk Adjustment Models ......................................83 Section H. Source of Diagnoses for Part D Risk Score Calculation for CY 2026 ..................89 Attachment V. Final Updated Benefit Parameters for the Defined Standard Benefit and Changes in the Payment Methodology for Medicare Part D for CY 2026 ........................90 Section A. Annual Percentage Increase in Consumer Price Index (CPI) ................................92 Section B. Calculation Methodology .......................................................................................92