A new KFF analysis finds that federal spending on the Medicare Advantage quality bonus program rose slightly to $13.4 billion in 2026, up from $12.7 billion the year before. At the same time, the number of enrollees in plans that qualify for the higher payments fell from 26 million to 24 million year-to-year, and the share in such plans declined from 75% in 2025 to 68% in 2026 -- the lowest share since 2018.
The increase in bonus spending in part reflects growth in traditional Medicare spending per person, on which the Medicare Advantage payment system is based.
The bonus program boosts payments to Medicare Advantage plans that have a star rating of 4 or above on a 5-star scale. While the star ratings are intended to be a measure of plan quality that can help beneficiaries evaluate and compare Medicare Advantage plans, the Medicare Payment Advisory Commission (MedPAC) and others have suggested that the star ratings relay on too many measures (about 40) may not be a useful indicator of quality.
Also newly available is a KFF issue brief that examines the use of diagnosis codes to adjust payments to Medicare Advantage plans to account for the health status of enrollees. The brief describes what is meant by “coding intensity,” and discusses recent steps taken by the Centers for Medicare & Medicaid Services to address the impact of coding on payments, the effects on Medicare beneficiaries, and proposals to improve Medicare Advantage payment accuracy.
