Medicare is set to spend more than $13 billion in quality bonus payments to Medicare Advantage plans this year, according to a new analysis from health policy research group KFF. The federal government will spend at least $13.4 billion on the MA quality bonus program in 2026, up from $12.7 billion last year.
The quality bonus program has seen significant growth since its establishment by the Affordable Care Act in 2010, with payments increasing from $3 billion in 2015. This program offers extra payments to MA plans with ratings of four stars or above.
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Despite increased spending, the number of enrollees in plans that qualify for a bonus fell from 26 million in 2025 to 24 million in 2026, or from 75% to 68% of Medicare beneficiaries. This is the lowest share of seniors in eligible plans since 2018.
The quality bonus program faces criticism from budget hawks and health policy researchers who argue that the U.S. isn’t getting enough value for its spending. MedPAC, a group of experts that advises Congress on Medicare policy, has found that the star ratings system is overly complex and isn’t a useful indicator of plan quality. They have spurred calls to reform the bonus schema or eliminate it entirely.
Ending the program would save the federal government almost $100 billion over a decade, according to the Congressional Budget Office’s 2018 estimate.
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The quality bonus program accounts for just about 2% of the $574 billion in payments that are expected to go to MA plans this year.
More than half of all Medicare enrollees, or some 35 million seniors, are enrolled in the privatized program, in which the government pays insurers a per-member, per-month fee for overseeing beneficiaries’ care.
The issue of quality bonus payments is likely to be a topic of consideration for policymakers as Medicare’s finances become increasingly precarious.
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A key trust fund underpinning the program is set to run out of money in 2033 without congressional action. Insurers are likely to lobby heavily against any changes to quality bonuses.
The CMS this spring finalized changes to the star ratings system that are set to send another $18 billion to insurers over the next decade. Regulators were forced to recalculate 2026 star ratings in a way that resulted in higher scores for some participants after losing a court case with MA insurer Clover Health.
