Medicare Will Pay $13B+ in Quality Bonuses to Advantage Plans in 2026

If you're enrolled in a Medicare Advantage plan — or thinking about joining one — there's a $13 billion story playing out behind the scenes that directly affects the quality of care you receive, or at least the quality your insurer claims to deliver. In 2026, the federal government will distribute more than $13 billion to private insurance companies through the Medicare Advantage Quality Bonus Program, a payment system designed to reward plans that score well on a five-star rating scale. That's a staggering sum, and understanding how it works — and whether it actually benefits you — is essential for any Medicare beneficiary making coverage decisions this year.

The Medicare Advantage Quality Bonus Program, administered by the Centers for Medicare & Medicaid Services (CMS), was created with a straightforward goal: pay insurers more when they deliver higher-quality care. Plans are rated on a scale of one to five stars, with ratings based on dozens of measures including how well plans manage chronic conditions, how members rate their experience, and how quickly plans process appeals. Plans that earn four stars or higher receive bonus payments on top of their standard government reimbursement. Those bonuses, in turn, are supposed to flow back to beneficiaries in the form of richer benefits — lower premiums, added dental or vision coverage, or reduced cost-sharing.

The theory sounds reasonable. The reality is considerably more complicated. According to KFF analysis, the Quality Bonus Program has ballooned into one of the most expensive components of Medicare Advantage financing, with 2026 payments exceeding $13 billion. That figure represents a dramatic increase from earlier years of the program, driven largely by the fact that a growing share of Medicare Advantage plans have achieved four-star ratings or better. According to CMS.gov data, in 2026 approximately 79% of Medicare Advantage enrollees are in plans rated four stars or higher — a number that sounds impressive until you start asking how so many plans achieved those ratings simultaneously.

Critics, including researchers at KFF and health policy experts across the political spectrum, argue that the star rating system has significant structural flaws that allow insurers to score well without necessarily delivering meaningfully better care. One major concern is that the measures used to calculate star ratings are heavily weighted toward administrative processes — things like whether a plan sends reminder calls for screenings or how quickly it resolves grievances — rather than actual health outcomes like hospital readmission rates or mortality. A plan can score four stars by being good at paperwork and member communication while still denying prior authorizations at high rates or maintaining narrow networks that limit your access to specialists.

There's also a well-documented pattern of what researchers call "star rating inflation" — the gradual upward drift of scores across the industry without a corresponding improvement in patient care. When CMS adjusts its thresholds or methodology, scores can shift dramatically in ways that have more to do with measurement changes than actual performance changes. This creates a situation where the federal government is paying billions in bonuses based on a grading system that may not accurately reflect what beneficiaries actually experience when they need care. For a 70-year-old managing diabetes, heart disease, or a recent cancer diagnosis, the difference between a plan that scores 4.2 stars and one that scores 3.8 stars may be far less meaningful than whether your cardiologist is in-network or whether your chemotherapy requires prior authorization.

Data Snapshot: According to CMS.gov data for the 2026 plan year, there are approximately 5,800 Medicare Advantage plan options available nationwide, and the average Medicare Part B premium in 2026 is $185.00 per month. The Quality Bonus Program's $13 billion-plus price tag means the federal government is spending roughly $2,200 per Medicare Advantage enrollee on bonus payments alone — money that comes directly from the Medicare trust fund and, by extension, from taxpayer dollars and beneficiary premiums.

So what does this mean for you practically? First, it means you should not treat a four-star or five-star rating as a guarantee of excellent care. Star ratings are a useful starting point, but they are a floor, not a ceiling, for your research. When evaluating a Medicare Advantage plan during the Annual Enrollment Period (October 15 through December 7) or the Open Enrollment Period (January 1 through March 31), dig deeper than the star badge on the plan's marketing materials. Use Medicare's Plan Finder tool at Medicare.gov to look at specific measures within the star rating — particularly the member experience scores and the measures related to getting needed care and getting appointments and care quickly. These sub-measures often tell a more honest story than the composite rating.

Second, understand that the bonus money insurers receive is not automatically passed through to you in the form of better benefits. While CMS requires that a portion of bonus payments be used to enhance benefits, insurers have considerable flexibility in how they deploy those funds. Some plans use bonus revenue to offer zero-dollar premiums or expanded dental coverage. Others use it to shore up their profit margins or fund administrative costs. When you're comparing plans, look at the actual benefits table — the Summary of Benefits document — rather than assuming a high-star plan automatically offers the richest coverage. A four-star plan with a $2,500 out-of-pocket maximum may serve you far better than a five-star plan with a $4,000 maximum, depending on your health needs.

Third, pay close attention to prior authorization requirements and network adequacy, two areas where Medicare Advantage plans have faced significant scrutiny in recent years. CMS has been tightening prior authorization rules, and starting in 2024, plans were required to make prior authorization decisions for urgent requests within 72 hours and standard requests within seven calendar days. However, denial rates still vary significantly by insurer. If you have a complex condition requiring frequent specialist visits or high-cost treatments, ask your doctor's office which Medicare Advantage plans in your area have the fewest prior authorization hurdles for your specific conditions. Your physician's billing staff often has firsthand knowledge of which plans are easiest to work with.

For beneficiaries who are frustrated with Medicare Advantage restrictions and are considering switching to Original Medicare with a Medigap supplement, the Quality Bonus Program debate is a useful reminder that the two systems operate on fundamentally different principles. Original Medicare (Parts A and B) does not use star ratings or bonus payments. It pays providers directly on a fee-for-service basis, giving you access to any doctor or hospital that accepts Medicare — which is the vast majority of providers nationwide. A Medigap Plan G policy, for example, typically covers the Part A deductible ($1,676 in 2026), the Part B coinsurance, and most other cost-sharing gaps, leaving you with relatively predictable out-of-pocket costs. The trade-off is a monthly Medigap premium, which varies by age, location, and insurer but commonly ranges from $100 to $250 per month for a 65-year-old, rising with age.

If you're currently in a Medicare Advantage plan and want to switch to Original Medicare plus a Medigap policy, be aware that outside of specific guaranteed issue windows, you may face medical underwriting — meaning insurers can review your health history and potentially charge higher premiums or deny coverage based on pre-existing conditions. The Annual Enrollment Period (October 15–December 7) lets you switch from Medicare Advantage back to Original Medicare, but Medigap insurers in most states can then apply underwriting. Notable exceptions include states with birthday rule protections — California, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Missouri, Nevada, New Jersey, New York, Oklahoma, and Oregon — where you have a 30-day window around your birthday each year to switch Medigap plans without medical underwriting.

The broader policy debate around the Quality Bonus Program matters for beneficiaries beyond just plan selection. The $13 billion-plus in bonus payments is a significant driver of Medicare Advantage's overall cost to the federal government. Multiple studies, including analyses from MedPAC (the Medicare Payment Advisory Commission), have found that Medicare pays more per beneficiary in Medicare Advantage than it would under Original Medicare for the same enrollee — a phenomenon known as overpayment. The Quality Bonus Program amplifies this overpayment by layering additional dollars on top of base payments. Policymakers are actively debating whether to reform the star rating methodology, tighten the thresholds required for bonus payments, or restructure how bonuses are calculated — any of which could affect plan benefits and premiums in future years.

For now, the most actionable step you can take is to treat the Medicare Advantage star rating as one data point among many, not as the final word on plan quality. Review your plan's Annual Notice of Change each fall — it arrives by September 30 and details any changes to premiums, cost-sharing, or covered benefits for the coming year. If your plan's benefits are changing in ways that don't work for your health needs, the Annual Enrollment Period is your opportunity to switch. And if you want personalized help comparing your options, your State Health Insurance Assistance Program (SHIP) offers free, unbiased counseling from trained volunteers — find your local SHIP counselor at shiphelp.org. These counselors have no financial stake in which plan you choose, making them one of the most trustworthy resources available to Medicare beneficiaries navigating an increasingly complex marketplace.