How the Trump Administration May Change Medicare Advantage

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The Medicare Advantage (MA) program is poised to see significant changes under the second Trump Administration. A broad program of deregulation, continuing the trend from the first Trump presidency and reversing Biden-era changes seems likely. Other policies, like changes to plan payment, are more uncertain, as policymakers grapple with the potentially conflicting imperatives of promoting MA on the one hand and cutting government expenditure on the other. More groundbreaking changes, like making MA the default option for most seniors, may also be on the horizon.

This analysis examines what changes may be on the way for MA in the coming years.

Deregulation and Reversal of Biden-Era Policies

The Centers for Medicare & Medicaid Services (CMS) carried out a broad program of deregulation in the first Trump Administration, loosening rules for MA plans in areas like marketing and supplemental benefits. Some of that trend reversed under President Biden. Biden Administration officials imposed policies that often restricted or increased oversight on plans and their contractors, in favor of beneficiary protection and enhanced oversight. The lowest hanging fruit for administrative action promoting MA in the Trump Administration would be to reverse these recently-imposed restrictions and continue the deregulatory push from the first Trump Administration. There are several areas of likely deregulation in the near term, such as:

• Limits on Supplemental Benefits. These include Biden-era restrictions such as requiring reporting on supplemental benefit usage, demanding a bibliography to substantiate the clinical value of innovative benefits, and new midyear notices to beneficiaries describing available unused supplemental benefits. CMS might also restart the , a program permitting experimental benefit designs.
• Marketing Rules and Limits on Brokers. MA regulators adopted a myriad of new restrictions on plan marketing during the Biden Administration. These brought more plan marketing materials (e.g., TV ads) under the microscope of stricter CMS review. And CMS aggressively regulated “third-party marketing organizations” like agents and brokers, subjecting them to restrictions on their activities, data sharing, and compensation. Under President Trump, CMS could reverse many of these initiatives to encourage greater program enrollment.
• Plan Medical Policies and Utilization Management. Responding to accusations that MA plans denied care more often than the Medicare fee-for-service (FFS) program, under President Biden, CMS constricted plans’ utilization management operations in several ways. Substantively, CMS articulated firmer rules requiring plans to follow Medicare FFS guidelines, including the “two-midnight” rule for hospital inpatient admissions. And new procedural regulations required plans to convene utilization management committees to draft, review, and publish plan medical policies. The Trump Administration might roll these back, giving MA plans more leeway to create their own clinical policies and utilization management procedures. Notably, the current Administration appears favorably disposed towards artificial intelligence (AI), suggesting that plans may have a wide berth to experiment with new applications for AI in utilization management programs.

Changes to MA Plan Payments

MA plan payment policy is the most unpredictable element of the incoming Administration’s policy agenda, since it presents an apparent conflict with explicitly stated Administration goals. On the one hand, the Administration will look to bolster MA, and has promised not to “cut Medicare,” suggesting a policy of increasing (or at least not cutting) plan payments. On the other hand, the Administration and Congress are aggressively looking to lower federal expenditures, whether under the auspices of the Department of Government Efficiency or to find savings in support of an extension of the 2017 tax cut package.

As these principles collide, there are several areas that may provide the focal point for the Administration’s plan payment policy. These are the areas to watch that may give an indication of how the Administration will balance these objectives:

• CMS Rate Notices. During the Biden Administration, MA plans cited below-market increases to plan premiums, resulting from CMS policy choices, as the cause of their retreat from some service areas and decreases in benefit offerings. Plausibly, the Trump Administration might reverse some of these policies, increasing payments to plans and making the market more favorable. For 2026, the outgoing Biden Administration floated rate proposals adding up to a projected 4.33 percent increase to plan payments. CMS is expected to issue a final rate notice in April 2025. Finalizing a rate significantly above or below the proposed 4.33 percent may provide an early window into the current Administration’s approach.
• Star Ratings. CMS is required by statute to operate a five-star quality rating system and pay bonuses to the highest-rated plans. But the agency has significant latitude in how the system is operated and can effectively raise or lower plan payments by adjusting the system to allocate more or fewer higher ratings, leading to more or fewer bonuses. One GOP-aligned think tank has proposed eliminating these quality bonuses all together. As such, the current Administration may look to tweak the ratings distribution in a way that effectively lowers payment to plans.
• Risk Adjustment Data Validation. In 2023, CMS confirmed that it would begin auditing MA plans’ risk adjustment and using extrapolation methods to calculate recoupment beginning with the payment year 2018 audit. The use of extrapolation greatly increases the potential payments due from plans and presents a significant challenge to profitability. CMS’ own rule projected a ten-year cost to plans of $4.5 billion. It remains to be seen whether the Trump Administration will keep this approach, viewing it as a means of reducing expenditure, or back away in order to limit the financial impact on plans.
• Overhauling Plan Benchmarks. Current MA plan payments are based on benchmarks derived from spending in the FFS program. But as MA overtakes FFS as the majority choice, that FFS basis becomes less sound. Congress could look to replace this methodology, last significantly revised in the Affordable Care Act, with a new approach.

Making MA the Default Choice

Under current regulations, all new Medicare beneficiaries who do not elect MA plans are enrolled by default in the FFS program. Several recent policy proposals, including Project 2025, have suggested promoting MA by making it the default enrollment option for new Medicare beneficiaries.  

The Trump Administration could be positioned to adopt such a policy without Congressional action, at least in part. The MA statutes have a “seamless continuation of coverage” clause. This clause, currently not in use, permits CMS to auto-assign new Medicare beneficiaries to an MA plan by default when the beneficiary has other coverage, like an employer plan or individual coverage, through that same organization. Under this authority, CMS could assign all newly eligible (and insured) Medicare beneficiaries to MA plans offered by their current insurer, while offering them the opportunity to elect a different plan or switch to the FFS program.

Conclusion

CMS is poised to potentially make several changes to the MA program under the new Administration. But whether these changes are deregulatory actions, promotion of enrollment, changes to financing, or all of the above remains to be seen. The next rulemaking cycles will provide a key window into CMS’ thinking and may give a roadmap for the next four years.

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