The CAI Methodology Update Is Less About Compliance, More About Revenue

The Categorical Adjustment Index (CAI) has always acknowledged that plans serving higher proportions of dual-eligible and low-income subsidy (DE/LIS) members face structural challenges in Star Ratings performance. The 2026 methodology update takes this a step further: 

It explicitly rewards plans that demonstrate improvement in care for these populations.

For quality leaders, this moves the conversation beyond compliance to include revenue strategy.

The Performance Gap is Real—And Measurable

Plans serving vulnerable populations face systemic headwinds. According to the CMS 2025 Star Ratings Fact Sheet, approximately 50% of nonprofit MA-PD contracts achieved 4+ stars compared to just 36% of for-profit contracts. This gap isn't coincidental. Nonprofit plans often serve higher concentrations of DE/LIS members and have built infrastructure specifically designed to address their needs.

Research published in the American Journal of Managed Care found within-contract disparities in performance on clinical measures, with lower odds of receiving recommended care for low-SES patients. The magnitude of these disparities varied across measures and contracts, but the pattern was consistent: vulnerable populations face barriers that affect quality measure performance.

CMS recognized this reality when implementing the CAI. The updated methodology acknowledges that some plans are running a harder race. It provides a pathway for those plans to demonstrate quality through improvement rather than absolute performance alone.

The Financial Stakes are Substantial

Quality bonus payments tied to Star Ratings represent billions in annual MA payments. According to the CMS 2026 Advance Notice Fact Sheet, MA payments are projected to increase by over $16 billion in 2025 compared to 2024, with quality bonus payments representing a significant portion of that growth.

For plans that cross the 4-star threshold, the financial impact is immediate. Advisory Board analysis indicates that 4+ star plans receive approximately a 5% boost to their benchmarks through quality bonus payments. For a large plan with 500,000 members, that can translate to a $50-100 million annual swing.

The stakes are even higher for plans serving vulnerable populations. KFF research shows that federal spending on Medicare Advantage quality bonus payments has more than quadrupled since 2015, reaching at least $12.7 billion in 2025. Plans that can demonstrate quality improvement for DE/LIS members now have a clearer pathway to capturing their share of these payments.

What the Updated Methodology Actually Rewards

The CAI highlights specific operational priorities that quality leaders can act on:

Digital Health Accessibility

Vulnerable populations face documented barriers to digital engagement. Research from the CDC found that Medicare beneficiaries without internet access were 8.2 percentage points less likely to report having access to telehealth. Those who had not participated in video calls prior to the pandemic were 6.6 percentage points less likely to have telehealth access. 

Solutions must account for varying levels of digital literacy and connectivity—meeting members where they are, not where technology assumes they should be.

Multi-Channel Member Engagement

According to ASPE analysis, over 26% of Medicare beneficiaries reported not having computer or smartphone access at home, and the majority of seniors using telehealth relied on audio-only visits rather than video. Plans that assume digital-first engagement will reach all members are leaving vulnerable populations behind. 

Effective engagement requires phone outreach, mail communications, and in-person touchpoints (not just an app).

Care Coordination That Accounts for Social Determinants

The American Hospital Association notes that one barrier to expanding telehealth to underserved populations has been a lack of access to enabling technologies, as well as education to support digital literacy. DE/LIS members often face transportation barriers, food insecurity, and housing instability that directly impact their ability to engage with care. 

Quality programs that don't account for these factors will continue to see performance gaps and miss the improvement opportunities that the updated CAI is designed to reward.

The Business Case for Equity Investment

The updated CAI methodology makes the business case explicit: plans that invest in closing care gaps for vulnerable populations are now better positioned to capture quality bonus payments.

CMS data shows that MA-PDs with 10+ years in the program are significantly more likely to achieve 4+ stars than newer contracts. These mature plans have had time to build the infrastructure, relationships, and operational capabilities required to serve complex populations effectively. 

The CAI update gives newer plans and those serving high concentrations of vulnerable members a more realistic pathway to demonstrating quality.

For quality leaders, the strategic question is straightforward: are you investing in the capabilities required to improve care and support for your most vulnerable members? Plans that do so will see performance follow. Those that don't are leaving both better outcomes and revenue on the table.

The plans that recognize this—and act on it—will find themselves better positioned as CMS continues to emphasize health equity in its quality measurement framework. Those that treat equity as a compliance checkbox rather than a strategic priority will continue to face the performance gaps that the CAI was designed to address.

For the full breakdown of 2026 methodology changes and what they mean for 2027 revenue, download our comprehensive analysis: 2026 Star Ratings: Key Findings and Recommendations