CMS Keeps MA Rate Flat in 2027 Advance Notice

On Monday, the Centers for Medicare and Medicaid Services (CMS) issued a proposal for the 2027 Medicare Advantage (MA) and Part D Advance Notice. The agency proposed a slight increase of 0.09%, shocking shares of publicly traded insurance companies.

The meager increase proposal comes after the Trump administration granted a generous bump of 5.06% for 2026 — far above the 4.33% proposed by the outgoing Biden administration. Inside Health Policy reports that CMS justified the drop by assuming a much lower growth rate in 2027 than 2026, or from 9.04% to 4.97%.

The rate also includes proposals to change the risk adjustment model, using a version of the 2024 risk adjustment model with more current, precise data. The CMS rate notice also says that the agency’s actions related to risk adjustment will be guided by three principles:

1. Simplicity to reduce day-to-day administrative burden for both plans and providers;

2. Competition on creating value for patients where risk adjustment facilitates such competition equally for all varieties of plans irrespective of size or resources; and

3. Payments that accurately reflect beneficiary health risk facilitate the efficient use of healthcare resources, enhanced program integrity, and greater accountability.

Providers and their advocates have been clear that they object to consistent high rises in plan payments as reimbursement disputes and claims denials from these same plans escalate. CMS appears to respond to these concerns by proposing to exclude diagnoses from “unlinked chart review records,” or documents that are not tied to a specific patient encounter, from risk score calculations. Health Leaders Media notes that the agency is framing these changes as “course corrections,” aimed at improving accuracy and reducing waste.

The advance notice includes changes to the MA Star Ratings quality assessment program, including a proposed list of measures for the Categorical Adjustment Index, which reflect payment adjustments based on socioeconomic status, disability or special dispensation during natural disasters. Modern Healthcare reports that this builds on a proposed Star Ratings overhaul that CMS announced late last year.

The market was caught off-guard by the Trump administration’s relatively flat rate and responded aggressively. In the immediate after-hours trading after the announcement on Monday, shares of UnitedHealth Group, the largest Medicare insurer, fell more than 9%. Humana’s shares dropped 12% and CVS Health fell by nearly 10%. Wall Street Journal explains that analysts had anticipated a similarly generous rate increase to 2026, and a spokesman for America’s Health Insurance Plans, the insurance lobby, said the proposal could “result in benefit cuts and higher costs” for MA beneficiaries.