The Centers for Medicare & Medicaid Services (CMS) has proposed a 0.09% increase in Medicare Advantage (MA) payments for 2027, amounting to over $700 million in additional payments.
Key Details of the Proposal
Payment Increase: The proposed net average year-over-year payment increase for Medicare Advantage plans is 0.09%. This translates to approximately $700 million in additional payments for the calendar year 2027.
Context of the Increase: This proposed increase is significantly lower than the expected mid-single-digit percentage increases seen in previous years, which were around 4% to 6%. Experts express concerns that this flat increase may lead to higher premiums and reduced benefits for seniors due to rising medical costs.
Risk Adjustment Updates: CMS is also proposing updates to the risk adjustment model, which aims to improve payment accuracy and address coding differences between Medicare Advantage and Original Medicare. This includes excluding certain diagnosis information from risk score calculations starting in 2027.
Stakeholder Concerns: There are worries among stakeholders that the proposed flat funding could impact seniors’ coverage and the affordability of premiums and supplemental benefits. Advocacy groups have raised alarms about potential benefit cuts and increased costs for beneficiaries.
Next Steps: The comment period for this proposal closes on February 25, 2026, with the final rate announcement expected by April 6, 2026.
This proposed rate increase reflects CMS’s ongoing efforts to ensure the sustainability of the Medicare Advantage program while addressing the complexities of risk adjustment and payment accuracy. However, the implications for beneficiaries and insurers remain a critical concern as the healthcare landscape continues to evolve.
