CMS proposes near-flat 2027 Medicare Advantage payment update, shaking insurers and reviving benefit-cut concerns
Federal health officials proposed a 0.09% net average increase in Medicare Advantage payments for 2027 and outlined risk-adjustment changes aimed at payment accuracy, setting up a high-stakes lobbying fight and raising questions about plan benefits and premiums.
A 0.09% proposed increase for 2027
The Centers for Medicare & Medicaid Services (CMS) released its 2027 Advance Notice outlining methodological changes for Medicare Advantage (MA) capitation rates and MA and Part D payment policies. If finalized, CMS projected the package would result in a net average year-over-year payment increase of 0.09%—roughly $700 million more in MA payments in calendar year 2027. CMS described the update as part of routine technical adjustments, but the small headline number immediately sharpened attention on how plans will maintain benefits, manage utilization, and price premiums.
In its announcement, CMS emphasized payment accuracy and sustainability, arguing the proposed approach supports beneficiary choice while aligning payments with real health needs and protecting taxpayers from unnecessary spending. The advance notice is an early stage in the annual rate-setting process, and the final numbers can shift after feedback, analysis, and political and industry pressure.
Risk adjustment: chart reviews and coding practices in the spotlight
Beyond the payment update, CMS proposed changes to risk adjustment intended to better reflect current costs and to address coding differentials between Medicare Advantage and traditional Medicare. A key element is a proposal to exclude diagnosis information from “unlinked” chart review records—diagnoses not tied to a specific beneficiary encounter—from risk score calculations starting in 2027. CMS signaled that the impact may be larger for organizations that rely more heavily on these chart review submissions.
The combination of a near-flat net update and tighter risk-adjustment rules is likely to intensify negotiations between the government and insurers. Plans may warn of benefit reductions, narrower supplemental offerings, or market exits if margins compress, while CMS will argue that more accurate coding and payment calibration are necessary to keep the program stable for beneficiaries and sustainable for federal finances.