Medicare Advantage boost

The Trump administration raised 2027 Medicare Advantage payments to private insurers by 2.48% on average, a much bigger increase than it proposed in January. (cms.gov) The Centers for Medicare and Medicaid Services released the final rate notice on April 6, 2026, and said the change will add more than $13 billion to Medicare Advantage plan payments in 2027. The agency’s January advance notice had projected only a 0.09% increase, or about $700 million. (cms.gov) The headline rate is 2.48%, but the Centers for Medicare and Medicaid Services said that after estimated changes in patient risk scores from coding and population trends, the increase comes to 4.98%. The agency also raised the 2027 effective growth rate to 5.33% from 4.97% in the advance notice. (cms.gov) Medicare Advantage is the private-plan version of Medicare, and more than half of eligible beneficiaries now use it. Kaiser Family Foundation said 34.1 million people were enrolled in 2025, equal to 54% of Medicare beneficiaries eligible to choose these plans. (kff.org) These plans are paid a set amount by the government for each enrollee, then use those payments to cover hospital and doctor care and often extras such as dental, vision, and hearing benefits. Kaiser Family Foundation said Medicare Advantage plans also tend to use narrower provider networks and prior authorization more than traditional Medicare. (kff.org) The biggest change between January and April was in risk adjustment, the formula Medicare uses to pay more for sicker patients and less for healthier ones. The Centers for Medicare and Medicaid Services said it will keep using the 2024 Medicare Advantage risk model based on older 2018 diagnoses and 2019 spending data, instead of switching now to a newer model built on 2023 diagnoses and 2024 spending. (aha.org) That decision eased pressure on insurers that had warned lower payment updates would force benefit cuts or plan exits after two years of higher medical costs. America’s Health Insurance Plans, the industry trade group, said plans are still “underwater” because of rising costs, even after the final notice. (ahip.org) Investors treated the final notice as a reprieve for insurers with big Medicare businesses. Reuters reported on April 7 that Humana rose 10.7% in early trading, UnitedHealth Group gained 6.9%, and CVS Health, Elevance Health, Centene, and Molina Healthcare each climbed between 3.6% and 6%. (whtc.com) The payment increase lands as Medicare Advantage faces heavier scrutiny over billing practices and federal spending. The Centers for Medicare and Medicaid Services said the 2027 policies are meant to improve payment accuracy, strengthen accountability, and keep the program sustainable for beneficiaries and taxpayers. (cms.gov) The next test is whether insurers use the extra federal money to steady 2027 benefits after a year of plan terminations and tighter offerings. Kaiser Family Foundation said 2.6 million people were in Medicare Advantage prescription drug plans that terminated coverage at the end of 2025. (kff.org)