Medicare Advantage 2027 boost
CMS finalised a stronger Medicare Advantage payment update for 2027, raising payments to MA insurers by an average of 2.48% plus an additional risk‑adjustment change that materially increases the effective boost. The agency also finalised the CY 2027 Medicare Advantage and Part D rule, with policies effective June 1, 2026 and applying to coverage starting January 1, 2027. (medicaleconomics.com) (mondaq.com)
The federal government will pay Medicare Advantage insurers more in 2027 than it first proposed, after the Centers for Medicare and Medicaid Services finalized a 2.48% average rate increase on April 6. (cms.gov) That 2.48% net increase equals more than $13 billion in additional payments to Medicare Advantage plans for calendar year 2027, according to the agency’s fact sheet. When the agency also counts expected changes in patients’ risk scores, the payment increase rises to 4.98%. (cms.gov) The final notice was a sharp change from the January advance notice, when the same agency projected an overall average increase of 0.09% for 2027. In the final version, the effective growth rate rose to 5.33% from 4.97%, and the hit from risk-model revision and normalization narrowed to -1.12% from -3.32%. (cms.gov) Medicare Advantage is the private-plan version of Medicare, and it now covers 34.1 million people, or 54% of beneficiaries with both Part A and Part B in 2025. Payment updates move through plan bids, benefits, and premiums, so the annual rate notice is one of the biggest financial signals for insurers in the program. (kff.org) The biggest technical change was what CMS did not do. The agency said it is not implementing an updated Medicare Advantage risk-adjustment model for 2027, and it is keeping the 2024 model while still updating the normalization factor and excluding diagnoses from most unlinked chart review records. (cms.gov) Risk adjustment is the formula Medicare uses to pay more for sicker patients and less for healthier ones. CMS said its 2027 payment policies are meant to improve payment accuracy and reduce differences in coding intensity between Medicare Advantage and traditional Medicare. (cms.gov) A separate final rule, issued April 2, changed how Medicare Advantage and Part D plans will be run for the 2027 contract year. The rule takes effect June 1, 2026, and applies to coverage starting January 1, 2027. (cms.gov) That rule drops 11 Star Ratings measures tied to administrative process and keeps the historical reward factor for the 2027 ratings instead of launching the “Excellent Health Outcomes for All” reward. It also adds a Part C depression screening and follow-up measure for the 2027 measurement year and 2029 Star Ratings. (cms.gov) The same rule locks in several prescription-drug changes from the Inflation Reduction Act for 2027 and later. CMS said it is codifying the end of the Part D coverage gap, the reduced annual out-of-pocket cap, zero cost-sharing in the catastrophic phase, and the manufacturer discount program that replaced the old coverage-gap discount on January 1, 2025. (cms.gov) Insurers and Medicare Advantage advocates welcomed the final rate. AHIP said the program serves “more than 35 million” seniors and people with disabilities, and Better Medicare Alliance said the April 6 notice was “an improvement from the initial proposal.” (ahip.org) (bettermedicarealliance.org) The next test is not the notice itself but the 2027 plan offerings that insurers file and beneficiaries compare later this year. CMS has now set the payment baseline and the rulebook those plans will use for coverage that starts on January 1, 2027. (cms.gov 1) (cms.gov 2)
