Health insurance

US Agency Boosts Medicare Advantage Pay 2.48% for 2027

Is the 2027 Medicare Advantage rate update a smart fiscal reform or a dangerous underfunding of vulnerable seniors?

Published APR 7

US Agency Boosts Medicare Advantage Pay 2.48% for 2027

Story

Above: CMS Administrator Mehmet Oz (R) during an announcement at the White House on Feb. 5. Image credit: Aaron Schwartz/CNP/Bloomberg/Getty Images

The Facts

The Centers for Medicare & Medicaid Services (CMS) on Monday finalized a net average payment increase of 2.48% for Medicare Advantage plans in 2027, amounting to more than $13 billion in additional funding compared to 2026. The rate determines how much CMS pays private insurers to provide MA coverage.
Centers for Medicare & Medicaid Services (CMS)
CNBC
The finalized rate is higher than the 0.09% increase CMS proposed in January, which had sent insurer stocks lower and drawn industry criticism over inadequate funding.
Market Watch
Benzinga
CMS said the higher final rate partly reflects its decision not to fully adopt proposed risk adjustment changes, instead continuing to use the 2024 Medicare Advantage model based on 2018 diagnoses and 2019 expenditures data for 2027.
American Hospital Association
Fierce Healthcare
Shares of major health insurers rose after the announcement, with UnitedHealth gaining around 8%, Humana around 8% and CVS Health around 6% at market open on Tuesday.
Market Watch
Reuters
CMS Administrator Mehmet Oz said the updates "keep coverage affordable and ensure patients get real value from their plans," while the American Medical Group Association (AMGA), a provider group, said the increase "does not reflect the economic realities" its members face.
HealthLeaders
Benzinga
Alongside the rate increase, CMS finalized changes to the Star Ratings system, removing 11 largely administrative measures and placing greater weight on clinical outcomes, patient experience and measures such as depression screening.
HealthLeaders
Newsweek

Sources Split

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CENTER

RIGHT

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CRIT

CENTER

PRO
ESTAB

The Spin

Pro-establishment narrative

The 2027 Medicare Advantage rate increase of 2.48% keeps coverage affordable while cracking down on inflated coding practices that cost taxpayers billions. Excluding diagnoses from unlinked chart reviews brings real accountability to a system that's been gamed for too long. This is exactly the kind of smart, patient-first reform that makes Medicare Advantage sustainable for seniors and fiscally responsible for everyone.

Centers for Medicare & Medicaid Services (CMS)

Establishment-critical narrative

A 2.48% Medicare Advantage payment update doesn't come close to covering the real inflationary pressures hitting medical groups and integrated health systems today. Excluding audio-only telehealth diagnoses from risk adjustment punishes the sickest, most vulnerable patients — rural seniors and those without broadband access — by making them invisible to the payment model. Underfunding care delivery guarantees benefit cuts, higher cost-sharing and plan exits.