CMS Gives Medicare Advantage Rates a 2.48% Bump for 2027 Plan Year
Following significant industry outcry over a proposal to keep Medicare Advantage rates largely flat in 2027, the Trump administration has bumped payments up slightly in the final policy.
The Centers for Medicare & Medicaid Services initially proposed a 0.09% increase in rates as part of the MA and Part D Advance Notice. In the final rule, the increase is instead set at 2.48%, which CMS said equates to about $13 billion in additional payments to plans for the coming plan year.
CMS said that the rate increase accounts for the growth in underlying costs, how 2026 star ratings could impact bonus payments and changes to risk adjustment.
Chris Klomp, director of Medicare and chief counselor for the Department of Health and Human Services, said on a call with reporters Monday afternoon that the final rule aims to balance immediate challenges in the program with the agency's goals of promoting long-term stability for MA.
The industry response to the original proposal was swift and unanimous: flat rates won't work with healthcare costs and utilization on the rise. Payers warned that the rates set in the proposed Advance Notice could force benefit cuts and further market retreats, both strategies insurers have turned to in a complex cost environment.
Conversation about the rate notice also dominated the Q4 2025 earnings cycle earlier this year, with top executives panning the proposal. Unsurprisingly, insurance companies saw a boost in their stock price at the end of the day on Monday following the news.
The main factor behind the increase, per CMS, is the delay in proposed changes to risk adjustment, which were designed to build on changes implemented under version 28, or V28. On the call, Klomp said the delay—which is indefinite but officials stressed did not amount to scrapping the proposal—would allow time for the V28 changes to "settle."
Updates to risk adjustment under V28 have been rolled out on a three-year timeline, with the implementation complete as of the 2026 plan year. In addition to giving those changes some breathing room, Klomp said that CMS has seen a chilling effect on participation in value-based care models, a critical priority at the agency under the current administration.
He said that while the proposal was delayed, CMS leaders will keep "a careful eye" on insurers who may engage in practices to game risk adjustment.