On April 6, 2026, the Centers for Medicare & Medicaid Services (CMS) finalized a 2.48% net average increase in Medicare Advantage plan payments for the 2027 calendar year. This adjustment will result in more than $13 billion in additional payments to plans compared to 2026. This story is featured today because the final rate represents a massive departure from the agency's initial projections released earlier this year.
The Story
According to AHA News, the finalized 2.48% increase is a sharp rise from the 0.09% estimate, or $700 million, initially proposed in the advance notice. The report states that CMS decided not to adopt the proposed 2027 risk adjustment model, which would have used 2023 diagnoses and 2024 expenditures. Instead, CMS will continue using the 2024 risk adjustment model calibrated with 2018 diagnoses and 2019 expenditure data. The rule also includes technical updates to Star Ratings and new oversight for supplemental benefits provided via debit cards.
Why It Matters
The decision to retain the older risk adjustment model is the primary driver behind the $13 billion payment increase. By backing away from the proposed 2027 model, CMS is providing Medicare Advantage plans with significantly higher revenue than the $700 million increase originally forecasted. This move provides plans with more financial predictability for 2027 than the initial advance notice suggested.
The Detail That Stood Out
CMS did not adopt in full its proposed changes to the risk adjustment model, which explains a significant portion of the increase in net plan payments...
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AHA News provides a detailed breakdown of the 2027 rate announcement and its impact on hospital-affiliated plans.
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