CMS Finalizes 2027 Medicare Advantage Payment Increase of 2.48%

Key Points

• Medicare Advantage payments to increase by 2.48% in 2027, up from near-flat January proposal
• New risk adjustment system based on simplicity, competition, and payment accuracy principles
• Part D updates reflect Inflation Reduction Act changes and separate accounting for MA and standalone PDP costs
• Insurance stocks surged following the announcement

Full Details

The Centers for Medicare & Medicaid Services announced Monday the final Calendar Year 2027 Medicare Advantage and Part D payment policies, featuring a 2.48% average payment increase to private insurers offering Medicare Advantage plans to older adults. This represents a significant shift from the near-flat change proposed in January. The new framework is guided by three principles: simplicity to reduce administrative burden, competition for all plans regardless of size, and payment accuracy that reflects beneficiary health risk. CMS is also updating the Part D risk adjustment model to account for Inflation Reduction Act changes to the Part D benefit, and separately accounting for Medicare Advantage prescription drug plan and standalone prescription drug plan costs to improve payment accuracy. The announcement drove insurance stocks sharply higher on Monday.