CMS ups payment increase for Medicare Advantage

WASHINGTON – The Centers for Medicare & Medicaid Services (CMS) has set a net average increase of 2.48% for Medicare Advantage plans in calendar year 2027, representing more than $13 billion in additional payments.

Earlier this year, CMS had proposed a net average increase of 0.09%, representing $700 million in additional payments.

CMS touts improved payment accuracy

In a new rate announcement, the agency says this expected increase includes consideration of the various elements that impact MA payments, such as growth rates of underlying costs, 2026 Star Ratings for 2027 quality bonus payments, and risk adjustment updates.

“CMS’s vision for Medicare Advantage and Part D is clear: a great choice for seniors and a smart deal for taxpayers,” said Chris Klomp, director of Medicare and chief counselor of the U.S. Department of Health and Human Services. “The Rate Announcement improves payment accuracy and strengthens competition based on quality—not on coding practices—helping put the program on a more sustainable path for the long term.”

Three principles for new system for MA risk adjustment

CMS says the policies in the rate announcement address coding differentials between MA and Original Medicare for CY 2027. The agency says it is working toward an MA risk adjustment system guided by three principles:

1. Simplicity to reduce day-to-day administrative burden for both plans and providers;
2. Competition for all plans irrespective of size or resources, creating greater value for patients; and
3. Achieving payments that accurately reflect beneficiary health risk and facilitate the efficient use of healthcare resources, enhanced program integrity, and greater accountability.

For more information

• The CY 2027 MA and Part D Rate Announcement may be viewed at: https://www.cms.gov/files/document/2027-announcement.pdf.
• A fact sheet discussing the provisions of the CY 2027 MA and Part D Rate Announcement can be viewed at: https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-rate-announcementv.