Cms Finalizes 2.48% Medicare Advantage Payment Increase For 2027, Higher Than Proposed

On Monday, the Centers for Medicare & Medicaid Services (CMS) finalized its 2027 rate announcement for Medicare Advantage and Medicare Part D – including a substantially higher increase to Medicare Advantage payments than the agency proposed in January.

CMS estimates that its finalized policies will lead to a 2.48% average increase, or $13 billion, in payments to Medicare Advantage plans in 2027. The increase comes as home health providers grapple with Medicare home health payment cuts, persistently low Medicare Advantage reimbursement rates and heightened Medicare Advantage penetration.

“Medicare Advantage and Part D should work for the people who rely on them,” CMS Administrator Dr. Mehmet Oz said in a statement. “These updates keep coverage affordable and ensure patients get real value from their plans.”

The finalized average increase amounts to a 4.98% increase when accounting for the estimated trend in Medicare Advantage risk scores due to factors such as population changes and coding practices.

The finalized rate announcement is far higher than what CMS proposed in January. That proposal included an estimated increase of 0.09%, or over $700 million, to Medicare Advantage plans in 2027. 

CMS followed a similar pattern for the 2026 Medicare Advantage reimbursement rate – proposing a 2.2% increase, only to finalize a 5.06% increase. CMS attributed the increase from the proposal to the finalized rate to a higher effective growth rate. 

The 2.48% average increase for 2027 takes into account growth in underlying costs for Medicare Advantage plans, 2026 Star Ratings for 2027 quality bonus payments and risk adjustment payments, according to CMS.

“CMS’ vision for Medicare Advantage and Part D is clear: a great choice for seniors and a smart deal for taxpayers,” Chris Klomp, the director of Medicare and chief counselor of the U.S. Department of Health and Human Services (HHS), said in a statement. “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.”

Persistently low Medicare Advantage rates perpetuate reimbursement struggles for home health providers, Susan Ponder-Stansel, CEO of Alivia Care, previously told Home Health Care News.

“Patients are getting the care, which is great, but a lot are not getting the care because the home health companies can’t afford to take them,” Ponder-Stansel said. “Or we’re seeing smaller companies close.”

Investors welcomed the news of the 2.48% average increase, with shares of UnitedHealth (NYSE: UNH), CVS  (NYSE: CVS) and Humana rising between 8% and 14% in extended trading, per Reuters.

Read CMS’ fact sheet here. 

The post CMS Finalizes 2.48% Medicare Advantage Payment Increase For 2027, Higher Than Proposed appeared first on Home Health Care News.