Cms Proposes 0.09% Medicare Advantage Payment Increase for 2027

The Centers for Medicare and Medicaid Services (CMS) announced a proposed 0.09% Medicare Advantage payment increase for CY 2027 on Monday, a significant drop from the 5.06% rate hike finalized for CY 2026. 

The increase would represent a $700 million increase in Medicare Advantage payments in 2027, year-over-year.

“These proposed payment policies are about making sure Medicare Advantage works better for the people it serves,” CMS Administrator Dr. Mehmet Oz said in a statement. “By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs.”

According to CMS, the proposal takes into consideration growth rates of underlying costs, 2026 Star Ratings for 2027 quality bonus payments and risk adjustment updates.

Medicare Advantage home health payment rates are significantly lower than traditional fee-for-service Medicare payment rates, placing substantial pressure on home health providers’ margins.

“Medicare Advantage is already a difficult topic for home health,” Susan Ponder-Stansel, CEO of Alivia Care, told Home Health Care News. “It’s a disconnect [between the] payment policy and the needs of the population that we’re all serving.”

Jacksonville, Florida-based Alivia Care provides home health, hospice, personal care, palliative care and Program of All-Inclusive Care for the Elderly (PACE) services across Northern Florida and Southern Georgia.

Many home health agencies accept referrals with low or negative margins in order to receive referrals with higher margins, Ponder-Stansel said. While larger providers may be able to decline referrals with slim margins, most providers cannot afford to decline patients.

“It just sort of perpetuates that problem, where you’re not even covering the costs,” Ponder-Stansel said. “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. Or we’re seeing smaller companies close.”

While last year’s Medicare Advantage final payment rule was met with a leap in enthusiasm from Wall Street, stock prices of major health insurers dropped following the CY 2027 proposal. Shares of UnitedHealth Group (NYSE: UNH), CVS Health (NYSE: CVS) and Humana (NYSE: HUM) dropped between 8% and 13% in after-hours trading, according to Reuters.

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