The Centers for Medicare & Medicaid Services (CMS) has finalized a 2.48% payment increase for Medicare Advantage (MA) plans in 2027, a notable shift from prior years’ larger hikes and a clear signal of increased scrutiny on plan payments and coding practices. CMS leadership, including Chris Klomp, emphasized that sustained, high growth in MA rates is unlikely moving forward.
- Moderate rate increase: The finalized 2.48% boost (over $13 billion) follows a much higher 5.06% increase in 2026
- Risk adjustment oversight: CMS will exclude diagnoses from unlinked chart reviews in risk score calculations
- Model stability: Planned updates to the risk adjustment model were delayed, allowing continued transition under the current framework
Industry Context
With nearly 35 million beneficiaries enrolled in MA plans, the program now represents a majority of Medicare participation. However, policymakers and advisors—including the Medicare Payment Advisory Commission—have raised concerns about higher-than-expected payments compared to traditional Medicare, driven in part by coding intensity and patient selection.
Enforcement and Compliance Focus
Recent enforcement actions underscore CMS’s position on coding practices. Investigations and settlements involving major organizations—including Elevance Health and Kaiser Permanente—highlight the agency’s intent to curb inappropriate risk score inflation and ensure payment accuracy.
What This Means for Providers
CMS is sending a strong signal that future MA payment growth will be more restrained and closely tied to compliance and value. For providers, especially those in risk-based arrangements, this means:
- Increased scrutiny on documentation and coding accuracy
- Potential financial impact from evolving risk adjustment policies
- Continued alignment toward value-based care and measurable patient outcomes
Healthcare organizations should review the finalized rule and related guidance to understand how these changes may affect reimbursement, contracting, and operational strategy moving into 2027.