The federal government has set new Medicare Advantage payment rates for 2027, and insurers are getting more money than they were told to expect at the start of the year. The Centers for Medicare & Medicaid Services finalized a net average increase of 2.48 percent, worth more than $13 billion in additional Medicare Advantage payments for calendar year 2027. That raise arrives as UnitedHealthcare, Humana and several other major carriers keep shrinking the plans available to Medicare beneficiaries, pulling out of counties, freezing broker commissions and trimming benefits even as their federal payments climb. The disconnect between a bigger check from Washington and a smaller menu of coverage choices is what seniors comparing plans will run into this fall.
CMS Locks In a 2.48 Percent Payment Bump for CY2027
CMS released the Calendar Year 2027 Medicare Advantage and Part D Rate Announcement on April 6, 2026, finalizing the payment update that will apply to Medicare Advantage plans across the country next year. The agency set the net average increase at 2.48 percent, or over $13 billion in additional payments to MA plans in CY 2027, a figure CMS attributes to growth in underlying health care costs, 2026 Star Ratings that determine 2027 quality bonus payments, and updates to how the government adjusts payments for patient health risk. CMS Administrator Dr. Mehmet Oz said the update was meant to keep coverage affordable and ensure “patients get real value from their plans,” while Chris Klomp, director of the Center for Medicare and chief Medicare counselor at the Department of Health and Human Services, described the announcement as sharpening “competition based on quality, not on coding practices.”
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The January Advance Notice Proposed Far Less
The 2.48 percent figure is well above what CMS floated at the start of the rate-setting cycle. In its CY 2027 Advance Notice, published January 26, 2026, the agency proposed a net increase of just 0.09 percent, or roughly $700 million more than CY 2026 payments, before accounting for expected growth in risk scores. That gap between January’s proposal and April’s final number is unusually wide, and it did not happen by accident. CMS chose not to adopt, in full, a planned update to the risk adjustment model that assigns payments based on how sick a plan’s members appear on paper. Rather than shifting to a model calibrated on more recent Original Medicare diagnosis and spending data, the agency kept using the version calibrated on 2018 diagnoses and 2019 expenditures for CY 2027, a decision the American Hospital Association said explains “a significant portion of the increase in net plan payments from the advance notice to the final rate announcement.”
Star Ratings and Risk Adjustment Are the Real Levers
CMS does not arrive at 2.48 percent from a single input. The figure blends three moving parts: the projected growth rate in underlying MA costs, Star Ratings earned in 2026 that set 2027 quality bonus payments, and the risk adjustment refinements described above, including a new exclusion of diagnosis information drawn from unlinked chart review records starting in CY 2027. When CMS layers in the separate trend for expected risk-score growth, the payment effect rises to 4.98 percent. Plans with stronger Star Ratings or richer risk-score documentation stand to gain more from the CY 2027 update than plans without those advantages, which helps explain why the same rate announcement can look generous to one insurer and thin to another.
UnitedHealthcare and Humana Keep Cutting Despite the Raise
The additional federal money has not stopped the country’s largest Medicare Advantage insurers from pulling back. UnitedHealthcare enrolled just shy of 7.6 million MA members in the second quarter of 2026, down from about 8.4 million at the end of 2025, and the company expects to end 2026 with as many as 1.1 million fewer MA members than it had a year earlier. A preliminary broker filing reviewed in August showed UnitedHealthcare weighing an exit from 34 counties across 12 states, affecting roughly 20,000 people, though the company says that list is not final. Humana, the second-largest MA insurer, has separately said it will shut down more underperforming plans in 2027, a move expected to touch roughly 600,000 of its 7.2 million MA members, or about 8 percent.
Aetna, Elevance and Centene Are Bidding for Margin, Not Members
UnitedHealthcare and Humana are not outliers. Executives at CVS’s Aetna, Elevance and Centene told investors this summer that their 2027 bids would prioritize margin recovery over enrollment growth, with Elevance and Centene emphasizing retention of dual-eligible members rather than broad membership gains. Centene CEO Sarah London told investors the company plans “to further simplify” its Medicare Advantage footprint heading into 2027. Insurers submitted those 2027 bids to CMS in June, and specific plan-level changes are due to be announced in early October, just before Medicare’s open enrollment period begins October 15, the window when the scope of the industry’s cuts and the size of the 2.48 percent increase both become visible to the seniors comparing plans.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
