U.S. health insurers slide after CMS projects just a 0.09% Medicare Advantage payment increase for 2027

U.S. health insurers were hit hard this week after the Centers for Medicare & Medicaid Services released its Calendar Year 2027 Advance Notice outlining proposed methodological changes for Medicare Advantage and Part D. If finalized, the package is projected to produce a net average year-over-year payment increase of 0.09%, which CMS said equals more than $700 million in additional payments to plans in 2027—far below what many investors and analysts had been expecting. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

The small headline increase matters because Medicare Advantage is a central profit engine for large insurers. When projected rate updates disappoint, markets often reprice the sector quickly, reflecting fears of tighter margins, reduced room to fund richer benefits, and intensifying pressure to manage medical costs. On January 27, 2026, that dynamic was visible as insurers were among the sharpest decliners in U.S. trading, with the move spilling over into companies adjacent to the MA ecosystem. ([apnews.com](https://apnews.com/article/9490a04190f0cb649966b3b8d7724bef))

CMS emphasized that the Advance Notice is part of an annual process to update capitation rates and payment policies, and it includes technical changes intended to improve payment accuracy. The agency also provided a second lens on the outlook: when “risk score trend” factors (driven by coding practices and population changes) are considered, CMS said the expected average change in payments would be 2.54%. That detail became central to how stakeholders debated the real impact, because many plans argue coding intensity and risk mix are integral to how payments translate into actual revenue. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

Beyond the top-line number, the fact sheet’s table highlighted items that can materially affect plan payments. These include the effective growth rate, risk model revisions and normalization, sources of diagnoses, and star-ratings-related adjustments. Even modest-looking changes in these components can swing revenue expectations across millions of members, which is why the Advance Notice tends to move markets immediately. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

The proposal now enters a formal comment period. CMS said comments must be submitted by 11:59 p.m. Eastern Time on February 25, 2026, and that the final Rate Announcement will be published no later than April 6, 2026. Between now and then, insurers, lobby groups, and provider organizations are expected to push for adjustments, arguing over whether the methodology reflects true costs, coding behavior, and beneficiary needs. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

For households with Medicare Advantage coverage, the announcement is not a benefits change by itself, but it can shape what plans choose to offer during the next enrollment cycle. Lower projected payments can translate into tougher trade-offs: narrower networks, higher cost-sharing, or fewer supplemental benefits—unless plans can offset the pressure through medical-cost controls or growth in higher-quality star ratings. ([cms.gov](https://www.cms.gov/newsroom/press-releases/cms-proposes-2027-medicare-advantage-part-d-payment-policies-improve-payment-accuracy-sustainability?utm_source=openai))