2027 Medicare Advantage Final Payment Rule: Key Changes Explained | David Meyers

Why It Matters

The rule delivers billions in extra payments to insurers while preserving overpayment risks, shaping the financial outlook for Medicare Advantage and influencing broader Medicare sustainability debates.

Key Takeaways

• CMS raises Medicare Advantage payments 2.48% for 2027.
• Effective growth rate plus risk adjustment yields ~5% total boost.
• CMS abandons retraining risk model, keeping 2018‑19 data.
• Unlinked chart reviews largely removed from risk score calculations.
• Potential savings tools like coding pattern adjustment remain unused.

Summary

The Centers for Medicare & Medicaid Services (CMS) released its final payment rule for Medicare Advantage (MA) plans for the 2027 benefit year, announcing a 2.48% increase in base rates – a figure far above the modest 0.009% bump proposed in the earlier advanced notice. CMS also assumes a 2.5% rise in risk‑adjusted scores, effectively delivering roughly a 5% payment boost that translates into an estimated $13 billion in additional spending for the program.

Key components of the rule include the effective growth rate tied to traditional Medicare spending and the risk‑adjustment methodology. While the agency originally signaled a shift to retrain the HCC risk model on more recent 2023‑24 data – a move that would have lowered payments by diluting code weights – the final rule retains the 2018‑19 training window, preserving higher insurer reimbursements. Additionally, CMS largely eliminates unlinked chart‑review diagnoses from risk scores, though it still permits them for new enrollees.

David Meyers of Brown University highlighted that insurers welcomed the higher rates, noting a positive market reaction in plan‑stock prices. He described the decision to forego model retraining as a concession to market stability, despite academic consensus that newer data would improve accuracy. Meyers also pointed out that CMS continues to rely on the statutory 5.9% coding‑pattern adjustment, a tool that could capture further overpayments but has never been used beyond the minimum.

The implications are two‑fold: insurers gain short‑term financial relief and likely remain in the MA market, but the program’s long‑term fiscal sustainability remains in question. By opting for modest adjustments rather than deeper reforms, CMS leaves substantial savings on the table, setting the stage for future policy debates over risk‑adjustment integrity, fraud‑waste‑abuse controls, and the balance between market stability and Medicare’s budgetary health.

Original Description

On an emergency pod episode, Health Affairs Publishing’s Jeff Byers welcomes Brown University's David Meyers to the pod to unpack the 2027 Medicare Advantage final payment rule, including the higher-than-anticipated rate increase, changes to risk adjustment models, what is V28, and the tradeoffs between market stability and long-term program sustainability.

On April 20th, join us for our upcoming Insider exclusive event ( https://www.healthaffairs.org/do/10.1377/he20260313.697167/full/?utm_medium=podcast&utm_source=this+week&utm_campaign=insidermarketing&utm_content=eventspecific ) exploring the evolution of the Medicare Advantage market featuring Sachin Jain, David Meyers, and Grace Mackleby.

Related Links:

* Assessing Recent Regulatory Action On Medicare Advantage ( https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2025.01127?utm_medium=podcast&utm_source=this+week&utm_campaign=forefront ) (Health Affairs Forefront)

Health Affairs This Week

Episode 242

April 8, 2026

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