This week’s newsletter is Sponsored By: Higi + VRI
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Here is what you’ll find in this week’s newsletter!
Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.
Deep Dive 📚 - 2027 MA Rate Announcement 📣
Sponsor Snapshot 🚀 - brought to you by Higi + VRI
It’s only a 5 minute read, but it will make you 10x smarter.
Here are IMPORTANT LINKS 🔗 for the week:
MedPAC April 9-10, 2026 Public Meeting - (link)
Chapter Raises $100 Million Series E to Continue Building the Trust Layer Between Seniors and Technology in the Age of AI - (link)
WSJ's Editorial Board Contradicts What Its Newsroom Has Reported on Medicare Advantage - (link)
New AHIP Report Highlights the Value of Medicare Supplement Plans for More Than 14 Million Americans - (link)
Jefferson Health sues Aetna over Medicare Advantage inpatient reimbursement policy - (link)
Broker Incentives for Ancillary Products - April 2026 Update - (link)
Medicare Supplement Broker Incentives - 2026 Q2 Update - (link)
Jared’s recent LinkedIn posts:
DEEP DIVE 📚
2027 MA Rate Announcement 📣
MA Rates Are Going Up
This past week CMS finalized 2027 MA Capitation rates in the 2027 Medicare Advantage and Part D Rate Announcement.
The headline number: the average change in MA revenue from 2026 to 2027 is 2.48%, up from 0.09% in the Advance Notice.
While this is a jump, it is not as significant as the 5.06% average revenue increase we saw in 2026.
The chart below shows the average change (excluding MA risk score trend) for both Advance and Final Notices over the past 10 years.
—
A Jump from the Advance Notice
It’s common for the Final Rate to come in higher than the Advance Notice - but the 2027 jump is above normal.
Year | Final vs. Advanced Notice Lift |
|---|---|
2018 | 0.20% |
2019 | 1.56% |
2020 | 0.94% |
2021 | 0.73% |
2022 | 1.26% |
2023 | 0.52% |
2024 | 1.15% |
2025 | 0.00% |
2026 | 2.83% |
2027 | 2.39% |
→ The average lift from 2018–2026 was just 1.02%.
→ The 2027 lift is 2.39% - more than 2x the typical increase.
—
Why the Big Change?
The primary driver of the lift between the advanced notice and final rule is CMS decided not to implement a new risk adjustment model for 2027.
Here is what CMS says:
“For the Advance Notice, the impact of the update to the normalization factor for MA risk adjustment was not shown in the Fact Sheet separately because of the considerable interaction between the impact of the MA risk adjustment model updates and the normalization factor update. Therefore, the combined impact was shown in the Fact Sheet. Because CMS is not implementing an updated risk adjustment model for CY 2027, the impact shown in the Rate Announcement Fact Sheet is entirely due to the normalization factor update.”
The other component impacting the lift from advanced notice to final rule is the effective growth rate.
Here is what CMS says:
“Each year for the Rate Announcement, CMS updates the growth rates to be based on the most current estimate of per capita costs, based on the available historical program experience and projected trend assumptions at that time. The growth rates change between the Advance Notice and the Rate Announcement as CMS incorporates updated data and assumptions. This year, the change in growth rates from the Advance Notice to the Rate Announcement is due primarily to incorporation of additional data, including Original Medicare program experience and incurred dates through fourth quarter 2025.”
And these higher trends are consistent with what MA and Med Supp carriers have been experiencing - as we’ve reported in previous issues - with elevated loss ratios and rate pressure across the board.
—
What the Effective Growth Rate Tells Us
While the overall average rate change is 2.48%, the Effective Growth rate is much higher at 5.33%.
So why the gap?
The biggest drag is the risk model revision and normalization and the average impact of the exclusion of diagnoses from all unlinked chart review records (CRRs) on risk scores under the proposed 2027 MA risk adjustment model (sources of diagnoses), which together subtract -2.65% from the final revenue calculation.
But let’s take a step back, what exactly is the Effective Growth Rate?
“The Effective Growth Rate reflects the current estimate of the growth in benchmarks used to determine payment for MA plans. This growth rate is largely driven by the growth in Medicare Fee-For-Service (FFS) per capita costs, as estimated by the Office of the Actuary.”
It’s a key indicator of overall healthcare cost trends in the Medicare market.
The chart below displays the effective growth rate over the past 10 years.
The 2027 Effective Growth rate of 5.33% is less than last year, but is more consistent with the rates during 2019-2023.
What does this tell us?
CMS explicitly notes that the higher 2026 growth rate was “largely attributable to the inclusion of additional fee‑for‑service expenditure data,” rather than a policy change.
Growth moderated in 2027, due to
Use of a higher spending baseline already adjusted in 2026
Absence of the one‑time technical adjustments that boosted 2026
Continued focus on payment accuracy rather than accelerating cost growth
__
What This Means for the MA Market?
CMS estimates MA payments will increase over $13 billion in Calendar Year 2027.
→ (That implies MA payments in 2026 are projected at roughly $507 billion.)
This infusion will help carriers absorb higher medical trends, but only if those trends are lower than 2.48%, the average revenue increase.
If claims costs continue to grow faster than revenue, loss ratios won’t improve, even with the rate bump.
This rate lift may impact:
2027 product designs
Service area decisions
Market exits or re-entries
Non-commissionable plans
With stronger-than-expected rate increases, some carriers may reconsider previous decisions to pull back.
It will be fascinating to watch how carriers respond in the coming months.
__
Thanks for reading!
SPONSOR SNAPSHOT 🚀: Higi + VRI
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Extending access for your most complex populations → (Explore Our Solutions)
What MMI + Subscribers read this week…
Insurance Regulatory Insights April 2026 - 🎂Birthday Rules coming to NM and WV. (link)
March ‘26 MA/MAPD and PDP enrollment data - February enrollment data has been loaded. Here are a few observations. (link)
Broker/Agent MA Commissions Increasing in 2027 - A look at historical MA/MAPD agent comp., and what to expect in 2027. (link)
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