The Trump administration has proposed nearly flat payment rates for private Medicare plans in 2027, a move that could significantly affect insurers that rely heavily on the Medicare Advantage program.
The Центры услуг Medicare и Medicaid (CMS) said payments to Medicare Advantage plans would rise by an estimated 0.09% on average in 2027 — far below expectations from Wall Street analysts, The Wall Street Journal reported Monday.
Medicare Advantage plans — offered by private insurers — now cover tens of millions of пожилые люди and people with disabilities.
CMS officials said the proposal is intended to improve the accuracy of payments and simplify the billing system.
“We do not want risk adjustment to be a source of competitive advantage for health plans,” Chris Klomp, CMS deputy administrator and director of Medicare, told the Journal.
Medicare Advantage is a major revenue driver for insurers and federal payment policies can have substantial financial impacts.
The proposed 0.09% increase would translate to roughly $700 million in additional payments across the industry, the report said.
Billing rule change targets chart reviews
The proposal also includes a major change to billing practices that have drawn scrutiny from government watchdogs.
CMS would eliminate payments tied to certain medical chart reviews that document diagnoses without being linked to a specific medical encounter — such as a doctor’s visit.
Under Medicare Advantage’s risk adjustment system, insurers receive higher payments when patients are documented as having certain medical conditions.
Critics have argued that insurers use chart reviews to identify diagnoses that boost payments without necessarily reflecting active treatment.
The Wall Street Journal report cited several government investigators — including the Office of Inspector General (OIG) for the Department of Health and Human Services — that say such practices lead to questionable payments that disproportionately benefit certain insurers.
A 2021 OIG report singled out UnitedHealth Group as a major beneficiary, though the company said its program was “transparent and compliant” with Medicare rules.
CMS officials said the proposed chart review change reduced the projected 2027 payment rate by 1.53 percentage points.
Growth assumptions, industry reaction
A key factor behind the lower-than-expected rate proposal is the agency’s calculation of spending growth in traditional Medicare, which influences Medicare Advantage payments.
Analysts had expected the growth rate to be higher than the 4.97% figure used to calculate the proposed insurer rate, according to The Wall Street Journal.
CMS said underlying billing trends could boost overall payments by 2.45%, bringing the total projected increase to about 2.54% when combined with the proposed rate update.
Actuaries may revise growth estimates before final rates are set in April.
An insurance industry group warned the proposal “could result in benefit cuts and higher costs for 35 million seniors and people with disabilities.”
The proposal briefly weighed on insurer stocks in after-hours trading — with shares of major Medicare Advantage providers falling sharply after the news was reported.
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