CMS’s September announcement says Medicare Advantage and Part D are expected to remain stable in 2027, citing broad plan access, a nearly flat plan count and eight in ten MA enrollees able to keep their plan at the same or a lower premium. Carrier-level decisions show a more varied picture, from benefit reductions and market exits to shifts in product strategy.
THE 2027 RATE ANNOUNCEMENT
The payment headline
In January, CMS proposed an average 2027 payment increase of 0.09%. The April rate announcement set it at 2.48%, more than $13 billion. CMS projects an increase of 4.98% when expected risk-score growth is included. The two figures measure different things: the first excludes that growth, and the second includes it.
CMS’s own table shows where the change came from. In the proposal, the risk model and normalization line showed a 3.32% reduction, combining the proposed model update with the normalization factor. In the final announcement, it showed a 1.12% reduction, accounting for about 2.2 of the 2.39 percentage points added since January. CMS dropped the updated risk adjustment model for 2027, so the final figure reflects only the normalization factor update. CMS said continuing the 2024 model gives the market more time to adjust to its recently completed phase-in.
The effective growth rate rose to 5.33% from 4.97% after CMS added data through the fourth quarter of 2025, contributing about 0.36 points. A 0.17-point rebasing adjustment, not yet estimated in the proposal, offset part of that.
PAYMENT INTEGRITY AND CODING POLICY
Risk adjustment
The 2.48% combines the 5.33% effective growth rate with four reductions: 0.17% for rebasing, 0.03% for Star Ratings, 1.12% for risk model normalization and 1.53% for excluding diagnoses from unlinked chart review records, with an exception for beneficiaries who switch MA organizations. These are CMS’s expected average impacts. The effect on any one plan depends on its own mix, including how heavily its risk scores rely on unlinked chart review diagnoses.
Separately, the Justice Department announced on September 30 that a regional insurer agreed to pay $22.5 million to resolve allegations that, for payment years 2017 through 2021, it submitted diagnosis data that inflated risk adjustment payments, did not withdraw codes its own chart reviews did not support and falsely certified to CMS that the data was accurate. The claims are allegations only, with no determination of liability. The settlement is separate from CMS’s payment methodology, though both involve chart review diagnoses.
PREMIUMS AFTER THE STABILIZATION DEMONSTRATION
Part D
CMS is ending the Part D Premium Stabilization Demonstration after 2026. The voluntary demonstration began in 2025 to address volatility in standalone drug plan premiums after the Inflation Reduction Act’s benefit changes. The demonstration could have continued through 2027, but CMS said its bid analysis shows sponsors now have enough experience with the redesigned benefit, so Part D returns to traditional market conditions in 2027. The demonstration applied only to standalone drug plans, not MA-PD plans.
The 2027 national average monthly bid amount is $296.05, up from $239.27. The base beneficiary premium rises to $41.33 from $38.99, the maximum 6% annual increase the law permits through 2029. That cap is statutory and separate from the demonstration. Even so, CMS projects the average standalone drug plan premium will rise less than $1 a month, to $36 from $35.09.
THE LATEST QUALITY PERFORMANCE DATA
Star Ratings and 2028 bonus dollars
CMS released the 2027 Star Ratings on October 8. Compared with 2026 as restated in CMS’s table, the share of MA-PD enrollees in contracts rated four stars or higher rose from about 67% to 71%, while the share of contracts at that level fell from about 44% to 37% and five-star contracts fell from 22 to 15. The pattern is consistent with larger contracts moving up. The ratings affect quality bonus payments in 2028.
One insurer said most of its exited plans were rated 3.5 stars or lower but that its decisions were not primarily driven by star ratings. That is one insurer’s account, not a market-wide finding.
BENEFIT DESIGN AND CARRIER PARTICIPATION
Premiums, benefits and selected exits
CMS projects the weighted average MA premium will fall from $14.37 to $12.00. The plan count dips slightly, from 5,553 to about 5,532. Plans project 34 million members in 2027, the same figure they projected for 2026, when actual enrollment reached 36.1 million by June. CMS says plan projections have historically understated enrollment and expects actual 2027 enrollment to exceed them.
An analyst review of Plan Finder found dental allowance cuts reaching about 70% of one large carrier’s members, 45% at another and 36% at a third, along with Part B giveback reductions for 62% of a fourth carrier’s members.
Individual MA plan options decline in 29 of the 51 jurisdictions where they are sold. Twelve payers that sold MA plans in 2026 will not offer any in 2027, eight of them at least partly owned by health systems, while four organizations are entering. One major insurer expects its exits to affect about 600,000 members and expects to keep just over 40% of them in its other plans. Another offers individual plans in 140 fewer net counties, though its overall MA footprint shrinks only about 2%. Carriers are also cutting PPOs, among them four large ones by 48, 37, 34 and 20 plans.
WHERE ENROLLMENT GROWTH IS CONCENTRATED
Special needs plans and dual-eligible withdrawals
Special needs plans accounted for 85% of the net increase in MA enrollment between 2025 and 2026, up from 48% the year before, while total growth slowed to 3% from 4%. For 2027, special needs plan offerings rise 9.4%, from 1,800 to 1,969, and chronic condition special needs plan offerings rise from 562 to 754.
Five insurers are each withdrawing D-SNPs from more than 100 net counties, while another is adding special needs plans in 350 net counties.
2027 RULES AND ENROLLMENT RESTRICTIONS
Enrollment caps and the D-SNP rule
Fifteen insurers have set enrollment caps on 65 plans across 11 states for 2027, and a plan that reaches its cap can close to new enrollees.
For coverage beginning Jan. 1, 2027, some D-SNPs must limit new enrollment under 42 CFR 422.514(h). The rule applies when an MA organization, its parent or an entity sharing its parent also contracts with a state as a Medicaid managed care plan for full-benefit dual-eligible members in the same service area, even with only partial overlap. New enrollment in those D-SNPs is limited to people enrolled in, or in the process of enrolling in, that Medicaid plan, and the organization may generally offer only one D-SNP for full-benefit dual-eligible members there. That one-plan limit has exceptions, including for certain state contract designs and for D-SNPs serving members in Medicaid fee-for-service. Existing unaligned members can remain in these D-SNPs until 2030. From then on, affected D-SNPs may enroll or continue covering only aligned members, except where deemed continued eligibility applies.
READING BEYOND THE NATIONAL AVERAGES
What the gap shows
CMS’s payment and premium projections describe the market in aggregate. Carrier decisions show where specific plans are changing benefits, county coverage, and product mix. Insurers have cited funding, medical and drug costs, utilization and profitability in explaining their choices, and one CFO described cutting plans at the low end of profitability and return. Taken together, those accounts point to several pressures, not a single market-wide cause. The 2027 results will show how these decisions affect enrollment, plan availability, and the economics of the market.
