Despite concerns over program integrity and overspending, CMS approved a significantly larger 2027 Medicare Advantage (MA) pay raise than initially proposed, following intense lobbying from the insurance industry.
On April 6, CMS announced it will raise payments to private insurers in MA plans by 2.48% in 2027, up sharply from the 0.09% increase proposed in January. After accounting for estimated risk score trends, the effective increase rises to 4.98%.
The agency projected this change will translate into more than $13 billion in additional payments to MA plans in 2027, compared with the roughly $700 million initially proposed. CMS said the higher rate reflects growth in underlying healthcare costs, the anticipated impact of 2026 star ratings on bonus payments, and updates to risk adjustment.
Since the release of the Advance Notice in January, MA advocacy groups ramped up pressure on regulators — funding research, launching ad campaigns, gathering signatures, and submitting a record number of comments to CMS in support of higher rates.
An analysis by KFF Health News of more than 16,400 public comments found that about 82% of the comments were identical to a letter that appeared on the website of Medicare Advantage Majority, an advocacy group that has spent more than $3.1 million on Facebook ads since September 2024. Between Jan. 22 and Apr. 21, 2026, the group invested over $313,375 on 222 Facebook ads, according to Meta’s Ad Library.
The “dark money” group did not disclose their funding sources on their website.
Major industry groups have also ramped up lobbying. The Better Medicare Alliance, a nonprofit “allies” with insurers and providers, spent $680,000 in the first quarter of 2026 — a 33% increase compared with the same period last year. In total, it reported more than $2.18 million in lobbying expenditures in 2025 and hired nine lobbyists, seven of whom previously held government roles, according to data compiled by OpenSecrets and U.S. Congress Lobbying Disclosure Act Reports.
Another advocacy group, America’s Health Insurance Plans, reported record lobbying spending of $17.23 million in 2025, up sharply from $11.77 million in 2024. Its spending in the first quarter of 2026 alone reached $5.32 million, a 10% increase compared with the same quarter last year. Of its 59 lobbyists, 34 previously held government positions.
Meanwhile, major health plans also boosted their lobbying expenditures in 2025, according to OpenSecrets data. UnitedHealth Group, the largest MA insurer, spent $12.54 million on lobbying in 2025, nearly doubling its 2024 total of $7.52 million. During the same period, the third- and fourth-largest MA insurers — Aetna’s parent company, CVS Health, and Elevance Health, Inc. — also saw slight increases in their lobbying outlays.
CMS Delay on Risk Adjustment Update Boosts MA Payments
MA insurers get a base payment per enrollee, with extra funds based on health status — a system known as risk adjustment that has been flagged as prone to abuse. CMS had proposed updates to the risk adjustment model that would recalibrate payments using more recent data on member diagnoses and spending.
However, those changes were ultimately not finalized. CMS officials said during an April 6 press call that this delay was a key driver behind the higher final rate.
“Delaying implementation of a risk adjustment model that is based on more recent underlying data prolongs the use of a risk adjustment model that, […,] is waning in its ability to predict current costs,” CMS officials acknowledged in the final regulation.
CMS did move forward with a policy to exclude diagnoses identified through chart reviews that are not tied to a provider encounter. Insurers have used chart reviews to add diagnoses from medical records that are not otherwise submitted by providers, thereby increasing payments to MA plans. The agency narrowed the policy by exempting enrollees who switch insurers, but it is still expected to reduce average payments by about 1.53%.
Chart reviews alone accounted for roughly $24 billion in payments to MA plans in 2023, according to The Medicare Payment Advisory Commission (MedPAC).
CMS also emphasized its focus on “payment accuracy,” as MA payments have faced growing scrutiny from watchdogs and auditors in recent years. MedPAC estimates that in 2026, MA plans will be overpaid by about 14%, or $76 billion, relative to traditional Medicare fee-for-service.
MA Insurers Scale Back Footprint in 2026
In this highly concentrated market, several major MA plans scaled back their offerings in 2026 amid pressure from recent reimbursement cuts and rising medical costs.
All three of the largest MA insurers — UnitedHealthcare, Humana, and Aetna — reduced the number of states and counties they serve in 2026. UnitedHealthcare, in particular, prioritized narrower MA health maintenance organization plans over preferred provider organization offerings, and exited the PPO market entirely in Connecticut, Maryland, South Dakota, and Vermont, according to CareSet’s analysis of CMS’s Medicare Advantage and Part D landscape files.
Among smaller plans, retrenchment was also evident. UCare, Minnesota’s second-largest MA insurer, exited the individual MA-PD market entirely in 2026. Meanwhile, Blue Cross Blue Shield of Michigan Mutual Insurance Co. terminated plans affecting just over one-third of its 2025 enrollees and withdrew from Vermont altogether.
Against this backdrop, the final rate announcement was seen as a major win for insurers. Stocks surged following the news, with UnitedHealth rising more than 10%, CVS Health nearly 7%, Humana gaining 8%, and Elevance Health adding 3%.
The gains came after a period of sharp volatility, following the January proposal that triggered backlash and wiped out billions in market value for publicly traded insurers already under significant financial pressure.
