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114. 2027 Rate Advance Notice Bad News For Medicare Advantage

114. 2027 Rate Advance Notice Bad News For Medicare Advantage

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 The Trump administration released the 2027 Advance Notice for Medicare Advantage and Part D, and the near-zero rate hike sent a shockwave through the MA industry. About The Podcast: Millions of Americans feel confused and frustrated in their search for quality healthcare coverage. Between out-of-control costs, countless inefficiencies, a lack of affordable universal access, and little focus on wellness and prevention, the system is clearly in dire need of change. Hosted by healthcare policy and technology expert Marc S. Ryan, the Healthcare Labyrinth Podcast offers accessible, incisive deep dives on the most pressing issues and events in American healthcare. Marc seeks to help Americans become wiser consumers and navigate the healthcare maze with more confidence and certainty through The Healthcare Labyrinth website and his book of the same name. Marc is an unconventional Republican who believes that affordable universal access is a wise and prudent investment. He recommends common-sense solutions to reform American healthcare. Tune in every week as Marc examines the latest developments in the space, offering analysis, insights, and predictions on the changing state of healthcare in America. About The Episode: On this episode, Marc discusses the release of the 2027 Advance Notice for Medicare Advantage and Part D. The near-zero rate hike sent a shockwave through the MA industry. Key Takeaways: In a huge shock to the industry, the Trump administration proposed a near-zero rate hike for 2027 in Medicare Advantage (MA). While the Effective Growth Rate was almost 5%, it was nearly zeroed out by two new risk adjustment reform changes. The 2027 increase stands at just 0.09% right now. That means just $700M in additional revenue in 2027 compared with $25B in 2026. Plans got no breathing room in 2027 after the new v28 risk model was phased in from 2024 to 2026 and took out 7.62% from rates. The proposed risk adjustment changes updated the new v28 model for more recent data as well as eliminated any chart review or health risk assessment submissions with diagnoses that do not have a linked medical encounter. The unlinked chart change has major impact on the biggest plans that practice very aggressive risk coding. The industry receives as much as $7.5B annually now for unlinked charts. Last year, the effective growth rate grew by almost 3% from the Advance Notice to the Final Announcement. That could happen again and move the rate for 2027 to just below 3%. This is still far below the 5% from 2026. A Stars restructuring that will reduce ratings and quality bonuses in the future compounds the overall gloomy financial picture. The MA recovery will be complicated by the rate announcement and more benefit, product, and geographic contractions are likely in 2027. The era of free-wheeling rates and risk adjustment is over. Plans need to focus on clinical management, quality, and cost control. One silver lining: overpayments are coming down and it is tantamount that the industry ensures Congress knows this before lawmakers push through more reforms. Connect With Marc: Marc on LinkedIn Marc on Twitter THL Podcast Resources: THL's Newsfeed THL's Blog The Healthcare Labyrinth: A Guide to Navigating Health Plans and Fixing American Health Insurance
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