UnitedHealth, Humana, CVS Jump As CMS Boosts Medicare Payments

by | Apr 7, 2026 | General

On Monday, the Centers for Medicare & Medicaid Services (CMS) released 2027 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies.

Payment Increase Exceeds Initial Expectations

The final policies in the calendar year 2027 Rate Announcement are projected to increase by 2.48% or over $13 billion in payments to MA plans.

When accounting for the estimated risk score trend in MA due to factors such as population changes and coding practices, this amounts to a 4.98% increase.

As per advance notice in January, the proposals expected a net average year-over-year payment increase of mere 0.09% versus the consensus of 4%-6%, translating to more than $700 million in additional payments to Medicare Advantage plans.

Key Companies With Exposure To Medicare Advantage

CMS Retains 2024 Risk Adjustment Model For 2027

For calendar year 2027, CMS will continue to use the 2024 MA risk adjustment model, which was calibrated with Original Medicare 2018 diagnoses and 2019 expenditures data and fully implemented in calendar year 2026, instead of the updated risk adjustment model calibrated with Original Medicare 2023 diagnoses and 2024 expenditures data that was proposed in the calendar year 2027 Advance Notice.

Continued use of the 2024 MA risk adjustment model will allow the MA market more time to adjust to the recently completed phase-in of the 2024 MA risk adjustment model.

For risk score calculation for calendar year 2027, CMS is finalizing the exclusion of diagnoses from audio-only encounters and diagnoses from unlinked CRRs, with an exception to include diagnoses from unlinked chart review records for beneficiaries who switch from one MA organization to another.

Improved Sentiment Across Medicare Advantage Sector

William Blair highlights the primary reason behind the increase versus the advance notice was due to a lower impact from risk model revisions and normalization than originally anticipated (-1.12% rate reduction in the final notice versus a -3.35% reduction in the initial notice).

Analyst Ryan Daniels wrote that this is a positive sign for the MA space, in that CMS and the administration were willing to listen to industry participants and ultimately updated the model to afford stronger 2027 MA rates.

The analyst added that these changes improve plan revenue visibility and ease concerns tied to earlier policy proposals.

The outcome should be positive for the sector, reflecting both better-than-expected rates and a more responsive stance from CMS, supporting greater predictability and stability in the MA market.

Market Reaction

Investor sentiment turned positive following the announcement. Shares of CVS Health rose 3.36% to $75.73, while Humana gained 4.45% to $190.78. UnitedHealth Group climbed 7.52% to $302.51, and Elevance Health advanced 3.07% to $311.91.

Alignment Healthcare surged 14.46% to $21.37, Astrana Health rose 5.42% to $27.41, and Oscar Health added 1.25% to $12.92. Centene edged up 0.48% to $35.57, while Molina Healthcare declined 2.50% to $139.78, according to Benzinga Pro data as of Tuesday.

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