Tens of millions of Medicare Advantage enrollees are heading into the next plan year under the tightest payment growth rate in recent memory. The Centers for Medicare and Medicaid Services finalized a net average payment increase of just 0.09 percent for calendar year 2027, translating to roughly $700 million across the program. That figure, confirmed on April 6, 2026, lands as insurers are already pulling out of counties and trimming plan options, and as research shows forced disenrollment spiked to one in ten enrollees during the 2026 cycle.
A 0.09 percent bump collides with rising medical costs
CMS set the final CY 2027 rate on April 6, 2026, locking in the 0.09 percent average increase it had proposed earlier. The agency framed the policy as a way to strengthen accountability and long-term sustainability, emphasizing technical refinements to risk adjustment and Star Ratings rather than a broad infusion of new dollars. In its earlier proposed rule, CMS stressed payment accuracy and sustainability as central goals, signaling to plans that they should not expect a generous update.
The growth rate, however, barely registers against the medical cost inflation carriers have reported in recent quarters, which has run several percentage points higher than the payment update. Hospital prices, specialty drugs, and post-acute care have all contributed to higher per-member spending, while utilization has rebounded from pandemic-era lows. When underlying costs rise faster than CMS payments, the gap creates direct pressure on plan design and benefit richness.
Carriers typically offset shortfalls by narrowing provider networks, raising copays, or withdrawing from less profitable service areas altogether. Counties where risk-adjusted benchmarks fall below the national average face the steepest risk of plan exits, because the math for lower-rated carriers in those markets turns negative fastest. That dynamic concentrates remaining coverage among a smaller number of large insurers, reducing the competition that originally attracted beneficiaries to Medicare Advantage and limiting choices for people who value extra benefits such as dental or vision coverage.
Forced disenrollment data signals deeper disruption ahead
Research from the Johns Hopkins Bloomberg School of Public Health found that one in ten Medicare Advantage enrollees faced forced disenrollment in 2026 due to plan exits. Between 2018 and 2024, that figure had averaged just over 1 percent annually. The tenfold jump hit PPO enrollees, members of smaller carriers, non-special-needs plans, and people living in rural or low-penetration areas hardest, reflecting where margins were thinnest and competitive pressures weakest.
A 0.09 percent payment increase for 2027 does little to reverse the conditions that drove that spike. Smaller insurers with lower Star Ratings receive smaller quality bonus payments from CMS, which compounds the revenue squeeze from a near-flat rate update. The CY 2027 final rule also includes Star Ratings measure changes and technical adjustments to contract consolidations, adding another layer of operational cost for plans already operating on thin margins. For regional and provider-sponsored plans that lack the scale of national carriers, those cumulative pressures can make full-county or multi-county withdrawals more likely.
If the pattern from 2026 repeats, beneficiaries in already underserved areas will again bear the brunt, forced to switch plans or return to traditional fee-for-service Medicare during open enrollment. Forced disenrollment can be especially disruptive for people with complex conditions who rely on specific specialists, prescription drug regimens, or supplemental benefits like transportation. Even when beneficiaries successfully choose a new plan, they may face new prior authorization rules, different formularies, or higher out-of-pocket costs, all triggered by a business decision rather than a change in their health needs.
Open questions before the next enrollment window
Several pieces of the 2027 picture are still missing. County-level benchmark data from the CY 2027 ratebook is available for download on the CMS rates and statistics page, but no public analysis yet maps which specific markets will see payments fall furthest below the 0.09 percent average or links those shortfalls to confirmed plan terminations. Until actuaries and policy researchers complete that work, beneficiaries and local officials have limited visibility into which counties are most exposed to another wave of exits.
Insurers, meanwhile, are still digesting the technical details of the final notice and rule. Risk adjustment refinements, Star Ratings weighting changes, and guardrails on contract consolidations all interact with the headline payment rate. For some plans, especially those with strong quality scores and favorable risk profiles, the net effect may be modestly positive even under a 0.09 percent average update. For others, particularly low-rated contracts in low-benchmark counties, the combination could tip margins from slim to negative.
Stakeholders will be watching several indicators as the next annual enrollment period approaches: the number of contract non-renewals filed with CMS, counties that drop from having multiple plan choices to just one or two, and shifts in supplemental benefits like dental, vision, and over-the-counter allowances. Advocates for older adults and people with disabilities are also pressing for clearer communication when plans exit, arguing that beneficiaries need more time and support to navigate complex coverage decisions.
For now, the 2027 payment policy underscores a tension at the core of Medicare Advantage: CMS is prioritizing long-term fiscal sustainability and payment accuracy at the same time that enrollees are experiencing real-time disruption from plan exits and benefit cuts. Whether the market can absorb another year of near-flat growth without a repeat of the 2026 disenrollment spike will depend on how insurers respond to the final rates in the months ahead.
