Millions of Medicare Advantage enrollees could lose dental cleanings, vision exams, and prescription drug extras starting in 2027 after the Centers for Medicare and Medicaid Services locked in a payment increase that insurers say falls short of rising medical costs. CMS finalized a net average payment increase of 2.48 percent for 2027, totaling more than $13 billion, a sharp jump from the 0.09 percent initially proposed but still below the rate many plans need to maintain current supplemental benefits. With plan bid filings due later this year, the gap between federal payments and insurer cost projections is expected to force cuts in the extras that have made Medicare Advantage popular with seniors.
Why a 2.48 percent payment bump may not protect dental and vision benefits
The final 2027 rate announcement moved dramatically from the advance notice CMS published earlier, which projected a net payment change of approximately 0.09 percent. After public comment, the agency revised the figure upward to 2.48 percent. That revision reflected changes in risk model normalization and other technical adjustments, but it did not alter two structural pressures squeezing plan budgets.
First, CMS confirmed it will continue using the 2024 Medicare Advantage risk adjustment model for 2027 rather than transitioning to a newer version. The 2024 model assigns risk scores that determine how much each plan receives per enrollee. Markets where patient populations have below-average risk-score growth under this model will see smaller per-member payment increases than the national average, even though local medical costs may be climbing faster. Those are the counties where supplemental benefit cuts are most likely to land first.
Second, CMS will exclude diagnoses drawn from unlinked chart review records when calculating 2027 risk scores. Chart reviews have been a significant source of risk-score inflation for some insurers, and removing unlinked diagnoses shrinks the payment base plans can claim. Together, these two policies create uneven pressure across geographies: plans in lower-benchmark counties with limited risk-score growth face the tightest financial headroom to fund extras like dental coverage, routine eye exams, fitness programs, transportation, and over-the-counter drug allowances.
CMS rate data and MedPAC findings behind the expected cuts
The official CMS rate materials comparing the advance notice to the final announcement show how each payment component shifted between the two stages. The overall expected average change moved from 0.09 percent proposed to 2.48 percent final, driven largely by revisions to normalization factors and the sources-of-diagnoses policy. CMS stated that the finalized policies are intended to “strengthen accountability and long-term sustainability,” framing the changes as necessary guardrails on coding intensity and overpayments.
Separately, the Medicare Payment Advisory Commission’s June 2025 Report to Congress includes a chapter on supplemental benefits in Medicare Advantage. MedPAC found that most extras, including dental, vision, and hearing coverage, are financed through plan rebates rather than through the basic Medicare benefit. Rebates are the difference between a plan’s bid for providing Part A and Part B services and the local benchmark set by CMS. When benchmarks tighten or bids rise due to higher medical costs, rebate dollars shrink, and plans have less funding available for these add-on benefits.
MedPAC’s analysis underscores how sensitive supplemental offerings are to even modest changes in payment policy. In counties where benchmarks are already close to underlying fee-for-service spending, small increases in utilization or unit prices can wipe out rebate margins. Plans then must decide whether to scale back dental and vision packages, introduce higher copays, or charge separate premiums for benefits that were previously included at no extra cost.
The commission also highlighted that beneficiaries with lower incomes are more likely to select plans based on the richness of supplemental benefits. That means rebate-driven benefit reductions could disproportionately affect enrollees who rely on Medicare Advantage for services not covered under traditional Medicare, such as comprehensive dental work or routine eyeglasses. For these members, losing access to cleanings or eye exams could translate into higher out-of-pocket spending and delayed care.
How CMS frames the policy shift
In its final rulemaking documents, CMS emphasized that the 2027 payment policies are designed to curb excess spending while preserving access to core Medicare services. The agency’s description of the finalized payment update stresses improved accuracy in risk adjustment and a focus on long-term program stability. Officials argue that restraining coding-driven growth and refining diagnosis sources will better align payments with actual patient needs.
However, insurers and some beneficiary advocates warn that the combination of modest net growth and tighter risk-score rules leaves little room to absorb rising hospital, physician, and drug costs. They contend that, even with a 2.48 percent average increase, many plans will face negative margins on the basic benefit unless they trim back extras or raise premiums. Because seniors have shown a strong preference for plans with robust dental, vision, and hearing coverage, reductions in those areas could trigger plan switching and market disruption in 2027.
As plan sponsors finalize their bids, the practical impact of CMS’s decisions will become clearer. In high-cost regions with limited rebate headroom, beneficiaries may see fewer zero-premium options with comprehensive dental or eyewear benefits. In more favorable markets, insurers might preserve current packages but tighten utilization controls or narrow provider networks. Across both types of counties, the 2027 payment rules signal that supplemental benefits are likely to be the first lever plans pull when balancing their books.
