On the Margins -- Apr 08: CMS lifts 2027 MA rate update to 2.48%
On the Margins
Your daily health economics & actuarial brief
Wednesday, April 08, 2026
What's happening today
| ■ | CMS finalized a 2.48% Medicare Advantage rate increase for 2027 after initially signaling a roughly flat update. |
| ■ | The White House's FY2027 budget request would cut HHS funding 12.5% and move 340B oversight to CMS. |
| ■ | Jefferson Health sued Aetna over a Medicare Advantage downcoding policy that providers say cuts reimbursement. |
Key Stories
CMS lifts 2027 MA rate update to 2.48%
CMS finalized a 2.48% Medicare Advantage payment increase for 2027 after initially signaling a roughly flat update. That gives plans more revenue room in benchmarks and bids than the proposal suggested. Helpful, yes. Windfall, no.
Budget request would move 340B oversight to CMS
The White House's FY2027 budget request would cut HHS funding 12.5%, revive its Administration for a Healthy America reorganization, and move 340B oversight to CMS. The spending cut is old news by Washington standards; the 340B shift is the operational change to watch. For health systems, that points to lower federal support and a more payment-centric regulator running 340B.
Jefferson sues Aetna over MA downcoding policy
Jefferson Health sued Aetna over a downcoding policy that providers say pushes claims into lower-severity codes. That matters because downcoding shifts revenue away from hospitals while trimming plan claims expense. In Medicare Advantage, payment-edit policy is becoming a margin dispute with pleadings attached.
Significant Digit
Fee-for-service can apparently turn wound products into a money printer; Medicare Advantage mostly did not buy the same story.
HHS OIG found that in Q3 2024, Medicare Advantage spending on skin substitutes was just $192 million versus $2.9 billion in Part B, even though MA covered more than half of Medicare enrollees. OIG says the gap likely reflects MA plans' use of negotiated rates and prior authorization, while Part B's ASP-based payment leaves room for spread pricing and some very creative billing behavior.
Other Relevant Headlines
Policy & Regulation
| Minnesota loses bid to unfreeze $243M in Medicaid funds | Becker's Payer |
| Insurers fought CMS star changes. Now the fallout begins | Modern Healthcare |
| Kaiser settles DOL behavioral health parity suit for $32 million | lexology.com |
| Judge vacates HRSA's restriction on 340B hospital replenishment models | Fierce Healthcare |
Payer Operations
| Insurers have eliminated 11% of prior authorizations under reform pledge | Fierce Healthcare |
| Blue Shield of California's virtual-first plan continues to show lower costs and increased access for members | Fierce Healthcare |
| Elevance expands out-of-network referral penalties to New York | Modern Healthcare |
Provider Economics
| Patient cost sharing plays bigger role in rural hospital revenues, claims study shows | Fierce Healthcare |
| How SSM Health revamped workforce and RCM to boost its bottom line | Modern Healthcare |
Pharmacy & Drug Pricing
| Florida Blue's new specialty drug bidding program generates $5M in monthly savings | Becker's Payer |
| Novo Nordisk launches high-dose Wegovy | STAT |
Digital Health & AI
| Everyone agrees AI scribes are increasing health care costs. No one agrees what to do about it | STAT |
ICYMI (Recent Key Stories)
- California plans Medicaid work requirements under budget strain -- California is considering Medicaid work requirements as it faces budget pressure. (2026-04-07)
- UnitedHealth commits $3B to enterprise AI -- UnitedHealth says it will invest $3 billion to expand AI across its operations. (2026-04-06)
- Washington Medicaid creates statewide billing code for ElliQ robot -- Washington Medicaid adopted a statewide billing code for the ElliQ companion robot. (2026-04-03)
- Medicaid immigration rechecks find few ineligible enrollees -- Immigration status reviews in Medicaid identified relatively few enrollees as ineligible. (2026-04-02)
- States pay Deloitte, Optum to cut Medicaid rolls -- States are hiring firms like Deloitte and Optum to help reduce Medicaid enrollment. (2026-04-01)
- Alabama bans breast imaging cost-sharing in 2027 -- Alabama will prohibit patient cost-sharing for breast imaging starting in 2027. (2026-03-31)
- AHIP sells affordability through chronic-condition management -- AHIP is promoting chronic-condition management as a way to improve healthcare affordability. (2026-03-30)
- Judge lets MA broker-kickback suit against Aetna, Humana, Elevance proceed -- A judge allowed a Medicare Advantage broker-kickback case against Aetna, Humana, and Elevance to move forward. (2026-03-27)