Each year, the Centers for Medicare & Medicaid Services (CMS) updates Medicare Advantage (MA) through a highly structured rate-setting cycle that includes the Advance Notice, Rate Announcement, and related MA-Part D regulations. The earliest signal is the MA Advance Notice, published in late January. In a new insight, Director of Health Care Policy Michael Baker provides an analysis of the MA Advance Rate Notice components.

Key points:

• The Advance Notice percentage change estimate is one of the most closely watched numbers in the MA market because it shapes early expectations for plan bids, benefit design, and insurer strategy.
• While the Advance Notice is not a final adjudication of what the percentage change in program rates may be, industry relies on the information provided in the Advance Notice to prepare for the yearlong benefit design process for the next plan year.
• CMS’ 2027 MA Advance Notice component-by-component breakdown is notable because it shows where CMS recognizes underlying Medicare cost growth, where it is refining quality incentives, and where it is tightening payment calibration and documentation standards to improve payment accuracy in MA.

Read the analysis.