| |  | The Lead Brief | Insurance companies were caught off-guard Monday evening when the Trump administration proposed flat Medicare Advantage payment rates for 2027. Now the industry is preparing to push back, warning it could result in higher costs for patients and a cut in popular supplemental benefits the private Medicare plans offer. The proposed .09 percent payment increase “falls short of what is needed to provide stability for the more than 35 million Americans who rely on Medicare Advantage,” said Mary Beth Donahue, who leads industry group Better Medicare Alliance. Ceci Connolly, president and CEO of the Alliance of Community Health Plans, which represents nonprofit health plans, called it “disappointing and wholly unrealistic” given the rising cost of providing care. Chris Bond, a spokesperson for insurer industry group AHIP, said the proposal “could result in benefit cuts and higher costs” if it’s finalized. I’ve been talking to people today who work for or represent insurance companies, with many saying that they’re still sifting through the dense 169-page document that dropped on Monday. Some of them have been given anonymity in order to describe the sentiments inside the industry — and the plan for what comes next. What’s next: Expect a flurry of action from insurers as they meet with administration officials and members of Congress in an effort to finalize higher payment rates. The comment period is open until Feb. 25. The .09 percent increase translates into an additional $700 million in Medicare Advantage payments, according to CMS. However, analysts had expected the administration to boost payments by 4 percent to 6 percent, according to the Wall Street Journal. Medicare officials said in the announcement that the average payment increase ends up being 2.54 percent after accounting for payment trends. There will also be an effort by the industry to encourage older Americans enrolled in private Medicare Advantage plans to get involved — focused on averting the potential cuts to the supplemental benefits — such as gym memberships, meal services and transportation to doctors’ appointments — the plans provide. The industry “doesn’t want to go too hard at the outset,” one person said, adding that insurers are hoping the Trump administration will be amenable to arguments of how they’re paying higher prices to cover beneficiaries who are sicker overall. → CMS has finalized higher Medicare Advantage payment rates than had been proposed in most years since the 2016 plan year, including five increases of more than 1 percentage point, according to agency data analyzed by Raymond James. The Trump administration finalized a 5.06 percent payment rate for the 2026 plan year, 2.83 percentage points higher than had been proposed earlier last year. The Biden administration had cut payment rates two years in a row — for plan years 2023 and 2024 — causing Medicare Advantage plans to cut back on benefits or leave certain markets entirely. In 2023, the Better Medicare Alliance spent big bucks on a Super Bowl ad urging people to contact the White House about it. Why it matters: Every year, the Center for Medicare and Medicaid Services updates how it pays health insurers for beneficiaries enrolled in Medicare. The process is complex and the result of wonky calculations, but it can have a direct impact on the amount that older Americans pay for their insurance. More than half of all Medicare-eligible Americans have chosen private Medicare advantage plans over government-run Medicare. The agency is also proposing to update the math behind Medicare Advantage payments, including incorporating newer cost data and proposals to curtail methods that plans have used to boost how much they can earn for treating sicker patients. “By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs,” said CMS Administrator Mehmet Oz in a statement. → CMS will release the final payment rates and rules by April 6. The political element: The real date on the calendar that matters is Oct. 15, when Medicare open enrollment begins. If insurers raise premiums or cut back on benefits to account for the lower-than-expected payment rates, the administration — and Republicans more generally — could face backlash from older voters in November’s midterm elections. “[I]t would be political suicide to give a bad [Medicare Advantage] update in a midterm election year as this results in decreased benefits for seniors who learn about the changes weeks before the election in mid-October,” Raymond James analyst Chris Meekins wrote in a client alert Monday. However, while insurers were surprised by the rate in the payment proposal, they’re not exactly freaking out — yet. Connolly, the president and CEO of the Alliance of Community Health Plans, tells me that the 30-day comment period “gives everyone the opportunity to take a breath.” “We all have one month to digest all of this information and to go over it with our members so that they can understand all of the potential implications,” she said. “I have now seen year after year after year that the day-one assessment always proves to be a little off the mark because there’s so much technical mathematical work to be done” to fully evaluate what it means for plans. | 
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