Zero Growth: CMS Freezes Medicare Advantage Rates for 2027
Primary Care Perspective - Texas Edition | Wednesday, January 28, 2026
Strategic intelligence for independent primary care physicians in Texas.
Opening Insight
The Centers for Medicare & Medicaid Services just proposed a flat rate update for Medicare Advantage in 2027-essentially zero growth-and Medicare director Chris Klomp is defending it despite fierce pushback from insurers. For Texas independent practices that rely on MA patients for a significant portion of revenue, this could signal tighter networks, reduced supplemental benefits, and harder contract negotiations ahead.
What’s Happening
CMS released its 2027 Medicare Advantage advance notice proposing no meaningful rate increase for health plans next year. Medicare director Chris Klomp publicly defended the proposal, stating the Trump administration is “massively” in support of Medicare Advantage even as insurers are crying foul over what they view as an inadequate rate update that fails to account for rising medical costs and utilization trends.
This flat rate proposal comes at a critical time for the MA program, which now covers more than half of Medicare beneficiaries nationwide. Health insurers have consistently argued that rate updates need to keep pace with medical inflation and the increasing acuity of their MA populations. A zero-growth rate environment typically forces plans to make difficult decisions: reducing provider reimbursement, narrowing networks, cutting supplemental benefits like dental and vision coverage, or increasing member cost-sharing.
The final rate announcement will come in April 2026, giving CMS time to adjust based on public comments. However, the initial proposal sets the tone for what independent practices can expect in their 2027 contract negotiations with MA plans.
Why This Matters for Texas Independents
Texas has one of the highest Medicare Advantage penetration rates in the nation, with major metro markets like Houston, Dallas, and San Antonio seeing MA enrollment above 50% of eligible beneficiaries. When CMS freezes rates, that financial pressure flows directly downstream to providers through lower reimbursement rates, more stringent utilization management, and delayed payment for services.
In a state where BCBS Texas and United Healthcare dominate the commercial market and also hold significant MA market share, independent practices have limited leverage in contract negotiations. Unlike large health systems that can threaten network exclusion, solo and small group practices often accept rates on a take-it-or-leave-it basis. A flat rate environment emboldens payers to hold the line or even propose rate cuts.
Texas’s lack of Medicaid expansion compounds this challenge. You can’t offset poor MA rates by shifting to Medicaid managed care growth the way practices in expansion states can. And with Texas having the largest uninsured population in the nation, the commercial and MA books of business are critical revenue sources you can’t afford to lose. Rural Texas practices face even starker choices, as they may have only one or two MA plans in their market, leaving virtually no negotiating power.
Your Action Items This Week
-
Pull your payer mix analysis immediately - Calculate what percentage of your total revenue comes from Medicare Advantage plans, broken down by specific payer. If MA represents more than 40% of your revenue, you’re highly exposed to whatever benefit cuts or network changes these flat rates trigger.
-
Request early contract renewal discussions - Don’t wait for payers to send 2027 contracts in the fall. Reach out to your network representatives now to understand their strategy for absorbing flat CMS rates. Ask specifically whether they’re planning network reductions, reimbursement cuts, or changes to authorization requirements.
-
Document your value proposition with data - Compile your quality metrics, readmission rates, ED utilization, and care gap closure rates for MA patients. In a zero-growth environment, plans will prioritize keeping high-performing providers who reduce their total cost of care. If you can demonstrate value, you have leverage even when the overall rate environment is terrible.
Source
“CMS official defends flat Medicare Advantage rate proposal for 2027” - Healthcare Dive
Primary Care Perspective delivers curated intelligence from trusted healthcare sources.
© 2026 Primary Care Perspective | Texas Edition