Medicare Advantage at an Inflection Point: From Coding Arbitrage to Value Competition
The Trump administration’s 2027 Medicare Advantage (MA) Advance Notice triggered an immediate market response—one that underscores how deeply investors understand the implications of this policy shift.[1]
Within hours of the proposal’s release, Medicare Advantage–exposed equities sold off sharply:
- Humana: Down ~20% at the open[1]
- UnitedHealth Group: Down high‑teens following the rate proposal and weaker 2026 guidance[1]
- CVS/Aetna, Elevance, Centene: Down ~10%–13%[1]
This was not a routine reaction to a modest rate update. The equity markets are signaling that the core earnings model underpinning Medicare Advantage, particularly the ability to offset medical cost pressure through coding intensity, is being structurally impaired.
Nearly flat benchmark rates combined with a proposed exclusion of unlinked chart reviews from risk adjustment represent the most consequential reset of the program in more than a decade. CMS is deliberately moving MA away from revenue growth driven by documentation arbitrage toward a model that forces plans to compete on true clinical value, medical cost control, and beneficiary experience.[2],[3]
For payers, the message is unambiguous: The arms race around risk score optimization is ending. The next era of Medicare Advantage will reward operational discipline—not financial engineering.
Sources:
[1] Singh, Pia and Constantino, Annika Kim. “Humana, UnitedHealth plunge 20% after Trump administration proposes keeping Medicare Advantage rates flat.” CNBC. January 26, 2026, updated January 27, 2026.
[2] Parduhn, Rebecca Pifer. “CMS proposes excluding chart reviews from MA risk scoring in 2027 payment rule.” Healthcare Dive. January 27, 2026.
[3] Centers for Medicare & Medicaid Services. Medicare Advantage and Part D Advance Notice. January 26, 2026.
[4] Medicare Payment Advisory Commission (MedPAC). March 2024 Report to the Congress: Medicare Payment Policy. March 15, 2024.
[5] Kaiser Family Foundation (KFF). “Medicare Advantage chart reviews and risk adjustment.” November 2024.
Freed, Meredith et al. “Medicare Advantage in 2024: Enrollment Update and Key Trends.” Kaiser Family Foundation (KFF). August 8, 2024
Biniek, Jeannie Fuglesten. “How Medicare Pays Medicare Advantage Plans: Issues and Policy Options.” Kaiser Family Foundation (KFF). November 20, 2025.
