CMS Proposes 2027 Medicare Advantage Payment Policy Updates
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 27 2026
0mins
Should l Buy UNH?
Source: Benzinga
- Payment Growth Forecast: CMS anticipates a mere 0.09% payment growth for Medicare Advantage in 2027, translating to over $700 million in additional payments, indicating significant pressure on insurers' profitability.
- Market Reaction: Following the update, shares of major health insurers plummeted, with UnitedHealth Group down 13.13%, reflecting market unease regarding future payment policies.
- Risk Adjustment Model Update: CMS proposed updates to the Part C risk adjustment model aimed at enhancing plan competitiveness by reducing administrative burdens and ensuring payment accuracy, highlighting a focus on beneficiary health risks.
- Drug Plan Adjustments: CMS also proposed updates to Part D risk adjustments to reflect changes from the Inflation Reduction Act, aiming to improve predictive accuracy for prescription drug plans, further impacting insurers' operational strategies.
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Analyst Views on UNH
Wall Street analysts forecast UNH stock price to rise
19 Analyst Rating
16 Buy
3 Hold
0 Sell
Strong Buy
Current: 288.200
Low
330.00
Averages
397.82
High
444.00
Current: 288.200
Low
330.00
Averages
397.82
High
444.00
About UNH
UnitedHealth Group Incorporated is a healthcare and well-being company. Its segments include Optum Health, Optum Insight, Optum Rx, and UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State. Optum Health offers comprehensive and patient-centered care, addressing the physical, mental, social, and financial well-being. Optum Health delivers primary, specialty and surgical care; helps patients and providers navigate and address complex, chronic and behavioral health needs. Optum Insight connects the healthcare system with services, analytics and platforms that make clinical, administrative and financial processes simpler and more efficient for all participants in the healthcare system. Optum Rx offers a range of pharmacy care services through retail pharmacies, through home delivery, specialty and community health pharmacies and the provision of in-home and community-based infusion services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Dividend Stability: Despite these challenges, UnitedHealth's dividend payout ratio remains below 45%, and CFO Wayne DeVeydt indicated that the dividend for 2026 will be well-supported by earnings and cash flow, demonstrating stability in its dividend policy.
- Uncertain Medicare Outlook: The uncertainty surrounding the proposed payment increase for Medicare Advantage plans in 2027 has left investors uneasy, particularly if the final increase is lower than expected, which could negatively impact the company's profitability.
- Changing Investment Thesis: Although the stock has declined, UnitedHealth's forward dividend yield now exceeds 3%, making it more attractive for income investors, even as the overall investment outlook is clouded by uncertainty.
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- Independent Study Findings: An independent study concluded that UnitedHealth's processes are 'robust' while suggesting improvements, indicating the company's commitment to enhancing operational efficiency and compliance despite facing a government probe.
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See More
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- Executive Changes Impact: Following the unexpected departure of its CEO, UnitedHealth Group reinstated longtime CEO Stephen Hemsley to stabilize leadership and restore investor confidence, thereby laying a foundation for future growth.
- Rising Healthcare Costs: UnitedHealth's earnings growth has been hampered by higher-than-expected service utilization, prompting the company to cut certain plans and adjust pricing to enhance operational efficiency and address escalating healthcare costs.
- Medicare Payment Policy Risk: The Trump administration's proposal to keep Medicare Advantage payment rates flat in 2027 could pressure UnitedHealth's profitability; however, the company emphasizes its diversified revenue streams, mitigating reliance on a single business line.
- Long-Term Growth Outlook: Despite facing short-term challenges, UnitedHealth remains optimistic about the future, predicting an increase in growth momentum leading into 2027, indicating the company's resilience and adaptability in navigating market changes.
See More
UnitedHealth Group Faces Challenges and Opportunities
- Stock Price Decline: UnitedHealth Group's stock has plummeted by 35% over the past year due to higher-than-expected medical costs and a CEO change, leading to diminished investor confidence in the company's future.
- Dividend Stability: Despite these challenges, UnitedHealth's dividend payout ratio remains below 45%, and CFO Wayne DeVeydt indicated that the dividend for 2026 will be well-supported by earnings and cash flow, demonstrating stability in its dividend policy.
- Uncertain Medicare Outlook: The uncertainty surrounding the proposed payment increase for Medicare Advantage plans in 2027 has left investors uneasy, particularly if the final increase is lower than expected, which could negatively impact the company's profitability.
- Changing Investment Thesis: Although the stock has declined, UnitedHealth's forward dividend yield now exceeds 3%, making it more attractive for income investors, even as the overall investment outlook is clouded by uncertainty.
See More
Naya Capital Acquires Significant Stake in Masimo
- New Investment Disclosure: Naya Capital Management UK Ltd disclosed on February 18 that it acquired nearly 1.6 million shares of Masimo, valued at approximately $203 million, indicating strong confidence in the company.
- Asset Allocation Insight: This investment represents 15.3% of Naya Capital's 13F assets under management, positioning Masimo as one of only five reportable holdings, highlighting its significance in the firm's portfolio.
- Market Performance Comparison: Despite Masimo's stock declining 2.6% over the past year, it surged over 34% on February 17 after Danaher announced a $9.9 billion acquisition at $180 per share, showcasing a dramatic price increase from $130.15.
- Investment Risk Advisory: While Naya Capital's timing appears fortuitous, the uncertainty surrounding the acquisition poses significant downside risks for investors, suggesting a cautious approach and potential recommendation to hold off on purchasing shares.
See More
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- New Position: Naya Capital Management initiated a position in Masimo (NASDAQ:MASI) by purchasing approximately 1.6 million shares valued at nearly $203 million, representing 15.3% of the fund's 13F assets under management.
- Portfolio Overview: Naya Capital's portfolio consists of only five reportable holdings totaling over $1.3 billion, with Masimo being the fifth-largest position, indicating a significant commitment to the company.
- Market Performance: Despite Masimo's shares declining by 2.6% over the past year, they surged by over 34% on February 17 following Danaher's announcement to acquire the company for $9.9 billion, raising the stock price from $130.15 to $174.69.
- Investment Risk Advisory: While Naya Capital's timing appears fortunate, analysts caution that there is considerable downside risk if the acquisition deal fails, suggesting investors should proceed with caution before buying Masimo shares.
See More
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- Stock Performance Decline: As of February 16, UnitedHealth Group's stock has fallen over 41% in the past 12 months, primarily due to disappointing earnings, potential Medicare changes, and poor public relations, indicating significant challenges ahead.
- Vertical Integration Advantage: UnitedHealth Group's vertical integration through its insurance business (UnitedHealthcare) and care business (Optum) allows it to collect revenue from multiple parts of the healthcare ecosystem, enhancing its competitive position in the market.
- Diversified Revenue Streams: The insurance segment is projected to generate over $352 billion in premiums by 2025, while Optum earns revenue by providing healthcare services and products (e.g., doctors, pharmacies, data), which mitigates business risk through diversified income sources.
- Significant Scale Effects: In the healthcare sector, the scale provides UnitedHealth with negotiating power when dealing with drugmakers and hospitals, ensuring that even if one part of the business faces difficulties, the other can provide support, securing the company's long-term stability.
See More
UnitedHealth Group Faces New Challenges Amid Recovery Efforts
- Leadership Changes: UnitedHealth Group's unexpected CEO departure led to the return of longtime CEO Stephen Hemsley, aiming to restore confidence and drive growth through stable leadership.
- Rising Healthcare Costs: The company's earnings growth has been impacted by rising healthcare costs and higher-than-expected service utilization, prompting UnitedHealth to implement measures such as cutting certain plans, adjusting prices, and leveraging AI for efficiency.
- Independent Study Findings: An independent study concluded that UnitedHealth's processes are 'robust' while suggesting improvements, indicating the company's commitment to enhancing operational efficiency and compliance despite facing a government probe.
- Medicare Payment Rate Proposal: The Trump administration's proposal to keep Medicare Advantage payment rates flat in 2027 could affect UnitedHealth's profitability; however, the company diversifies its revenue through employer insurance plans, mitigating potential risks.
See More
UnitedHealth Group Faces Challenges and Opportunities
- Executive Changes Impact: Following the unexpected departure of its CEO, UnitedHealth Group reinstated longtime CEO Stephen Hemsley to stabilize leadership and restore investor confidence, thereby laying a foundation for future growth.
- Rising Healthcare Costs: UnitedHealth's earnings growth has been hampered by higher-than-expected service utilization, prompting the company to cut certain plans and adjust pricing to enhance operational efficiency and address escalating healthcare costs.
- Medicare Payment Policy Risk: The Trump administration's proposal to keep Medicare Advantage payment rates flat in 2027 could pressure UnitedHealth's profitability; however, the company emphasizes its diversified revenue streams, mitigating reliance on a single business line.
- Long-Term Growth Outlook: Despite facing short-term challenges, UnitedHealth remains optimistic about the future, predicting an increase in growth momentum leading into 2027, indicating the company's resilience and adaptability in navigating market changes.
See More
