New York, Jan 27, 2026, 17:51 EST — After-hours
- CVS shares fall following proposed changes to 2027 Medicare Advantage payments
- Insurers caution that benefit reductions are coming as cost pressures clash with stagnant rates
- Attention turns to CVS earnings on Feb. 10, with CMS’s final rate decision due in April
CVS Health Corp (CVS.N) shares slid roughly 14% to $72 in after-hours trading Tuesday, after a U.S. Medicare payment proposal prompted a sharp reevaluation of health insurer earnings. The stock fluctuated between $70.77 and $77.08, with volume surpassing 44 million shares.
On Monday, the Centers for Medicare & Medicaid Services unveiled its 2027 “Advance Notice” for Medicare Advantage and Part D, outlining a projected net average payment hike of 0.09% if approved. CMS also put forward tweaks to risk adjustment—the system that compensates plans more for sicker enrollees—suggesting the removal of certain diagnoses from chart reviews that lack a direct beneficiary encounter. (Centers for Medicare & Medicaid Services)
Medicare Advantage, the private-sector option to traditional Medicare, has turned into a major profit engine for leading insurers. CVS offers these plans via Aetna, meaning that even slight changes in federal payments can rapidly alter forecasts.
CMS flagged a 0.09% headline increase, translating to over $700 million more in Medicare Advantage payments for 2027. The fact sheet also breaks down offsets tied to risk model tweaks and other adjustments. Including expected risk-score growth, the agency projects an average payment bump of 2.54%. Comments are due by Feb. 25, with the final rate set to drop by April 6. (Centers for Medicare & Medicaid Services)
The move knocked peers sharply. UnitedHealth Group dropped close to 20%, Humana tumbled around 21%, and Elevance Health declined about 14% in late trading.
Analysts flagged the near-flat update as a tightrope, with medical costs still high. Baird’s Michael Ha warned plans might face “significant benefit reductions or plan exits” to defend 2027 margins. Bernstein’s Lance Wilkes predicted “membership growth will remain low” if rates hold here. Leerink’s Whit Mayo described the update as “well below expectations.” (Reuters)
Insurers wasted no time voicing objections. UnitedHealthcare CEO Tim Noel described the proposal as “disappointing” on an earnings call, according to Healthcare Finance News. (Healthcare Finance News)
Trade groups flagged potential fallout for consumers. AHIP spokesperson Chris Bond warned that flat program funding combined with climbing medical costs will “impact seniors’ coverage.” Meanwhile, Alliance of Community Health Plans CEO Ceci Connolly slammed the proposal as “disappointing and wholly unrealistic,” suggesting it might drive more insurers out of certain markets. (Fierce Healthcare)
CVS investors have a key date ahead. The company plans to release its fourth-quarter and full-year 2025 earnings on Feb. 10, followed by a conference call at 8 a.m. ET. (CVS Health Investors)
However, the CMS figures aren’t set in stone, with the option for revisions following industry input. Should the final rates align more closely with investor expectations, pressure could ease. If they don’t, attention will remain fixed on benefit cuts, slower enrollment growth, and tighter margins at Aetna.
Next up are early clues on 2027 plan pricing, CVS’s remarks on Feb. 10, the Feb. 25 deadline for comments, and the rate announcement set for April 6.
