NEW YORK, Jan 28, 2026, 11:46 EST — Regular session
- Shares of CVS climbed roughly 3% late this morning, bouncing back after a steep decline yesterday
- The sector took a hit from a nearly flat 2027 Medicare Advantage payment update and stricter risk-adjustment rules
- Attention now turns to CVS’ earnings call on Feb. 10 and CMS’ final rate decision set for April 6
Shares of CVS Health Corporation climbed roughly 3% on Wednesday, recovering some ground after a sharp drop linked to new U.S. government proposals affecting Medicare Advantage payments. By late morning, the stock had gained 3.1%, reaching $74.22.
The rebound follows CVS’s close at $72.00 on Tuesday, marking a 14.15% drop as investors adjusted their view on managed-care risks in healthcare. The selloff came after a government draft update on 2027 Medicare Advantage payments landed below Wall Street’s expectations. (Yahoo Finance)
Medicare Advantage, the private alternative to traditional Medicare for seniors, is a key area for CVS thanks to its Aetna unit. Even minor adjustments in how the government calculates payments can quickly affect plan pricing, benefits, and profit margins.
The Centers for Medicare & Medicaid Services announced its draft 2027 payment rules would boost payments by an average of 0.09% year-over-year, adding over $700 million. CMS also suggested tweaks to the “risk adjustment” system that pays insurers more for sicker members, including removing some diagnoses from “unlinked” chart reviews. CMS Administrator Mehmet Oz said the changes aim to “make sure Medicare Advantage works better for the people it serves.” (CMS)
A CMS fact sheet laid out the details. It pegged the effective growth rate at 4.97%, but noted adjustments like risk model revision and normalization, which subtract 3.32%, plus a 1.53% hit from “sources of diagnoses,” would pull the expected average change down to just 0.09%. Including the estimated risk-score trend, CMS said the expected average payment change rises to 2.54%. (CMS)
Analysts flagged that the draft still signals tougher times ahead for insurers heavily invested in Medicare Advantage. Baird’s Michael Ha warned the rates might be “insufficient,” potentially triggering “benefit reductions or plan exits” to safeguard 2027 margins. Lance Wilkes of Bernstein said plans could face pressure to “cut benefits” and “tighten networks.” Leerink’s Whit Mayo acknowledged that “the proposed update is better in the final,” but still described the draft as well below expectations. (Reuters)
The downside is clear: if the proposal becomes final policy, insurers might have less flexibility to boost benefits without hurting their margins, and CVS would feel the impact through Aetna. America’s Health Insurance Plans, the industry trade group, warned that “flat program funding” amid soaring medical costs could force “benefit cuts and higher costs” for Medicare Advantage enrollees if the plan goes through. (Reuters)
Pressure is mounting on the pharmacy front. Congress is pushing for changes in how pharmacy benefit managers, or PBMs, are compensated under Medicare Part D. The plan would “delink” their pay from drug prices, switching to flat fees instead — a move that directly impacts CVS Caremark. Rena Conti, a professor at the University of Pittsburgh, described PBMs as “the last bastion of significant opacity.” (Axios)
CVS is set to report its Q4 and full-year 2025 earnings on Feb. 10 at 8:00 a.m. ET. Investors will be focused on updates about Aetna’s Medicare Advantage margins and the company’s strategy ahead of the CMS decision expected by April 6. ([CVS Health Investor Relations][7])
[7]: https://investors.cvshealth.com/events-and-presentations/event-details/2026/Q4-2025-Earnings-Conference-Call-2026-66crk8-NAH/default.aspx “
CVS Health | Q4 2025 Earnings Conference Call
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