Deutsche says CMS rate notice ‘significant negative’ for managed care

Deutsche Bank says the Centers for Medicare and Medicaid Services announced a “significant negative” update for the managed care group. The agency’s advance rate notice released last night proposed the net average Medicare Advantage payment rates for 2027 to rise by only 0.09%, far below market expectations of at least 5% increase, the analyst tells investors in a research note. The proposed change is worth $700M in Medicare Advantage payments to plans, Deutsche contends. It notes the effective growth rate reflecting underlying cost trends is mostly in line with expectations, but the risk model change and coding change were not expected. Stocks in the group include Centene (CNC), CVS Health (CVS), Elevance Health (ELV), Humana (HUM), Molina Healthcare (MOH) and UnitedHealth (UNH).