MA Landscape 2027: Capturing the Upside of Shifting Payer Strategies

With the annual enrollment period officially underway for Medicare Advantage (MA), now is a good time for SNF executives to assess how the MA landscape is shaping up for 2027. Data released by CMS and statements from leading insurers suggest another year of retrenchment and margin pressure in the MA sector.

Here are the most relevant takeaways for SNF leaders:

·       MA growth has stalled. MA enrollment grew just 2.5 percent in 2026, versus annual growth rates of 7 percent to 10 percent earlier in the decade, while Traditional Medicare enrollment rose by 600,000 after years of decline.

·       Benefits and coverage will be less generous. Many insurers are tightening benefits, raising cost-sharing, and shifting their offerings toward HMOs and away from broader network PPOs to improve profitability.

·       Insurers are making big bets on specialized MA plans for the chronically ill. Chronic condition special needs plans (C-SNPs) are MA plans that are designed for people with specific chronic conditions such as diabetes, chronic heart failure, and cardiovascular disease. The number of C-SNP offerings will grow 34 percent in 2027, following substantial growth in 2026, even as insurers scale back their general-enrollment MA offerings.

·       Enrollment growth taking a backseat to margin improvement. Unlike the high-growth years of the 2010s and early 2020s, plans are now focused on raising revenue through higher Star ratings while closely managing costs.

As we look ahead to 2027, there’s good news and bad news for SNFs.

Slower MA growth provides some near-term relief for SNFs.

For most of the past decade, MA growth came largely at the expense of Traditional Medicare. That shift has lost significant momentum in recent years with many plans projecting flat or lower enrollment for 2027, thus, the pressure on SNFs’ Traditional Medicare admissions from the shift to MA may ease.

That’s welcome news for SNFs, since most are still heavily reliant on Traditional Medicare to generate strong margins that subsidize the rest of the enterprise. MA plans pay SNFs roughly 25 percent less per day than Traditional Medicare, according to estimates cited by MedPAC. MA beneficiaries also use fewer SNF days: among beneficiaries who used SNF care in 2023, median use was 20 days for MA enrollees versus 33 days for Traditional Medicare beneficiaries.

This relief may be short-lived, however. For many plans, 2026 and 2027 are years to repair margins, not a permanent retreat from growth. Even with leaner benefits, MA remains an attractive lower-premium option for many seniors. The average MA plan premium is projected to fall to $12 a month in 2027, while Medigap premiums averaged $244 a month in 2025, before the cost of a separate drug plan. These are premiums in addition to Part B; total out-of-pocket costs depend on coverage and care needs. Once plans restore their margins, the conditions for renewed growth will still be in place.

Increased focus on MA margins means tougher contract negotiations ahead.

The relief on payer mix comes with a catch: insurers rebuilding their MA margins are likely to be even tougher at the negotiating table and more stringent in managing utilization.

CMS finalized a 2.48 percent average MA payment increase for 2027 before projected risk-score growth, or 4.98 percent including that growth. Several insurers say the update still won’t fully cover rising medical costs. That makes meaningful SNF rate increases harder to win, and some plans may push to hold rates flat.

The shift toward HMO products also enables insurers to hold the line on rate increases because they don’t need networks as broad as those of PPOs. However, plans don’t hold all the cards. They still must meet network adequacy standards for SNFs, and in many markets, they’re competing for limited SNF capacity to keep hospital discharges moving. (I’ve highlighted how SNFs can capitalize on the need for timely hospital discharges later in this piece.)

SNF lengths of stay will also be in insurers’ crosshairs. Alignment Health told investors in September that SNF lengths of stay had risen and that it was adding clinical resources to improve transitions of care and shorten stays. Humana is steering members to lower-cost settings through contracting, incentives, and benefit design. For SNFs, that could mean fewer authorized days, more concurrent reviews and more patients sent home with home health.

On paper, the regulatory environment for prior authorization, a favored utilization management tool for plans, has improved. Since January 2026, MA plans have generally had to make standard decisions on medical-service requests within seven calendar days and urgent decisions within 72 hours, subject to permitted extensions. Insurers participating in a voluntary industry pledge also report reducing prior authorization requirements in MA by more than 15 percent. Yet prior authorization remains pervasive for SNFs: in 2026, 95 percent of MA enrollees were in plans requiring it for a SNF stay.

For SNFs, the bottom line is that 2027 contract talks for “bread-and-butter” skilled nursing services are likely to be challenging.

Margin pressure is opening new doors for SNFs.

There’s an upside to the margin squeeze: plans need deeper relationships with providers to control medical spending and maximize their Star ratings. UnitedHealthcare and Humana both emphasize value-based care in their efforts to improve clinical and financial performance, citing company analyses showing lower utilization or costs among members served through these arrangements.

Close relationships with financially aligned providers will be especially critical for insurers that are banking on C-SNP products to generate margins in 2027. C-SNPs can be an attractive source of growth and margin, but managing the costs of members with multiple chronic conditions is a significant challenge.

That creates an opening for SNFs. As MA growth slows and plans become more selective about their networks, some may forge deeper relationships with providers that can manage volume efficiently, take on difficult patients, and reduce expensive hospital use.

For operators with the right scale, capabilities, and market position, three roles are worth exploring:

·       Preferred partner for high-volume, predictable SNF care – This is less about being the “best SNF in town” than about becoming exceptionally good at managing a large volume of MA cases. A plan that can reliably send routine orthopedic and medical patients to a facility with predictable stays, low rates of avoidable readmissions, fast admissions, and efficient discharges has reason to steer more volume there. There’s a critical quid pro quo, however: the plan must give the SNF something in return, such as preferred-network status, volume commitments, better rates, fewer prior authorization requirements, and faster payment. This is a two-way street, not a unilateral commitment by the SNF to shorter stays.

·       Dependable alternative to high-cost care settings – Plans and hospitals share an interest in moving patients out of expensive hospital beds once acute care is no longer needed, and plans also want to avoid hospital admissions altogether. For SNFs with strong clinical capabilities and reliable coverage from physicians and advanced practice providers, which creates a valuable role: accepting patients other facilities refuse, managing them safely and helping plans and hospitals reduce unnecessary hospital days. For clinically appropriate patients, and where coverage and payment arrangements permit, the role can extend to serving as an alternative to inpatient rehabilitation facilities, long-term acute care hospitals and, in selected care models, hospital stays themselves. Payment must reflect the added cost and risk, but the plan can still generate net savings.

·       Risk-bearing complex care manager – As plans look for better ways to manage medical spending through value-based care, they may be more open to episode-based payments, shared savings, sub-capitation or other arrangements that give post-acute providers a financial stake in the cost of care. So far, value-based contracting with SNFs has been uneven, but for operators with sufficient scale and sophistication, an episodic “case rate” model may offer a workable starting point. The keys are sufficient volume, the ability to influence costs beyond the facility, timely data and contract terms that clearly define which costs and outcomes the SNF is accountable for.

None of these options are slam dunks, and they won’t make sense for every SNF or every market. Indeed, with MA growth slowing, it is tempting for SNF executives to focus on maximizing their Traditional Medicare volumes.

But as MA plans work to strengthen their finances and retool how they pursue profitable growth, SNFs have a unique opportunity to elevate their role and capture additional revenue by becoming “problem solvers” for their MA plan partners.

If you’d like to discuss these issues in more depth, please contact Fred at fred@bentleyhealthstrategies.net. Fred Bentley is founder and managing principal of Bentley Health Strategies LLC, a consulting firm focused on growth and innovation in post-acute care.