State-by-State Rate Impact Analysis

MA rates are national policy applied to county-level economics. The 0.09% headline number lands differently in Miami-Dade than in rural Montana. AHIP’s Wakely analysis estimated that roughly 70% of MA enrollees live in areas that would see payment cuts under the advance notice, with the most negatively affected states including Oklahoma, Kansas, West Virginia, Alabama, and North Dakota. Rural counties face lower growth on average than urban ones. This article maps the differential impact of the CY 2027 rate environment across the 20 largest Medicare markets, identifying where exits are most likely, where chart review exposure concentrates, and where beneficiaries face the most material coverage risk.

How County-Level Benchmarks Work

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MA benchmarks are derived from county-level FFS per-capita spending. CMS calculates what Traditional Medicare spends per beneficiary in each county, then assigns benchmarks based on where that spending falls relative to national averages. Counties are sorted into quartiles: the highest-spending counties receive benchmarks at a percentage of national average FFS spending that exceeds 100%, while the lowest-spending counties receive benchmarks below the national average. The statutory formula caps benchmarks at specified percentages of local FFS costs depending on the quartile, with the lowest-spending counties receiving benchmarks above their local FFS costs (to attract plan participation) and the highest-spending counties receiving benchmarks below their local FFS costs (to generate savings).

The Quality Bonus Payment is applied to the benchmark, not the bid. A 5% QBP on a $1,200 monthly benchmark produces $60 per member per month in additional revenue. The same 5% on an $800 benchmark produces $40. The absolute dollar value of the quality bonus scales with the benchmark level, meaning plans in high-benchmark counties have more financial room to absorb rate compression while maintaining benefits.

A flat or near-flat rate increase compresses margins differently depending on starting position. High-benchmark urban counties with benchmarks well above the national median have more margin cushion. Low-benchmark rural counties where benchmarks already sit near or below the cost of care have minimal buffer. The chart review exclusion compounds the geographic variation: plans with concentrated chart review operations in specific markets face localized revenue loss that exceeds the national average $7.2 billion figure on a per-enrollee basis.

Analytic Framework

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For each of the 20 states profiled below, the analysis considers total Medicare enrollment and MA penetration rate, plan type mix across national carriers, regional nonprofits, and provider-sponsored plans, average benchmark levels relative to national median, chart review exposure where data allows, Star Rating distribution, rural county composition and exit vulnerability, and dual eligible population characteristics. The profiles are organized by market size and penetration level.

High-Penetration Markets

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Florida has the highest MA penetration in the country, with approximately 60% of Medicare beneficiaries enrolled in MA. Miami-Dade and Broward counties anchor the South Florida MA market with high county benchmarks driven by historically high FFS spending. Chart review intensity has been historically elevated in Florida, particularly in South Florida markets where national carriers operate large MA books. The chart review exclusion hits Florida harder in aggregate dollar terms than most states because of the combination of high enrollment, high penetration, and high chart review dependence. Exit risk concentrates outside the major metros, in lower-benchmark counties in the Florida Panhandle and rural Central Florida where plans operate on thinner margins. Dual eligible concentration is significant in South Florida, where D-SNP availability interacts with Medicaid managed care.

California is the second-largest MA market by enrollment, but its market structure is distinct. Kaiser Permanente operates as the dominant payvider, serving a substantial share of California’s MA population through its integrated delivery model. Kaiser’s encounter-based documentation system means the chart review exclusion has minimal revenue impact on the state’s largest MA organization. The benchmark differential between San Francisco, Los Angeles, and the Central Valley is substantial. Rural California, particularly the agricultural counties of the San Joaquin and Sacramento Valleys, faces the same low-benchmark vulnerability as rural markets nationally. California’s PACE program is among the largest in the country, with organizations serving frail dual eligible populations under the separate PACE transition timeline.

Texas is geographically vast with sharp urban-rural benchmark divergence. Houston, Dallas-Fort Worth, and San Antonio metros carry high benchmarks and concentrated MA enrollment. West Texas and the Rio Grande Valley operate on fundamentally different economics, with lower benchmarks, sparser provider networks, and higher proportions of dual eligible beneficiaries. Texas is a WISeR state, meaning the prior authorization reform model adds a regulatory layer for plans operating in those markets (MCR-01.03). Chart review intensity among national carriers in Texas metros is high, making the urban Texas MA market significantly exposed to the chart review exclusion.

New York is an AHEAD state with select counties participating in the hospital global budget model. New York also has guaranteed-issue Medigap, which gives beneficiaries a fallback option if MA plans exit or reduce benefits. The dual eligible population is concentrated in the NYC boroughs, where FIDE SNPs and provider-sponsored plans have built integrated Medicare-Medicaid products. New York was the only state to see greater than 5% MA enrollment growth in 2026, driven partly by SNP expansion in the NYC market. The AHEAD model’s interaction with MA is significant: hospitals operating under global budgets face different financial incentives when serving MA enrollees versus FFS beneficiaries, which affects network dynamics.

Pennsylvania offers the clearest payvider case study in the country. UPMC operates as both a major health system and an MA plan in western Pennsylvania, with encounter-based documentation that insulates it from chart review exclusion exposure. Geisinger serves rural central and northeastern Pennsylvania with a similar integrated model. The benchmark variation from Philadelphia’s high-cost urban market to rural Appalachian counties is among the widest of any state. EGWP enrollment is significant in Pennsylvania’s legacy steel, manufacturing, and mining communities, where employer-sponsored retiree MA coverage adds a stability factor not present in the individual market.

Mid-Tier Markets

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Ohio is a WISeR state with strong regional plan presence, including Medical Mutual and SummaCare alongside national carriers. Cleveland, Columbus, and Cincinnati metros carry moderate to high benchmarks, while Appalachian Ohio mirrors the low-benchmark vulnerability of rural Pennsylvania. The WISeR model’s prior authorization requirements create operational complexity for plans in Ohio markets.

Michigan carries an auto industry EGWP legacy that makes employer-sponsored MA a larger share of the market than in most states. Dual eligible concentration in Detroit and Flint intersects with Michigan’s Medicaid expansion population. Benchmark variation between metro Detroit and the Upper Peninsula is extreme.

Illinois is anchored by the Chicago metro, which generates high benchmarks and high enrollment. Downstate Illinois operates on different economics, with lower benchmarks and rural access challenges similar to other Midwest agricultural states.

Georgia was an early Medicaid work requirements adopter, and its low-income dual eligible population sits at the intersection of Medicaid and Medicare policy changes. Atlanta’s high benchmarks contrast with rural South Georgia’s thin-margin environment. Plan exits in lower-benchmark Georgia counties are among the more likely outcomes of the CY 2027 rate environment.

Arizona is a WISeR state with high MA penetration in the Phoenix metro. The state’s growing retiree population has driven consistent MA enrollment growth, but the 0.09% rate compresses margins for plans that expanded aggressively into lower-benchmark counties outside Maricopa.

New Jersey splits sharply between high-cost Northern New Jersey (proximate to the NYC health system market) and lower-cost Southern New Jersey. The WISeR model applies in New Jersey, adding prior authorization reform to the payment environment. High-benchmark Northern New Jersey counties provide more cushion; Southern New Jersey rural counties face exit risk.

North Carolina has growing MA penetration but remains below the national average. The state’s large dual eligible population, particularly in eastern North Carolina’s rural counties, creates D-SNP market opportunity but also exposes plans to the thin margins that characterize low-benchmark rural markets.

Growth and Emerging Markets

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Virginia has moderate and growing MA penetration, with enrollment concentrated in the Northern Virginia suburbs, Hampton Roads, and the Richmond metro. Rural southwestern Virginia operates on economics similar to Appalachian Kentucky and West Virginia.

Minnesota is a notable case. MA enrollment actually declined in 2026, partly driven by UCare’s exit from the non-SNP market. Minnesota implements guaranteed-issue Medigap starting August 2026 (MCR-00.03), which gives beneficiaries an alternative pathway out of MA without medical underwriting. The combination of plan exits and Medigap expansion may accelerate the shift away from MA in Minnesota.

Tennessee has a high dual eligible population and well-developed Medicaid managed care infrastructure. Nashville’s hospital-heavy economy creates provider-plan dynamics distinct from other Southern markets.

Colorado has growing MA enrollment with significant altitude and geography-driven cost variation between the Front Range and the Western Slope. The ski corridor and mountain communities present access challenges that rural benchmark levels do not adequately reflect.

Washington is a WISeR state with telehealth-dependent rural populations east of the Cascades. CareOregon operates as a regional payvider presence in the Pacific Northwest, providing structural resilience similar to Kaiser in California.

National Patterns

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Where exits are most likely. The counties at highest risk are those combining low benchmarks, single-plan or two-plan markets, below-4-star plans that do not qualify for QBP, and high chart review dependence. Rural counties in the bottom benchmark quartile with enrollment below 5,000 MA beneficiaries are the most vulnerable. AHIP’s Wakely analysis identified Oklahoma, Kansas, West Virginia, Alabama, and North Dakota as the most negatively affected states, and within those states, rural counties face the most acute risk. The 2026 experience provides a leading indicator: seven states saw MA enrollment decline during the 2026 annual enrollment period, including Vermont (where Blue Cross exited, leaving no individual MA plans available), Wyoming, New Hampshire, Idaho, Minnesota, Maryland, and South Dakota. UnitedHealth and Aetna significantly retreated from the Maryland market.

Where chart review exposure concentrates. The $7.2 billion in chart review exclusion revenue loss is national, but its geographic distribution is not uniform. Markets where national carriers with aggressive chart review programs hold dominant share, particularly in South Florida, Texas metros, parts of the Northeast corridor, and select Midwest markets, will absorb disproportionate per-enrollee revenue loss. Markets dominated by payviders (California through Kaiser, western Pennsylvania through UPMC) or regional nonprofits with lower chart review intensity will see less impact.

Where payvider and regional plan resilience is strongest. California, western Pennsylvania, central Pennsylvania (Geisinger), and the Pacific Northwest (CareOregon) are markets where integrated delivery models provide structural insulation from both the chart review exclusion and the broader rate compression (MCR-05.02, MCR-04.06). These markets will experience less plan exit risk, more stable benefits, and more predictable provider network continuity.

Where beneficiaries are most exposed. The highest-risk beneficiaries are those in counties facing potential plan exits where Medigap access is limited by medical underwriting. In most states, beneficiaries who leave MA after their initial Medigap open enrollment period face underwriting for Medigap policies, meaning those with pre-existing conditions may be unable to obtain affordable supplemental coverage in Traditional Medicare. Dual eligible beneficiaries in markets where D-SNPs may exit or reduce benefits face particular vulnerability because their Medicaid-Medicare integration depends on plan participation. Rural beneficiaries with no alternative coverage options and limited provider access face the compound risk of rate compression, plan exit, and workforce shortage (MCR-05.13).

The 0.09% is a national number applied to a fundamentally local market. The beneficiary in Miami and the beneficiary in rural Montana experience the same federal policy through radically different coverage environments. Understanding where the rate compression actually bites, and where it does not, is the prerequisite for any plan, provider, or advocacy strategy in 2027.

Related Reading

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MCR-11_05 Florida and Texas: Scale, Fragmentation, and the MA Profitability Problem at Volume MCR-04_06 Regional Plans vs. National Giants: Who Survives the Rate Compression MCR-04_08 MA Market Consolidation: Exit, M&A, and New Entrants