The Centers for Medicare and Medicaid (CMS) released the Calendar Year (CY) 2027 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. The Advance Notice, issued annually, proposes updates to MA payment rates and technical updates to keep MA payments up-to-date and accurate. The agency is taking aim at MA and Part D risk adjustment models, building on a recent efforts to collect stakeholder feedback [refer to Washington Highlights, Dec. 5, 2025].
The CY 2027 Advance Notice proposal provides an effective growth rate of 4.97%, but when coupled with changes to Star Ratings and risk adjustment including changes to diagnostic sources, there is an expected average increase of 0.09%. CMS estimates this will provide over $700 million more in MA payments to plans in CY 2027. The proposed change to the diagnostic sources allowed for risk adjustment in CY 2027 would exclude diagnostic information from unlinked chart review records. Unlinked chart review records include diagnoses that are not associated with a specific beneficiary encounter. This source of diagnostic data has been scrutinized for contributing to the practice of upcoding and overpayment in MA. CMS further outlined three principles to guide its approach to risk adjustment, which may play a role in future rulemaking. These include simplifying administrative burden for plans and providers, competition by creating value through risk adjustment for patients regardless of plan size, and payments that accurately reflect beneficiary health risk.
Comments are due Feb. 25, 2026, and the final Rate Announcement for CY 2027 must be announced by April 6, 2026.