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FOR IMMEDIATE RELEASE
January 26, 2026
Contact: CMS Media Relations
(202) 690-6145 | CMS Media Inquiries
CMS Proposes 2027 Medicare Advantage and Part D Payment Policies to Improve Payment Accuracy and Sustainability
The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2027 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and MA and Part D Payment Policies (the CY 2027 Advance Notice). This annual release proposes routine and technical updates that ensure MA and Part D payments are accurate. If finalized, the proposed policies are projected to result in a net average year-over-year payment increase of 0.09%, or over $700 million in MA payments to plans in CY 2027. This expected increase includes consideration of the various elements that impact MA payments, such as growth rates of underlying costs, 2026 Star Ratings for 2027 quality bonus payments, and risk adjustment updates. CMS also expects that the CY 2027 Advance Notice’s proposed policies will promote even greater payment accuracy, maintain beneficiary choice, help ensure affordable coverage for Medicare beneficiaries, and enable an even more stable MA program in the long run.
“These proposed payment policies are about making sure Medicare Advantage works better for the people it serves,” said CMS Administrator Dr. Mehmet Oz. “By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs.”
CMS is committed to ensuring Medicare beneficiaries are free to choose the health coverage that best meets their needs, and that such coverage aligns spending and value to the greatest extent possible. Establishing accurate payments in MA and Part D is foundational to this objective of aligning spending with value, and the agency has taken particular care in considering updates to these payment policies.
The proposals in the Advance Notice address coding differentials between Medicare Advantage and Original Medicare for CY 2027. As the agency considers opportunities for improving risk adjustment both in the 2027 Advance Notice and in the future, CMS is working towards a MA risk adjustment system guided by three principles: (1) simplicity to reduce day-to-day administrative burden for both plans and providers; (2) competition on creating value for patients where risk adjustment facilitates such competition equally for all varieties of plans irrespective of size or resources; and (3) payments that accurately reflect beneficiary health risk and facilitate the efficient use of healthcare resources, enhanced program integrity, and greater accountability. Improving the risk adjustment system in this way will promote a more stable and sustainable MA program in the long run by giving beneficiaries and taxpayers confidence that CMS is mitigating unnecessary cost growth from coding practices that do not lead to better quality coverage.
In the Advance Notice, CMS is proposing to make updates to the MA risk adjustment model that reflect more current costs associated with various diseases, conditions, and demographic characteristics. In addition, CMS is proposing to exclude diagnosis information from unlinked Chart Review Records, which is diagnosis information not associated with a specific beneficiary encounter, from risk score calculation starting in CY 2027. As a result, diagnoses that are not reported or associated with a service would not be considered for risk adjustment. CMS expects the payment impact of this proposal to be greater for MA organizations that use more unlinked Chart Review Records to report risk-adjustment eligible diagnoses for their enrollee population.
CMS is also proposing updates to the Part D risk adjustment model that include accounting for Inflation Reduction Act changes to the Part D benefit for CY 2027, reflecting more current costs, aligning sources of diagnoses for use in risk adjustment to be consistent with similar policies proposed for MA (e.g., excluding diagnoses from unlinked Chart Review Records), and separately accounting for MA prescription drug plan and standalone prescription drug plan costs in order to improve the accuracy of Part D payments for these two segments of the Part D market. These proposed updates will bring additional stability to prescription drug benefits for all Medicare beneficiaries.
Star Ratings updates in the CY 2027 Advance Notice include providing the list of eligible disasters for adjustment, non-substantive measure specification updates, and the list of measures included in the Part C and Part D improvement measures and Categorical Adjustment Index for the 2027 Star Ratings.
CMS will accept comments on the CY 2027 Advance Notice through 11:59 p.m. Eastern Time February 25, 2026, before publishing the final Rate Announcement on or before April 6, 2026.
The CY 2027 Advance Notice may be viewed at: https://www.cms.gov/files/document/2027-advance-notice.pdf.
To read the CMS fact sheet on the CY 2027 Advance Notice, visit: https://cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice.
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