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CMS Unveils 2027 Medicare Advantage & Part D Updates: A 0.09% Rate Increase and Focus on Data Integrity
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The Centers for Medicare & medicaid Services (CMS) released its highly anticipated 2027 Medicare Advantage and Part D Advance notice on January 26, 2026, outlining proposed payment and policy updates poised to reshape the landscape for Medicare Advantage (MA) and part D plans next year. The annual publication signals a shift towards simplifying administrative processes, fostering competition, and ensuring accurate payments within the program.For professionals in risk adjustment and quality within MA organizations, understanding these changes is paramount for optimizing performance, maintaining compliance, and securing a competitive edge.
A Modest Rate Increase Amidst Rising Costs
As the Medicare Advantage program faces increasing scrutiny regarding its costs, CMS has proposed an average rate increase of just 0.09% for 2027. this represents a significant decrease from the 5.06% increase finalized in April 2025 for the 2026 plan year. The industry is reacting to the proposal, with one industry representative warning that “flat program funding at a time of sharply rising medical costs and high utilization of care will impact seniors’ coverage.” Though, CMS officials maintain that the minimal increase is necessary to ensure the long-term sustainability of the program.
The proposed changes are expected to impact MA plan payments in the following ways:
- Effective growth rate: 4.97%
- Change in Star Ratings: -0.03%
- MA coding pattern adjustment: 0.00%
- Risk model revision and FFS normalization: -3.32%
- Sources of diagnoses: -1.53%
- Expected average change in revenue: 0.09%
(Figure 1. Percentage change in anticipated MA plan payments for 2027 – Source: CMS fact sheet)
Recalibrating Risk with CMS-HCC Model V28
A key driver behind the modest payment increase is CMS’s plan to continue utilizing the CMS-HCC Model Version 28 (V28),but with a recalibration to more current Medicare fee-for-service data.This shift moves the data foundation from 2018 diagnoses and 2019 expenditures to 2023 diagnoses and 2024 expenditures. According to the agency, this recalibration will “reflect more current costs associated with various diseases, conditions, and demographic characteristics.” CMS projects this adjustment will decrease MA plan payments by an average of 3.32%.
Enhanced Data Integrity: Excluding Unlinked Records and Audio-Only Encounters
Another significant update in the 2027 Advance Notice is CMS’s proposal to exclude diagnoses originating from unlinked chart review records and audio-only encounters from the Part C risk adjustment model. Diagnoses captured solely through chart reviews that lack a corresponding encounter
- Strengthen Cross-Functional Collaboration: Foster alignment between risk adjustment, quality, engagement, and clinical teams. Establishing regular cross-departmental reviews of performance data and shared accountability for financial and quality targets will be essential.
By taking proactive steps now, while awaiting the publication of the final Rate Proclamation anticipated in April, medicare Advantage plans can position themselves for success as they navigate the regulatory changes outlined in the 2027 Advance Notice. Staying informed,agile,and collaborative will be key to achieving sustainable growth and delivering high-quality care to members.
To stay abreast of risk adjustment and quality essentials throughout 2026, cotiviti will host a deeper dive into the CMS Advance Notice from a risk adjustment perspective on Tuesday, March 3. interested parties can sign up for the “Risk Adjustment Essentials” webinar series, which will cover best practices, regulatory updates, and strategies for ensuring compliance and audit readiness.
For those seeking to bolster Star Ratings results, Cotiviti’s “Quality Decoded” webinar series will kick off on Tuesday, February 24, with a breakdown of the CMS Advance Notice from a quality betterment perspective, followed by additional insights into HEDIS® and Star Ratings throughout the year.
Cotiviti’s Marge ciancetta, Star Intelligence product manager, contributed to
