CMS Unveils Calendar Year 2027 Medicare Advantage and Part D Proposed Changes

The Centers for Medicare & Medicaid Services (CMS) announced its Calendar Year (CY) 2027 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies on January 26, 2026. This notice details proposed adjustments to payment methodologies, risk adjustment models, and the Star Ratings program for Medicare Advantage and Part D plans across the United States.

Proposed Payment Rate Adjustments

If finalized, the proposed policies are projected to result in a net average year-over-year payment increase of 0.09% for Medicare Advantage plans, equating to over $700 million in additional MA payments in CY 2027. However, when accounting for estimated risk score trends driven by coding practices and population changes, the expected average change in payments is 2.54%. This figure is notably lower than the mid-single-digit percentage increase, typically between 4% to 6%, that payers had anticipated based on previous years. Experts and advocacy groups have expressed concerns that these near-flat rates could lead to increased costs for insurers and beneficiaries.

Updates to Risk Adjustment Models

A central component of the Advance Notice involves significant updates to the risk adjustment models for both Part C and Part D. CMS aims to enhance the accuracy of payments by better reflecting the current costs associated with specific diseases, conditions, and demographic groups. Key proposed changes include:

• Exclusion of diagnosis information from unlinked chart review records from risk-score calculations, effective CY 2027. Only diagnoses linked to a specific service or visit will contribute to risk adjustment.
• Updates to the Part D risk adjustment model to align with changes introduced by the Inflation Reduction Act (IRA), such as an increased manufacturer discount. The model will also be calibrated using more recent data from 2023 diagnoses and 2024 costs.
• Exclusion of diagnoses derived from audio-only services and unlinked Chart Review Records (CRRs) from the updated Part D risk adjustment model.

CMS states that its risk adjustment system is guided by principles of simplicity, fostering competition, and accurately reflecting beneficiary health risk.

Revisions to Star Ratings Program

The Advance Notice also outlines several revisions to the Medicare Advantage and Part D Star Ratings program. CMS is soliciting feedback on future measures and concepts to continually improve the Star Ratings system. Notable changes include:

• The removal of the Health Equity Index reward, also known as EHO4all, from the 2027 Star Ratings.
• The proposed removal of 12 measures from the Star Ratings, commencing with the 2027 measurement year.
• The addition of three new measures for the 2027 Star Ratings: 'Care for Older Adults – Functional Status Assessment', 'Concurrent Use of Opioids and Benzodiazepines', and 'Polypharmacy: Use of Multiple Anticholinergic Medications in Older Adults'.
• The removal of three specific measures: 'Care for Older Adults – Pain Assessment', 'Medication Reconciliation Post-Discharge', and 'MTM Program Completion Rate for CMR'.

These changes, among others, are projected to increase Medicare spending by approximately $13.8 billion between 2027 and 2036, primarily due to higher quality bonus payments.

Next Steps and Public Comment

The public comment period for the CY 2027 Advance Notice will conclude on February 25, 2026, at 11:59 p.m. Eastern Time. Following this period, CMS will publish the final CY 2027 Rate Announcement no later than April 6, 2026.