CMS Announces 2027 Medicare Advantage & Part D Rate Notice
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The Centers for Medicare & Medicaid Services (CMS) have released the Contract Year (CY) 2027 Medicare Advantage (MA) and Part D Advance Rate Notice, setting payment rates for the following year and including policy and technical changes for MA and Part D plans. CMS proposes a basic update of 0.09%, significantly lower than the previous year’s 5.06% update, and estimates that this will yield over $700 million in additional MA payments in 2027, with a projected average increase in payment of about 2.54% for 2027. Other key proposed changes include the exclusion of diagnoses from audio-only services and from chart review records that are not linked to a specific encounter record, various risk model revisions, and the introduction of separate Part D risk models for stand-alone Part D plans and MA-PD plans.
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Rate Notice for Medicare Advantage and Part D for Contract Year 2027 issued by CMS
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Earlier this week, the Centers for Medicare & Medicaid Services (CMS) rolled out the Contract Year (CY) 2027 Medicare Advantage (MA) and Part D Advance Rate Notice. The yearly notice sets payment rates for MA and Medicare Part D plans for the next year.
Following the Advance Rate Notice, MA and Part D plans will plan their bids for CY 2027, due June 1, 2026. CMS is also set to finalize the rule in April 2026. Lynn Nonnemaker and I will provide an overview of the advance notice.
Highlights of the Advance Notice
In the CY 2027 notice, CMS proposes an average update of 0.09%, which is considerably less than last year’s update of 5.06%. This update is projected to result in over $700 million in additional MA payments in CY 2027. Risk scores are also expected to rise by around 2.45%, resulting in a total increase in payments of about 2.54% for 2027.
The proposed changes will vary based on factors such as geographical location, 2026 Star Rating, and health status of enrollees. The numbers are also preliminary and may change when the final notice is released in April 2027 based on a review of more recent data and on comments that CMS receives on the advance notice.
Key Proposals in the CY 2027 Notice
The effective growth rate of 4.97% is less than what observers anticipated, considering the recent rise in healthcare spending. CMS has also proposed changes to rules around how diagnoses are counted in MA plan risk scores, resulting in an overall reduction of 1.53% to the base rate.
CMS introduced a new category “sources of diagnoses” and proposed to exclude diagnoses from audio-only services and those submitted through chart review records not linked to a specific encounter record.
While the advance notice does not include changes to Star Ratings, it does invite feedback on potential new measures to deter plans from providing unnecessary or inappropriate care, and measures related to medical errors or misdiagnoses. CMS also suggests considering changes to the way it calculates ratings in the future.
CMS also proposed some notable changes to Medicare Part D payments. Notably, CMS proposes to use separate Part D risk models for MA-PD and stand-alone plans. This change will result in lower risk scores for MA-PD enrollees and increased risk scores for stand-alone plans.
Stakeholders will have 30 days to submit comments on the advance notice. CMS will respond to stakeholder feedback and make revisions to these policies and rates by April.
For more details, feel free to contact Jeffrey Davis, or subscribe to Regs & Eggs.
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