CMS Releases CY 2027 Medicare Advantage and Part D Advance Notice
On January 26, 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 Part C and Part D Payment Policies. CMS has also provided a fact sheet accompanying the Advance Notice.
The Alliance provided a thorough analysis and described that if finalized, CMS projects the CY 2027 Advance Notice policies would result in an increase in MA payment increase of 0.09% relative to CY 2026, or over $700 million in additional payments to MA plans. CMS notes that when accounting for expected changes in MA risk scores driven by coding practices and population changes, the expected average change in payments is 2.54%.
Part C Risk Adjustment
CMS proposes to calculate risk scores for MA organizations entirely using the 2027 CMS‑HCC model. CMS projects that this change would reduce MA risk scores by –3.32% relative to CY 2026, representing $15.22 billion in net savings to the Medicare Trust Fund. Among other things, CMS would incorporate more recent data years in the goal to better reflect more current costs associated with conditions and demographics. CMS proposes to also exclude diagnoses from audio-only encounters as well as diagnoses from unlinked chart review records (CRRs) for risk score calculation purposes beginning in CY 2027. CMS estimates that excluding diagnoses from unlinked CRRs would reduce MA risk scores by –1.53%, representing $7.12 billion in net savings to the Medicare Trust Fund in CY 2027.
For Program of All-Inclusive Care for the Elderly (PACE) organizations, CMS reiterates its intent to continue transitioning to a full encounter data system (EDS) submission process and aligning with the model used for organizations other than PACE. To this end, CMS proposes continuing the phase-out of the 2017 CMS-HCC model by using a blended risk score approach, with 50% based on the 2017 CMS-HCC model, and 50% based on the proposed 2027 CMS-HCC model. CMS also proposes using a blended approach with ESRD risk scores for PACE organizations, with 50% based on the 2023 ESRD CMS-HCC model and 50% based on the 2019 ESRD CMS-HCC model.
Part D Risk Adjustment
CMS proposes updates to the Part D RxHCC risk adjustment model to reflect Inflation Reduction Act (IRA) changes that will be in effect for CY 2027, and to incorporate more recent data years. Among other things, CMS indicates the updated Part D model would exclude diagnoses from audio-only services and from unlinked CRRs, consistent with the agency’s Part C proposals.
Part C and D Star Ratings
For the 2027 Star Ratings, the agency will begin using data collected through Part C Reporting Requirements to confirm completeness of Independent Review Entity (IRE) data used in certain appeals measures, and will implement scaled reductions if data integrity issues are identified. In addition, CMS seeks comment on display measure updates which are publicly reported but not included in Star Ratings.
CMS notes four new or updated measures being added beginning with the 2027 Star Ratings, including:
- Colorectal Cancer Screening
- Care for Older Adults – Functional Status Assessment
- Concurrent Use of Opioids and Benzodiazepines (COB)
- Polypharmacy: Use of Multiple Anticholinergic Medications in Older Adults (Poly‑ACH)
Three measures are being removed beginning with the 2027 Star Ratings:
- Care for Older Adults – Pain Assessment
- Medication Reconciliation Post-Discharge
- Medication Therapy Management (MTM) Program Completion Rate for Comprehensive Medication Review (CMR)
See Table IV-1 in the Advance Notice for a full list of measures that will be used to calculate the 2027 Star Ratings.
Comments must be submitted by February 25, 2026 through the https://www.regulations.gov website, under docket number ‘CMS-2026-0034’.