In a late day announcement on January 26, 2026, the Center for Medicare and Medicaid Services (CMS) released its 2027 Medicare Advantage (MA) and Part D Advance Notice, which outlines proposed MA annual payment rate adjustments and corresponding payment policies. This year, CMS proposed rate increase is expected to increase MA plan rates, on average, by 0.09%, or 2.45% when adjusting for estimated Part C risk score trends.
CMS also outlined three principles that it will use in improving risk adjustment for 2027 and beyond: 1) simplicity to reduce provider and plan administrative burden; 2) facilitating competition among all types of plans regardless of size or available resources; 3) ensuring payments accurately reflect beneficiary health risk and facilitate efficient use of health care resources, enhanced integrity and greater accountability. Principal Deputy Director of the Center for Medicare at CMS, Alec Aramanda, noted that CMS will now use 2023 diagnoses and 2024 expenditures data in calculating risk adjustment and specifically called out a policy change that will now exclude diagnoses derived from audio-only encounters and those from chart reviews that are not tied to a provider encounter from being used in risk score calculations for CY2027 and beyond. This change could drive down the per member per month rates plans receive but these practices of “upcoding” via unlinked chart reviews has been an ongoing concern of policymakers for some time.
The CMS fact sheet on the Advance Notice also states that CMS will continue its work to transition PACE organizations from the Risk Adjustment Processing System (RAPs) to the encounter data system (EDS) to align PACE payments more closely with the MA system.
LeadingAge will review the full details of the Advance Notice to confirm there are no changes to the previously outlined transition timeline.
