CMS finalizes Medicare Advantage rates for CY 2027

The Centers for Medicare & Medicaid Services April 6 released the Medicare Advantage and Part D Rate Announcement for calendar year 2027. The rate announcement finalized a net average year-over-year increase of 2.48% in MA plan payments, or over $13 billion more than in 2026. This is an increase over the agency's estimate of 0.09%, or $700 million more than in 2026, in the advance notice earlier this year. This rate accounts for anticipated changes in MA plan input costs (e.g., health care utilization and prices), changes to the Star Ratings programs, and certain refinements to the MA risk adjustment model, including the exclusion of diagnosis information from unlinked chart review records from risk scores. CMS did not adopt in full its proposed changes to the risk adjustment model, which explains a significant portion of the increase in net plan payments from the advance notice to the final rate announcement. Specifically, CMS will use the 2024 MA risk adjustment model calibrated with Original Medicare 2018 diagnoses and 2019 expenditures data for CY 2027 in lieu of the updated risk adjustment model calibrated with Original Medicare 2023 diagnoses and 2024 expenditures data as was proposed in the CY 2027 advance notice.