On January 26, 2026, CMS released the 2027 Advance Notice for Medicare Advantage (MA) and Part D rates. The announcement makes technical updates that impact capitated rates for MA organizations (MAOs). The policies included in the Advance Notice would increase payments to MA plans in calendar year (CY) 2027 by $700 million (0.09% on average) compared to CY 2026 if finalized. MA plan sponsors should review the Advance Notice carefully as they prepare bids for CY 2027.
What Changes Are in the Advance Notice?
Below is a summary of key updates included in the Advance Notice.
Part C Risk Adjustment Model: Non-PACE Organizations
For MAOs that are not Program of All Inclusive Care for the Elderly (PACE) organizations, CMS is proposing several technical updates to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model for 2027 that largely maintain the structure of the 2024 model while incorporating more current data and refining certain condition categories. The 2027 model would continue using the same eight model segments, demographic variables, condition count factors, and V28 clinical classification system, with disease hierarchies applied in the same manner as today.
The most notable structural change is the removal of the constraint that previously forced HCC 328 (CKD Stage 3B) and HCC 329 (CKD Stage 3, except 3B) to share the same coefficient. CMS now has sufficient 2023 diagnostic and cost data to estimate separate values that reflect the distinct clinical severity and cost patterns of each stage.
Beyond this refinement, CMS proposes key technical updates, including recalibrating the model using more recent data (2023 diagnoses predicting 2024 costs), updating the denominator year for relative factors to payment year 2024, excluding diagnoses from audio-only services to align with MA diagnosis submission policy, and excluding diagnoses from unlinked chart reviews. The exclusion of diagnoses from audio-only visits and unlinked chart reviews is discussed in additional detail below:
- Exclusion of Audio-Only Diagnoses: CMS proposes excluding diagnoses derived solely from audio-only telehealth services—identified by modifiers 93 and FQ—from calibration of the 2027 CMS-HCC model, since these encounters do not meet the face-to-face requirement for risk adjustment eligibility. Under the proposal, only diagnoses from eligible inpatient, outpatient, professional, or interactive audio-video telehealth services would be included, aligning the model with MA diagnosis submission policy for 2027.
- Exclusion of Diagnoses From Unlinked Chart Review Records: Beginning in 2027, CMS proposes to exclude all diagnoses submitted on unlinked chart review records because they are not tied to a documented service. This change responds to long-standing program integrity concerns—highlighted by the Office of Inspector General and MedPAC—that unlinked chart reviews contribute to differential coding and inflate payments. CMS believes requiring diagnoses to be linked to an actual service will improve accuracy without prohibiting plans from submitting unlinked chart reviews for other purposes.
CMS expects these updates to improve model accuracy, which means beneficiary and plan risk scores may shift depending on diagnosis combinations and enrollee mix when the updated model takes effect for Part C payments in 2027.
Part C Risk Adjustment Model: PACE Organizations
CMS proposes continuing the transition toward full reliance on encounter data for PACE organizations by blending two risk adjustment models. In CY 2027, half of the risk score would come from the long-used 2017 CMS-HCC model, which uses Risk Adjustment Processing Systems (RAPS), encounter data, and fee-for-service (FFS) claims. The other half would come from the newly proposed 2027 CMS-HCC model (using only encounter data and FFS claims).
Part C Risk Adjustment Model: ESRD Enrollees
Similar to CY 2026, for non-PACE organizations in CY 2027, CMS proposes to continue using the 2023 End-Stage Renal Disease (ESRD) CMS-HCC models to calculate risk scores for beneficiaries in dialysis, transplant, and post-graft status.
CY 2027 Star Ratings Update
CMS reminds MA plans that it is adding four new measures beginning with the 2027 Star Ratings. These include:
- Colorectal Cancer Screening (respecified measure, replacing an existing measure)
- 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)
CMS is also removing three measures 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)
Key Deadlines for CY 2027 Star Ratings
The Advance Notice notes the following key deadlines for MA plans to be aware of related to the 2027 Star Ratings:
- March 31, 2026: Request a review of 2025 Complaints Tracking Module (CTM) data for the 2027 Star Ratings.
- May 18, 2026: Request a review of administrative data used for the Part D Patient Safety Star Ratings measures for the 2025 measurement year for the 2027 Star Ratings.
- June 30, 2026: Request a review of 2025 appeals data.
Key Deadlines for CY 2028 Star Ratings
The Advance Notice notes the following key deadlines for MA plans to be aware of related to the 2028 Star Ratings:
- March 31, 2027: Request a review of 2026 CTM data for the 2028 Star Ratings.
- May 18, 2027: Request a review of administrative data used for the Part D Patient Safety Star Ratings measures for the 2026 measurement year for the 2028 Star Ratings.
CMS’ fact sheet on the Advance Notice is available here.
How Forvis Mazars Can Help
Forvis Mazars helps MA plans and other payors develop regulatory excellence to maintain compliance and strategically navigate evolving policies. If you have questions about the CY 2027 MA rate Advance Notice and how it may impact your organization, please reach out to our professionals.