On January 26, 2026, the Centers for Medicare & Medicaid Services (CMS) released the 2027 Advanced Notice for Medicare Advantage (MA) plans, detailing proposed changes to MA capitation rates and Part C and Part D payment policies.
The updates reflect CMS’s continued focus on payment accuracy, data integrity, and alignment with Original Medicare, with meaningful implications for health plans and vendors supporting risk adjustment, quality improvement programs, and operational compliance.
While the projected payment increase for 2027 is modest, the methodological changes signal a structural shift in how diagnoses are captured, validated, and used for payment, requiring health plans to proactively adapt their strategies before final rates are announced.
Modest Payment Growth, Greater Emphasis on Accuracy
CMS is proposing an average net MA payment increase of 0.09% for 2027.
Although impacts will vary across plans, the direction is clear: future MA performance will rely less on rate increases and more on compliant, encounter-linked data. CMS continues to prioritize program sustainability, tightening policies that influence risk score growth and emphasizing defensible documentation and transparent care delivery.
Impact on Medical Record Review (MRR)
A key proposal is the exclusion of unlinked Chart Review Records (CRRs) from risk score calculations, which directly affects MRR strategies.
Encounter Linkage Requirements: Starting in 2027, all diagnoses from MRR must be linked to an Encounter Data Record (EDR) representing an actual healthcare service. This shifts MRR from standalone retrospective reviews to fully integrated, encounter-supported workflows.
Data Integrity Focus: CMS and the OIG have raised concerns that some diagnoses lack evidence of care delivery. Requiring linkage ensures diagnoses are grounded in documented clinical services, aligning MA with Original Medicare standards.
Revenue Implications: CMS projects this change will result in:
- 1.53% reduction in MA risk scores
- Approximately $7.12 billion in net Medicare Trust Fund savings
Plans will need robust, compliant MRR programs to maintain payment integrity and audit readiness.
Impacts on In-Home Health Assessments (IHAs)
IHAs remain valuable for capturing member health, but 2027 proposals increase scrutiny on how diagnoses are generated and submitted.
Stricter Diagnosis Requirements: MedPAC identifies chart reviews and IHAs as drivers of coding differences between MA and FFS. CMS’s changes address these differences.
Audio-Only Encounters Excluded: Diagnoses from audio-only telehealth billed with modifiers (93 or FQ) will no longer count for risk adjustment unless paired with another qualifying service. In-person or compliant telehealth assessments are now essential.
Full Transition to CMS-HCC V28: MA plans will rely entirely on CMS-HCC Version 28, recalibrated using 2023 diagnoses to predict 2024 costs, projected to reduce MA risk scores by 3.32% relative to 2026.
Practical Note for Plans: To ensure IHA results are eligible for risk adjustment, all diagnoses must be linked to an actual encounter date and submitted in a claim or record that corresponds to that encounter. Audio-only IHAs without another qualifying service are not eligible, so plans should confirm that their documentation and submission workflows meet CMS linkage requirements.
Star Ratings and Quality Updates
CMS proposes updates affecting Star Ratings and HEDIS measures, including:
New and Updated Measures
- Colorectal Cancer Screening (respecified)
- Care for Older Adults – Functional Status Assessment (returning with updates)
- Concurrent Use of Opioids and Benzodiazepines (COB)
- Polypharmacy: Use of Multiple Anticholinergics
Removed Measures
- Care for Older Adults – Pain Assessment
- Medication Reconciliation Post-Discharge
Shift Toward ECDS Reporting: Measures like Transitions of Care and Diabetes Care – Blood Sugar Controlled are moving to ECDS-only reporting, signaling a broader shift away from hybrid and administrative data sources.
Conclusion
The 2027 CMS Advance Notice marks a critical step in aligning Medicare Advantage more closely with Original Medicare while strengthening payment accuracy and sustainability.
Although overall payment growth is modest, the proposed methodological changes will materially affect risk scores, revenue, and operational strategy.
Advantmed supports health plans through these changes with compliant Medical Record Review, In-Home Health Assessments, and quality improvement services. By focusing on accuracy, transparency, and performance, we help plans adapt with confidence and remain competitive in the evolving MA landscape.
Learn more about how Advantmed’s integrated solutions can help your health plan adapt to the latest CMS changes.