The Centers for Medicare and Medicaid Services (CMS) is proposing an increase of 0.09 percent, or over $700 million, in Medicare Advantage (MA) payments to plans in CY 2027. By comparison, the rate increase was 5.06 percent for 2026. However, when considering the estimated risk score trend in MA, driven by coding practices and population changes, the expected average change in payments will be 2.54 percent.
The Georgetown University’s Medicare Policy Institute breaks down rate announcements and MA risk score trends from 2016-2027 here.
The near-flat rate increase follows an analysis from the Medicare Payment Advisory Commission that found MA is overpaid by about $76 billion a year compared with Medicare fee for service, which is largely driven by MA plan coding intensity.
To crack coding intensity, or upcoding, by MA plans to secure higher federal payments, the Administration is also proposing to make updates to the MA risk adjustment model. It is also proposing to exclude diagnosis information from unlinked Chart Review Records, which is diagnosis information not associated with a specific beneficiary encounter, from risk score calculation starting in CY 2027. As a result, diagnoses that are not reported or associated with a service would not be considered for risk adjustment.
Reduced growth in federal payments to MA plans could lead to plans cutting reimbursement to providers, instituting stricter utilization management tactics, or narrowing provider networks to control costs.
Read the CMS fact sheet here.
Read the CMS press release here.