2027 Medicare Advantage & Part D Advance Notice & Fact Sheet

CMS Fact Sheet: 2027 Medicare Advantage and Part D Advance Notice

The article below contains information from an Advance Notice from the Centers of Medicare & Medicaid Services (CMS), as well as information from a 2027 Medicare Advantage and Part D Advance Notice Fact Sheet in the CMS Newsroom. All sources shall be linked before, within, and beneath the article.

January 26, 2026 — The Centers for Medicare & Medicaid Services (CMS) is committed to ensuring that all Medicare beneficiaries are free to choose the health coverage that best meets their needs, and that such coverage aligns spending and value to the greatest extent possible. Establishing accurate payments in Medicare Advantage and Part D is foundational to this objective of aligning spending with value, and so, we have taken particular care in considering updates to our risk adjustment models. We believe that the policies in this Advance Notice, if finalized, will address coding differentials between Medicare Advantage and Original Medicare for CY 2027. We further believe that they will bring much-needed stability to prescription drug benefits for all Medicare beneficiaries.

In accordance with section 1853(b)(2) of the Social Security Act (the Act), we are notifying you of planned changes in the Medicare Advantage (MA) capitation rate methodology and risk adjustment methodology applied under Part C of the Medicare statute for CY 2027. Also included with this Advance Notice is a discussion of the annual adjustments for CY 2027 to the Medicare Part D benefit parameters for the defined standard benefit. CMS will announce the MA capitation rates and final payment policies for CY 2027 no later than Monday, April 6, 2026, in accordance with section 1853(b) of the Act, as established in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) and amended by the Securing Fairness in Regulatory Timing Act of 2015 (pub. L. 114-106). The Advance Notice of Methodological Changes is published no fewer than 60 days before the publication of the final Announcement of CY 2027 MA Capitation Rates and Part C and Part D Payment Policies (Rate Announcement) and provides a minimum 30-day period for public comment.

Attachment I of the document linked here shows the preliminary estimates of the national per capita MA growth percentage and the national Medicare Fee-for-Service (FFS) growth percentage, which are key factors in determining the MA capitation rates. Attachment II sets forth changes in the Part C payment methodology for CY 2027. Attachment III presents the annual adjustments to the Medicare Part D benefit parameters for the defined standard benefit and sets forth the Part D payment methodology for CY 2027. For additional information about Part D policies related to the Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169) for 2027, see the CY 2027 proposed rule (CMS-4212-P, 90 FR 54894) titled “Contract Year 2027 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program,” which appeared in the Federal Register on November 28, 2025. Attachment IV applies standards for certain updates for the MA and Part D Star Ratings. Attachment V contains economic information for significant provision in the Advance Notice. Attachment VI presents the risk adjustment factors for the proposed CMS-HCC risk adjustment model and RxHCC risk adjustment models.

As with prior Advance Notices and Rate Announcements, CMS is releasing a Fact Sheet, found here and below, to accompany this CY 2027 Advance Notice. The Fact Sheet provides additional information on the impact of the policies and updates on individual payment factors, such as the growth rates and risk adjustment changes, and the overall average impact of the factors on MA revenue.

CMS invites comments on the Advance Notice. To submit comments or questions electronically, go to https://www.regulations.gov, enter the docket number “CMS-2026-0034” in the “Search” field, and follow the instructions for “submitting a comment.” Comments will be made public, so submitters should not include any confidential or personal information. It should be noted that CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm the individual. In order to receive consideration prior to the release of the Rate Announcement, comments on this Advance Notice must be received by 11:59 PM Eastern Time on February 25, 2026.

To read the rest of the Advance Notice, click here.

Fact Sheet

January 26, 2026 — Today, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2027 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the CY 2027 Advance Notice).

Each year, CMS is required to update MA payment rates and conducts technical updates supporting MA payment accuracy. This is accomplished through the Advance Notice and Rate Announcement process. If finalized, the proposed policies in the CY 2027 Advance Notice are projected to result in a net average year-over-year payment increase of 0.09 percent, or over $700 million in MA payments to plans in CY 2027. When considering estimated risk score trend in MA driven by coding practices and population changes, the expected average change in payments will be 2.54%.

Net Impact

The table below provides the expected average impact of the proposals on MA payment components relative to last year.

Growth Rates

The Effective Growth Rate reflects the current estimate of the growth in benchmarks used to determine payment for MA plans. This growth rate is largely driven by the growth in Original Medicare per capita costs, as estimated by the Office of the Actuary.

Part C Risk Adjustment Model

CMS is committed to the sustainability of the MA program. As the agency considers opportunities for improving risk adjustment both in the 2027 Advance Notice and in the future, CMS is working towards a MA risk adjustment system guided by three principles: (1) simplicity to reduce day-to-day administrative burden for both plans and providers; (2) competition on creating value for patients where risk adjustment facilitates such competition equally for all varieties of plans irrespective of size or resources; and (3) payments that accurately reflect beneficiary health risk and facilitate the efficient use of healthcare resources, enhanced program integrity, and greater accountability.

CMS is proposing to update the Part C risk adjustment model. The proposed model continues to use version 28 (V28) of the clinical classification system first implemented in the 2024 risk adjustment model but is calibrated using more recent underlying Original Medicare data (updated from 2018 diagnoses and 2019 expenditures to 2023 diagnoses and 2024 expenditures) to reflect more current costs associated with various diseases, conditions, and demographic characteristics. The proposed model also includes refinements to exclude diagnoses from audio-only encounters. In addition, CMS is proposing to exclude diagnosis information from unlinked Chart Review Records (CRRs) – diagnosis information not associated with a specific beneficiary encounter – from risk score calculation starting in CY 2027. MA organizations may continue to submit diagnoses using unlinked CRRs, however, those diagnoses will no longer be used for calculating risk scores.

Part C Risk Adjustment Model for PACE Organizations

As noted in previous Advance Notices and Rate Announcements, CMS intends to transition Program of All Inclusive Care for the Elderly (PACE) organizations from submitting risk adjustment data to the legacy Risk Adjustment Processing System (RAPS) to fully submitting risk adjustment data to the encounter data system (EDS) consistent with the rest of the industry, and to align the model used to pay PACE organizations with the model used to pay organizations other than PACE. For CY 2027 payments to PACE organizations, CMS proposes to continue phasing out the 2017 CMS-Hierarchical Condition Categories (CMS-HCC) risk adjustment model by calculating risk scores using a risk score blend. Specifically, CMS proposes to blend 50% of the risk score calculated with the 2017 CMS-HCC model and 50% of the risk score calculated using the proposed 2027 CMS-HCC model. It is imperative to continue to align with the most current version of the CMS-HCC model being used for the rest of the industry during the transition to ensure PACE organization risk scores reflect recent updates and risk adjustment model improvements.

Puerto Rico

The proportion of people with Medicare who receive benefits through MA (as opposed to Original Medicare) is far greater in Puerto Rico than in any other state or territory. The policies under consideration for CY 2027 would be continuations of current policies and would support stability for the MA program in the Commonwealth and to Puerto Ricans enrolled in MA plans. These policies include basing the MA county rates in Puerto Rico on the relatively higher costs of individuals in Original Medicare who have both Medicare Parts A and B and applying an adjustment regarding the propensity of individuals with zero claims.

Part D Risk Adjustment

CMS is proposing updates to the Part D risk adjustment model to reflect Inflation Reduction Act (IRA) changes to the Part D benefit that will be in effect in CY 2027 – such as an increased manufacturer discount for specified small manufacturers having their discounts phased-in over time – as well as calibrating the model using more recent data years (2023 diagnoses and 2024 costs). The updated model also excludes diagnoses from audio-only services and from unlinked CRRs to be consistent with similar policies proposed for Part C.

Finally, CMS proposes to improve the model’s predictive accuracy for beneficiaries in MA prescription drug (MA-PD) plans and standalone prescription drug plans (PDPs) by calibrating the model separately for the MA-PD and PDP populations, as well as continuing to calculate separate normalization factors for MA-PD plans and PDPs. These updates to the Part D risk adjustment model are essential for plan sponsors to develop accurate bids for CY 2027.

Part C and D Star Ratings

In the Advance Notice, CMS provides information and updates in accordance with the Star Ratings regulations at 42 C.F.R. §§ 422.164, 422.166, 423.184, and 423.186. In addition, CMS solicits input on future measures and concepts as we continue to enhance the Star Ratings over time.

Star Ratings updates in the CY 2027 Advance Notice include providing the list of eligible disasters for adjustment, non-substantive measure specification updates, and the list of measures included in the Part C and D improvement measures and Categorical Adjustment Index for the 2027 Star Ratings. We are also soliciting initial feedback on substantive measure specification updates and comments on new measure concepts. We are further seeking comments on updates to display measures which we publicly report but do not include in Star Ratings. All substantive measure specification changes, the addition of new measures, and methodological changes must go through rulemaking.

Process

Comments on the proposals set forth in the CY 2027 Advance Notice must be submitted by 11:59 p.m. Eastern Time on February 25, 2026. The CY 2027 Rate Announcement will be published no later than April 6, 2026.

To submit comments or questions on the CY 2027 Advance Notice electronically, go to www.regulations.gov, enter the docket number “CMS-2026-0034” in the “search” field, and follow the instructions for ‘‘submitting a comment.’’

The CY 2027 Advance Notice may be viewed by going to: https://www.cms.gov/medicare/payment/medicare-advantage-rates-statistics/announcements-and-documents and selecting “2027 Advance Notice.”

For more information, please see CMS.gov, or call us today at (800) 689-2800!

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