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What CMS proposed
The advance notice released Jan. 26 projects a net average increase of 0.09% in 2027 Medicare Advantage payments, or a little over $700 million. That headline masks offsetting forces. The effective growth rate, driven by rising traditional Medicare costs, is 4.97%. Against that, a revised risk model and normalization would subtract 3.32%, and a new policy excluding diagnoses from unlinked chart reviews from risk scores would subtract another 1.53%. Counting the usual upward drift in plans’ risk scores, CMS estimates the change at 2.54%.
The chart review change matters most. Plans that rely heavily on retrospective reviews of medical records, without a linked encounter, to add diagnoses would lose that revenue. CMS said the impact will be largest for those organizations. Comments are due Feb. 25, and the final rate announcement is due by April 6.
Why hospitals should care
Medicare Advantage now covers a large share of most hospitals’ Medicare patients, and plans facing rising utilization have already tightened prior authorization and denials. A flat rate year on top of elevated medical costs gives plans little room. Hospitals should expect that pressure to show up in several ways:
- Harder rate negotiations. Plans will resist increases above traditional Medicare benchmarks and may seek multi-year terms at lower escalators.
- More utilization management. Prior authorization, observation status decisions and post-acute placement reviews are the usual levers when plan margins compress.
- Network and market changes. Some plans may narrow networks or exit counties for 2027, which can shift patients between payers mid-strategy.
- Less coding-driven revenue for risk partners. Systems in shared-risk or provider-sponsored MA arrangements should model how the chart review exclusion affects their own risk scores.
What to do before April
The advance notice is a proposal, and the final numbers can change after comments. Even so, finance and managed care teams should use the next 10 weeks to prepare:
- Pull current MA denial, appeal and payment delay data by plan, so negotiations rest on documented performance.
- Review contract terms that tie hospital rates to plan revenue or percentage of premium.
- Consider whether to submit comments, alone or through state associations, on how payment pressure on plans affects access and timely payment.
Archive entry for Jan 27, 2026, added Nov. 11, 2026.