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What changed from the advance notice
CMS released the 2027 rate announcement today. The net average increase of 2.48% amounts to more than $13 billion in additional payments to plans compared with 2026. The advance notice had projected a 0.09% increase, or about $700 million.
Much of the difference comes from risk adjustment. CMS had proposed recalibrating its model with 2023 diagnoses and 2024 spending. It will instead keep the 2024 model, calibrated on older data, and evaluate public feedback before considering future changes. AHA News noted that this decision explains a significant portion of the increase.
CMS did finalize one major coding change. Starting in 2027, diagnoses from unlinked chart review records, those not tied to a specific patient encounter, will not count toward risk scores. The exception is beneficiaries who switch from one plan to another. CMS expects the largest effect on plans that rely heavily on such records, and Part D risk adjustment will follow the same approach.
Why hospitals should care
Medicare Advantage revenue shapes how plans negotiate, manage utilization and design benefits. A higher-than-expected rate gives plans more room in 2027 and weakens the argument that tight federal payments require lower provider rates.
The chart review change cuts the other way. Plans that relied on retrospective record reviews will need diagnoses documented during actual visits. That raises the value of complete, accurate coding at the point of care, and plans may press providers for better encounter data or tie incentives to it.
A checklist for contracting teams
- Refresh negotiating positions. Use the final rate when plans plead financial constraint in 2027 negotiations.
- Review risk-based terms. Contracts that share savings or set budgets using risk scores may shift as coding rules change.
- Strengthen encounter documentation. Clinical documentation programs now carry more value for MA partners, which can support better terms.
- Track denials closely. Better plan finances do not guarantee fewer denials. Keep reporting denial and payment trends to plan leadership.
Archive entry for Apr 6, 2026, added Nov. 11, 2026.