CMS proposes 2027 changes to Medicare policies
The Centers for Medicare & Medicaid Services (CMS) has released a proposal outlining 2027 payment and policy updates to Medicare Advantage (otherwise known as Medicare Part C), a private‑plan alternative to Original Medicare, and Medicare Part D, the prescription drug benefit offered through Medicare‑approved private insurers that helps cover outpatient medications.
What Are The CMS’s Proposed Medicare Changes
The CMS has proposed several key changes for 2027, to make sure Medicare “works better for the people it serves,” and to “ensure beneficiaries continue to have affordable plan choices and reliable benefits.”
These changes include:
Net average payment change
The CMS projects a 0.09 percent average increase in year-over-year Medicare Advantage payments for 2027—more than $700 million in total—with an expected 2.54 percent average change after factoring in risk-score shifts, driven by changes in how patients are coded and population changes.
Risk adjustment updates
CMS is keeping its current risk‑adjustment system (Version 28), but is planning to use newer information—specifically, health diagnoses from 2023 and cost data from 2024 to help make sure the payments to Medicare Advantage plans “reflect more current costs associated with various diseases, conditions, and demographic characteristics.”
Unlinked chart review records
CMS wants to stop counting certain diagnoses that insurance plans report if those diagnoses aren’t linked to an actual doctor visit or medical service. Currently, some plans submit diagnoses from chart or paperwork reviews, which don’t come from a real appointment. Starting in 2027, CMS says these “unlinked” diagnoses won’t count anymore when calculating how sick a patient is for payment purposes.
Star rating updates
CMS is updating the 2027 star ratings system—which is how Medicare grades Medicare Advantage and Part D plans each year—by:
- Providing a list of which disasters—such as a hurricane or a wildfire, for example—affect a plan’s performance when adjusting scores
- Making small clarifications to rating rules to make them clearer
- Telling plans exactly which performance measures will count toward their 2027 ratings and improvement scores
CMS Administrator Mehmet Oz, M.D. said: “By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs.”
Why It Matters
Medicare Advantage enrollment has grown rapidly in recent years, and payment policies influence plan benefits, premiums, and the stability of offerings available to beneficiaries nationwide.
CMS said the 2027 updates aim to align payments with actual health risk and reduce reliance on coding practices that are not tied to clinical services, a change the agency argued will protect beneficiaries and taxpayers while maintaining plan choice.
What People Are Saying
“These proposed payment policies are about making sure Medicare Advantage works better for the people it serves,” said CMS Administrator Mehmet Oz, M.D.
What Happens Next
Stakeholders, including plans, providers, and beneficiary advocates, may submit comments on the 2027 Advance Notice through February 25, 2026, after which CMS plans to issue the final Rate Announcement by April 6, 2026.
Separate but related rulemaking for Contract Year 2027 proposes broader program changes—such as streamlining Star Ratings measures, codifying Inflation Reduction Act Part D redesign elements, and adjusting enrollment flexibilities—which CMS published for comment had a deadline of January 26, 2026.
