Regulatory NewsBREAK: CMS Finalizes 2027 Rate Announcement

Topic(s):

Legislation & Regulation , Medicare

On April 6, 2026, the Centers for Medicare and Medicaid Services (CMS) issued the Calendar Year (CY) 2027 Medicare Advantage (MA) and Part D Rate Announcement (Rate Announcement).

The Effective Growth Rate of 5.33% reflects the current estimate of the growth in MA benchmarks used to determine payment for MA plans, combining fee-for-service (FFS) and MA. The change in growth rate from the Advance Notice (4.97%) is due primarily to incorporation of additional data.

For CY 2027, CMS is continuing to use the 2024 MA risk adjustment model, in lieu of the updated risk adjustment model that was proposed in the CY 2027 Advance Notice.

CMS intends to transition Program of All Inclusive Care for the Elderly (PACE) organizations to submit risk adjustment data to the encounter data system (EDS) consistent with the rest of the industry. CMS is finalizing the accelerated transition to move PACE organizations to the same risk adjustment model as MA. CMS will calculate risk scores for PACE organizations by blending the risk score calculated using the 2024 MA risk adjustment model and the risk score calculated using the 2017 MA risk adjustment model.

CMS is finalizing several policies specific to Puerto Rico. CMS will base the MA county rates in Puerto Rico on the costs of individuals in Original Medicare who have both Parts A and B.

CMS is finalizing updates to the Part D risk adjustment model to reflect Inflation Reduction Act (IRA) changes, including an increased manufacturer discount for specified small manufacturers having their discounts phased-in over time and more recent data years. CMS will improve the model’s predictive accuracy for beneficiaries in MA prescription drug (MA-PD) plans and standalone prescription drug plans (PDPs) by finalizing the updated model.

Star Ratings updates 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.

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