LUGPA Policy Brief: CMS Advance Notice, CY 2027 Medicare Advantage Payment and Risk Adjustment Changes

February 2026 

At-a-Glance Essentials

What’s Changing
CMS proposes updates to Medicare Advantage (MA) payment rates and risk adjustment, including excluding diagnoses from unlinked chart reviews and certain audio-only telehealth encounters.

Why It Matters
Risk adjustment changes could reduce MA plan payments and influence plan behavior, with downstream effects on provider contracting, administrative burden, and patient access.

Who Is Affected
Medicare Advantage plans and providers treating MA beneficiaries, including specialty practices caring for high-cost, high-acuity patients.

Key Dates

• Released: January 26, 2026
• Public Comment Deadline: February 25, 2026
• Final Policies Announced by: April 6, 2026

Overview

On January 26, 2026, CMS released the Advance Notice of Methodological Changes for CY 2027 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies. CMS projects a net average MA payment increase of 0.09% (approximately $700 million), alongside significant risk adjustment updates.

The proposal would exclude diagnoses from unlinked chart review records and certain audio-only telehealth encounters, update the CMS-HCC risk adjustment model using more recent data, and make parallel changes to Part D. CMS states these updates are intended to improve payment accuracy and align risk scores with documented care.

What the Advance Notice Proposes

MA Payment Rates

• Net average payment increase of 0.09% for CY 2027.
• Reflects cost growth, Star Ratings impacts, and risk adjustment revisions.

Risk Adjustment Updates (Part C)

• Exclusion of diagnoses from unlinked chart review records (CRRs).
• Exclusion of diagnoses from audio-only telehealth encounters without an eligible in-person service.
• Transition to CMS-HCC Version 28 using 2023 diagnoses and 2024 expenditures.
• Continued 50% blend for PACE programs.

Estimated Impacts

• Unlinked CRR exclusion projected to reduce risk scores by 1.53% (≈$7.1 billion).
• Combined changes yield an estimated –3.32% overall risk score impact.

Part D Updates

• Parallel exclusions for unlinked CRRs and audio-only diagnoses.
• Recalibration reflecting Inflation Reduction Act provisions.

CMS emphasizes that risk-adjustment-eligible diagnoses must be tied to actual services while maintaining beneficiary choice and program stability.

Why This Matters for LUGPA Members

LUGPA member practices provide specialized urologic care—including procedures, imaging, and physician-administered drugs—to a large Medicare population, with more than half of beneficiaries enrolled in MA plans. MA policies directly affect reimbursement, networks, prior authorization, and utilization management for high-cost specialty services.

Potential implications include improved program integrity, pressure on MA plans to adjust contracting and utilization strategies, and possible indirect effects on patient access if plans tighten controls. While physician payment formulas are unchanged, tighter alignment between payment and documented care may influence how MA plans manage specialty services such as urology.