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LUGPA Policy Update - CMS Finalizes CY 2027 Medicare Advantage and Part D Rate Announcement

April 2026

Overview

The Centers for Medicare & Medicaid Services (CMS) has released its Calendar Year (CY) 2027 Medicare Advantage (MA) and Part D Rate Announcement. The finalized policies aim to improve payment accuracy, strengthen program accountability, and support long-term sustainability of the Medicare Advantage program while maintaining beneficiary choice.

The updates are projected to result in a net average increase of 2.48%, equating to more than $13 billion in additional payments to MA plans in CY 2027. This figure accounts for underlying cost growth, quality bonus payments based on 2026 Star Ratings, and risk adjustment refinements.

Key Provisions

1. Medicare Advantage Risk Adjustment

  • CMS will continue using the 2024 MA risk adjustment model for CY 2027. The agency will review public comments before considering any future model changes.
  • Exclusion of unlinked chart review records: Beginning in CY 2027, diagnosis information from unlinked chart reviews (diagnoses not tied to a specific beneficiary encounter or service) will be excluded from risk score calculations.
    • Exception: Applies to beneficiaries who switch MA organizations.
    • This change is expected to have a larger negative impact on plans that rely heavily on chart reviews for risk adjustment.

2. Part D Risk Adjustment Updates

  • Updates reflect Inflation Reduction Act (IRA) changes to the Part D benefit.
  • Incorporates more current cost data.
  • Separately accounts for costs in MA prescription drug plans versus standalone PDP plans.
  • Aligns diagnosis sources with MA policies (excluding unlinked chart reviews, with the same switching exception). These changes are intended to improve payment accuracy and stability for prescription drug coverage.

3. Broader Policy Goals CMS emphasized three guiding principles for the MA risk adjustment system:

  • Simplicity (reduce administrative burden).
  • Fair competition across plans of all sizes.
  • Accurate reflection of beneficiary health risk to support program integrity and efficient resource use.

Statements from CMS Leadership

  • CMS Administrator Dr. Mehmet Oz: “Medicare Advantage and Part D should work for the people who rely on them. These updates keep coverage affordable and ensure patients get real value from their plans.”
  • Chris Klomp, Director of Medicare and Chief Counselor of HHS: “The Rate Announcement improves payment accuracy and strengthens competition based on quality—not on coding practices—helping put the program on a more sustainable path for the long term.”

Implications for LUGPA Members

Urology group practices participating in Medicare Advantage should note the following:

  • The modest overall payment increase (2.48%) may help offset rising costs, but the exclusion of unlinked chart review diagnoses could reduce risk scores—and therefore payments—for organizations that have relied on this documentation method.
  • Practices should review their coding and documentation processes to ensure diagnoses submitted for risk adjustment are appropriately linked to face-to-face encounters and services.
  • The continued use of the 2024 risk adjustment model provides short-term stability but signals CMS’s ongoing focus on tightening risk adjustment integrity.
  • Part D updates may influence plan formularies and pharmacy benefit management strategies, potentially affecting urologic medication access and costs.

LUGPA will continue to monitor how these policies affect urology-specific conditions (e.g., prostate cancer, BPH, kidney disease) and will advocate for accurate payments that reflect the complexity of care provided to Medicare beneficiaries.

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