CMS outlines 2027 Medicare Advantage rate methodology with a 0.09% net average payment increase and key risk-model changes

Federal health officials have opened the next round of Medicare Advantage pricing and policy debate. On January 26, 2026, the Centers for Medicare & Medicaid Services released its Calendar Year 2027 Advance Notice of Methodological Changes for Medicare Advantage (Part C) and Part D, describing how the agency intends to update capitation rates and payment policies for 2027. The Advance Notice is the first major step in a process that will culminate in a final Rate Announcement due by early April. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

The headline figure is a net average year-over-year payment increase of 0.09%, which CMS said equates to more than $700 million in additional payments to MA plans in 2027 if the proposal is finalized. That number is modest enough to trigger immediate concern among insurers and investors, given the scale of Medicare Advantage enrollment and the cost pressures that plans say they face, including medical utilization and pharmacy spending. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

CMS also presented a second way to interpret the update: when it accounts for estimated risk score trend driven by coding practices and population changes, the agency said the expected average change in payments would be 2.54%. This distinction is central to the policy fight because plans argue that risk adjustment, diagnosis sources, and normalization strongly influence real-world revenue more than the headline net figure suggests. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

Beyond the top-line percentage, the Advance Notice highlights specific levers that can move payments: risk model revision and normalization, “sources of diagnoses,” and star-ratings-related quality bonuses, among other components. Even small methodological changes can alter how accurately payments match patient complexity—an ongoing concern because policymakers want to curb overpayment while plans argue they need predictable funding to maintain benefits. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

The policy proposal sets up a formal stakeholder scramble. CMS said comments are due by February 25, 2026, via regulations.gov (docket CMS-2026-0034), and the agency will publish the final Rate Announcement on or before April 6, 2026. Between those dates, insurers, seniors’ advocates, providers, and budget watchdogs are expected to push for changes, each arguing the proposal either protects or threatens affordability and access. ([cms.gov](https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice?utm_source=openai))

For beneficiaries, the Advance Notice doesn’t directly change what anyone pays tomorrow, but it can influence what plans offer later. If final payments come in lower than plans anticipate, insurers may respond by tightening provider networks or trimming supplemental benefits; if payments prove stronger after risk trend effects, plans may preserve richer offerings. Either way, the 2027 methodology debate is now underway—and the outcome will ripple into the next cycle of Medicare Advantage plan design and pricing decisions. ([cms.gov](https://www.cms.gov/newsroom/press-releases/cms-proposes-2027-medicare-advantage-part-d-payment-policies-improve-payment-accuracy-sustainability?utm_source=openai))