CMS Finalizes 2027 Medicare Advantage Rates: What It Means for MA Plans

CMS released the final Medicare Advantage (MA) and Part D rate announcement, delivering a materially more favorable outcome for MA plans than many had expected following the Advance Notice earlier this year.

While the headline final net average 2.48% rate increase is important (up from the +0.09% proposed in January), the real story is CMS’s decision to soften what had been shaping up as a much tougher 2027 policy environment. By easing risk score pressure and avoiding additional cuts, CMS preserved fiscal discipline while giving MA plans the stability needed to plan, invest, and operate effectively. This final announcement doesn’t eliminate challenges ahead, but it meaningfully reduces uncertainty at a critical point in the Medicare Advantage calendar. For MA plans, the opportunity is now less about surviving the rules and more about winning the bid.

Relief on Risk Model Pressure

The most consequential change in the final announcement was CMS’s decision not to implement the proposed new MA HCC risk adjustment model in 2027. Instead, CMS retained the current risk model, significantly reducing what had been shaping up to be a major revenue headwind.

As a result, projected risk score pressure eased from roughly -3.32% to -1.12%, a shift that overwhelmingly explains the improvement in the overall rate.

This decision offers MA plans near-term stability in risk score calculations at a time when many organizations are still adjusting to prior model changes.

Chart Review Policy Finalized (with an Important Exception)

CMS finalized its policy to exclude diagnoses derived from unlinked chart review records from risk score calculations beginning in 2027, maintaining the overall direction signaled earlier in the rulemaking.

However, CMS carved out a notable exception: beneficiaries who switch from one MA plan to another. For those members, unlinked chart review diagnoses may still be used, helping preserve continuity in risk scores and partially mitigating disruption for plans with member churn.

Growth Rate and Coding Adjustment = Discipline Maintained

Despite substantial industry feedback that cost growth has outpaced recent MA payment updates, CMS made only modest changes to the effective growth rate, which increased from 4.97% to 5.33%, largely due to additional fee‑for‑service Medicare data through late 2025.

CMS also held the MA coding pattern adjustment steady, declining to adopt recommendations to increase it. Avoiding an upward adjustment here prevented the addition of another revenue headwind and further reinforced the relative stability of the final package.

Focus on Bid Strategy and Operational Execution

By easing risk score pressure and avoiding additional revenue cuts, CMS provided stability without abandoning fiscal discipline. That stability arrives at a critical moment—just in time for plans to turn their attention to thoughtful, disciplined, and strategic bid development. For MA plans, the final announcement provides a clearer and more workable planning baseline:

• Bid modeling can proceed using the retained risk model, rather than preparing for another major recalibration
• Risk adjustment strategies must reflect the finalized unlinked chart review policy, including the switcher exception
• The reduced normalization impact materially improves financial outlooks, especially for risk‑heavy plans
• With payment pressure eased, attention can shift to operational execution, including preparing for the refocused Star Ratings measure set coming into effect in 2027