We wanted to bring to your attention an important update from the Centers for Medicare & Medicaid Services (CMS) regarding proposed changes to Medicare Advantage (MA) and Part D payment policies for Calendar Year (CY) 2027. These updates could have significant implications for our work and the plans we offer to beneficiaries.
Key highlights of the proposal:
- Focus on payment accuracy and sustainability:
CMS is proposing updates to improve the accuracy of payments by aligning them more closely with actual beneficiary risk and care needs, rather than documentation intensity. This includes adjustments to the risk adjustment model for both Medicare Advantage and Part D plans. - Part D risk adjustment model updates:
The proposed changes include accounting for the Inflation Reduction Act’s impact on Part D benefits for CY 2027. CMS also plans to separately account for costs associated with Medicare Advantage Prescription Drug (MA-PD) plans and standalone Prescription Drug Plans (PDPs) to enhance payment accuracy. - Minimal payment growth:
The proposed policies are projected to result in a net average year-over-year payment increase of just 0.09%, or approximately $700 million in additional payments to MA plans in CY 2027. - Exclusion of certain diagnoses:
Diagnoses from unlinked chart review records will be excluded from risk adjustment calculations, aligning with similar policies proposed for Medicare Advantage plans.
What this means for us:
These proposed changes emphasize the importance of accurate documentation and risk adjustment practices. They also highlight CMS’s commitment to ensuring that payments reflect actual care needs and costs. As these policies are finalized, they may impact plan designs, premiums, and the way we approach Medicare Advantage and Part D offerings.
I think these changes reflect CMS’s ongoing effort to make Medicare Advantage and Part D programs more sustainable and fair. While I appreciate the focus on accuracy and beneficiary needs, I also recognize that these updates could create some challenges for us and our clients.
For example, the minimal payment growth might put pressure on plan designs, and the exclusion of certain diagnoses could impact risk scores. That said, I believe this is an opportunity for us to demonstrate our value as trusted advisors. By staying informed and proactive, we can help our clients navigate these changes and ensure they continue to receive the best possible coverage.
Next steps:
- CMS is accepting comments on these proposals until February 25, 2026, with a final rate announcement expected by April 6, 2026 (https://www.regulations.gov/).
- We encourage you to review these updates in detail and consider how they may affect your clients and our operations.
We will continue to monitor developments and provide updates as more information becomes available.
