CY 2027 Medicare Advantage Final Rule & Rate Announcement: 5 Updates Payers Need to Know
With the recently released the 2027 Medicare Advantage Final Rule and Rate Announcement, The Centers for Medicare and Medicaid Services (CMS) confirmed it is finalizing payment rates at a higher-than-anticipated average rate and that a suite of policy changes will take effect for contract year 2027.
For payers, the combined impact spans revenue, risk adjustment, Star Ratings, supplemental benefit administration, and marketing operations.
1. Payment Rates: Growth with Real Revenue Headwinds
The final National Per Capita Medicare Advantage (MA) Growth Percentage for calendar year (CY) 2027 is 4.40 percent—below the Fee-for-Service (FFS) Growth Percentage of 5.46 percent. The change in growth rates from the CY 2027 Advance Notice to the CY 2027 Rate Announcement is due primarily to incorporation of additional data. The non-ESRD Fee For Service United States Per Capita Costs for Part A and Part B are based on claims experience with incurred dates through Q4 2025.
However, the headline growth number does not tell the full revenue story for health plans. CMS is finalizing two diagnosis source exclusions that will reduce risk scores—and therefore risk-adjusted payments—for plans that have relied on these coding sources:
- Exclusion of diagnoses from unlinked chart review records (CRRs), with a narrow exception for beneficiaries switching between MA organizations, and
- Exclusion of diagnoses coded from audio-only services (modifiers 93 and FQ).
Together, these changes are estimated to produce net Medicare Trust Fund savings in CY 2027 by reducing the pool of diagnoses eligible for risk adjustment. Plans with higher historical reliance on unlinked CRRs or audio-only encounter coding will see a proportionally greater impact on their risk scores and payment rates.
CMS is also maintaining the statutory minimum MA coding pattern difference adjustment of 5.90 percent, unchanged from CY 2026. Plans should model the combined effect of normalization factor updates (2024 CMS-HCC model normalization factor: 1.079) and diagnosis exclusions on their projected CY 2027 risk scores now that bid season has commenced.
Key Numbers:
- 4.40% Medicare Advantage Growth Percentage
- 5.46% Fee-for-Service Growth Percentage
- 5.90% coding pattern adjustment
- Normalization: 1.079 (2024 model)
2. Risk Adjustment Model: Continuity, not Recalibration
CMS is continuing the 2024 CMS Hierarchical Condition Category (HCC) risk adjustment model for non-PACE MA organizations—pulling back from the proposed recalibration to a 2027 model using 2023 diagnoses and 2024 expenditure data. Program of All-Inclusive Care for the Elderly (PACE) organizations will use a 50/50 blend of the 2024 and 2017 CMS-HCC models. While continuity reduces year-over-year volatility, plans should not interpret model stability as payment stability: the diagnosis exclusions and normalization factor updates will still move risk scores materially for many organizations.
CMS also finalized the exclusion of diagnoses from audio-only services for RxHCC models, and implemented updated RxHCC models reflecting IRA-driven Part D benefit restructuring, using 2023 diagnoses and 2024 expenditure data for non-PACE plans.
3. Star Ratings: Simplification Does Not Equal Reduced Accountability
CMS is finalizing a significant reduction of the Star Ratings measure set. The two Part C appeals measures—Plan Makes Timely Decisions about Appeals and Reviewing Appeals Decisions—will be removed beginning with the 2029 Star Ratings. The Call Center—Foreign Language Interpreter and TTY Availability measure is also being removed for both Part C and D.
CMS also decided not to proceed with the Health Equity Index (HEI) reward factor, retaining the existing historical reward factor in the methodology. The net 10-year Trust Fund impact of these Star Ratings changes is estimated at $18.56 billion (from 2027 to 2036).
Note: Health plans should not interpret appeals measure removal as reduced risk. CMS stated unequivocally that full compliance with 42 CFR Part 422 Subpart M remains mandatory, and CMS will use audits, corrective action plans, and public warning letters to enforce appeals processing performance. The financial incentive structure changes, but the compliance obligation does not.
4. Supplemental Benefits: Debit Card Guardrails Now Codified
CMS is codifying existing guidance on debit card administration of supplemental benefits, requiring that debit cards be electronically linked to plan-covered items and services through a real-time point-of-sale verification mechanism and restricting card use to the specific plan year. While use of debit cards to administer benefits remains voluntary, plans that use them must now comply with these codified standards, rather than abiding by informal guidance. Note that cards must also be restricted to the current plan year only, with no balance rollovers into a new plan year.
In addition, CMS is finalizing a new transparency requirement: health plans must publicly post their plan-developed Special Supplemental Benefits for the Chronically Ill (SSBCI) eligibility criteria on their public-facing website. This is a new operational compliance obligation for plans offering SSBCI. Notably, CMS did not finalize the proposed prohibition on marketing the dollar value of supplemental benefits, which is a significant pullback from the proposed rule.
5. Marketing and Agent/Broker Rules: Targeted Deregulation
In a notable deregulatory shift, CMS eliminated the 12-hour delay requirement between educational events and marketing events at the same location. Health plans and agents/brokers may now hold a marketing event directly following an educational event at the same location, provided attendees are notified of the transition and given sufficient opportunity to leave. This reverses the 2023 requirement and reduces compliance burden on plans and agents conducting community outreach.
CMS also modified Third Party Marketing Organization (TPMO) disclaimer requirements, adjusting the timing from “within the first minute of a sales call” to “prior to the discussion of any benefits,” and updated the disclaimer language to reflect the number of organizations and plans the TPMO represents. CMS also reduced the required retention period for call recordings from 10 years to 6 years. Plans that rely on TPMO distribution channels should review their call scripts, training materials, and recording retention policies for CY 2027 applicability, with marketing changes effective October 1, 2026.
The CY 2027 regulatory environment rewards payers with administrative systems that can adapt quickly, from risk adjustment data integrity to supplemental benefit configuration to member-facing disclosure requirements. HealthEdge’s integrated platform of solutions— including HealthRules® Payer, HealthEdge Source
, HealthEdge Provider Data Management, GuidingCare®, and Wellframe—is purpose-built to support health plans in navigating these compounding, cross-functional changes with the speed and precision the regulatory calendar demands.
Learn more about how integrated HealthEdge solutions enable health plans to stay in line with shifting Medicare Advantage standards. Download our eBook: Navigating the New Medicare Advantage Reality—Why Member Engagement and the Right Platform Is Your Competitive Advantage.
About Bettina Vanover, CHC, CIPP/US
Bettina Vanover is the Regulatory Principal at HealthEdge. She joined the team in 2025, bringing more than 20 years of experience in the healthcare industry. Bettina earned her MBA in Business, Health Administration from the University of Colorado, and her BA in Health Policy & Administration from Penn State University. Follow Bettina on LinkedIn.
