AMA Secures Key Wins in CY 2027 Medicare Advantage Final Rule for Physicians
The American Medical Association secured key provisions in the Centers for Medicare & Medicaid Services’ final rule for the 2027 Medicare Advantage program, released April 2, 2026, affecting physicians nationwide. According to CMS officials, the rule includes a 2.48% increase in Medicare Advantage payments and updates to Star Ratings that influence quality bonus payments starting January 1, 2027.
This increase exceeds the agency’s earlier advance notice estimate of 0.09%, or approximately $700 million. CMS officials attributed the higher payment rates to updated input costs, the 2026 Star Ratings that determine quality bonus payments, and refinements in risk adjustment methodologies.
The final rule includes a net average increase of 2.48% in Medicare Advantage plan payments for contract year 2027, translating to more than $13 billion in additional payments compared to 2026, according to the Centers for Medicare & Medicaid Services.
The 2026 Star Ratings, which influence 2027 quality bonus payments, underwent significant revisions under the final rule, officials said. CMS finalized the removal of the Excellent Health Outcomes for All reward measure and eliminated 11 administrative process measures from the Star Ratings system. These changes are intended to better align quality metrics with patient outcomes and contributed to the overall payment increase, CMS representatives confirmed.
Regarding risk adjustment, CMS opted not to fully adopt the proposed updates to the Medicare Advantage risk adjustment model. Instead, the agency will use the 2024 model calibrated with Original Medicare data from 2018 diagnoses and 2019 expenditures, replacing the advance notice’s suggested model based on 2023 diagnoses and 2024 expenditures. CMS also refined the exclusion of diagnosis information from unlinked chart review records in risk scoring and delayed the implementation of a risk-adjusted model building on version 28, according to the final rule published in the Federal Register on April 6, 2026.
In Medicare Part D, the rule implements several reforms mandated by the Inflation Reduction Act (P.L. 117-169). CMS eliminated the coverage gap phase, reduced the annual out-of-pocket threshold for beneficiaries, and removed cost-sharing requirements for enrollees in the catastrophic phase. The agency also formalized the Medicare Part D Manufacturer Discount Program to apply to 2027 Part D plans, officials said.
Operational changes for Medicare Advantage plans include the removal of the requirement to send mid-year notices about unused supplemental benefits. CMS also rolled back certain health equity requirements, including those related to MA utilization management committees and quality improvement programs. While the agency acknowledged public comments on these changes, CMS did not provide direct responses but indicated the input will inform future rulemaking.
CMS emphasized that the finalized policies aim to strengthen accountability and ensure the long-term sustainability of the Medicare Advantage and Part D programs. The agency highlighted three guiding principles for MA risk adjustment: simplicity, competition, and accurate risk-based payments. CMS officials said these principles support program integrity, efficient use of healthcare resources, and reduced administrative burden.
The 2027 Medicare Advantage and Part D Rate Announcement, released April 6, 2026, complements the final rule by improving payment accuracy across both programs. CMS stated that the updates reflect growth rates in underlying costs and coding differentials between Medicare Advantage and Original Medicare, ensuring payments align with beneficiary health risk.
The final rule, which revises Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), and Medicare cost plans, takes effect January 1, 2027. It was published in the Federal Register on April 6, 2026. CMS officials said the policies are designed to maintain a stable Medicare Advantage program that offers beneficiary choice while stewarding taxpayer funds responsibly.
