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.

This increase, finalized on April 2, 2026, and published in the Federal Register on April 6, represents a significant rise from the 0.09% increase estimated in the earlier Advance Notice, CMS officials said. The payment update reflects adjustments to coding differentials between MA and Original Medicare and aims to support a sustainable MA program while maintaining beneficiary choice and stewardship of taxpayer funds.

The final rule for Contract Year 2027 includes a 2.48% increase in Medicare Advantage (MA) payments, projected to add approximately $13 billion in revenue for plans compared to 2026, according to the Centers for Medicare & Medicaid Services (CMS).

CMS finalized several changes to the Star Ratings quality measurement system, removing 11 measures focused on administrative processes that showed consistently high performance and limited variation between plans. These deletions take effect starting with the 2027 measurement year and the 2029 Star Ratings, officials said. In their place, a new measure addressing behavioral health gaps—Part C Depression Screening and Follow-Up—will be added. CMS noted that these changes streamline the measure set to emphasize areas where beneficiaries can better distinguish plan performance. The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) summarized these simplifications in their April 21, 2026, analysis of the rule.

Part D reforms codify provisions of the Inflation Reduction Act (IRA) of 2022, including eliminating the coverage gap phase and establishing a reduced annual out-of-pocket threshold of $2,100 for 2026, with statutory adjustments for subsequent years. CMS finalized the removal of cost sharing for enrollees in the catastrophic coverage phase, which now consists of three phases: deductible, initial coverage, and catastrophic. The rule also incorporates the Manufacturer Discount Program, which replaced the Coverage Gap Discount Program as of January 1, 2025, aligning Part D benefits with statutory requirements, CMS said.

The rule updates risk adjustment policies by excluding diagnoses from unlinked chart review records, except for beneficiaries switching MA organizations, and excluding diagnoses coded from audio-only services identified by modifiers 93 and FQ. These changes are expected to reduce the risk adjustment diagnosis pool, producing net savings to the Medicare Trust Fund in 2027. CMS officials emphasized principles of simplicity, competition, and accurate payments reflecting health risk in their risk adjustment methodology. Plans heavily reliant on unlinked chart review records or audio-only coding may see greater impacts on risk scores and payments.

Several deregulatory provisions affecting marketing and enrollment take effect October 1, 2026. CMS eliminated the 48-hour Scope of Appointment waiting period and the 12-hour prohibition on educational-to-marketing events, rescinded the requirement for MA plans to send mid-year notices about unused supplemental benefits, and relaxed marketing and agent broker requirements. The Medicare Rights Center publicly criticized these relaxations on April 16, 2026. Additionally, the rule exempts account-based plans such as health reimbursement arrangements (HRAs), flexible spending accounts (FSAs), and health savings accounts (HSAs) from creditable coverage disclosure requirements.

Regarding supplemental benefits and equity, CMS removed the obligation for plans to issue mid-year communications on unused supplemental benefits but retained the supplemental benefits provision after initially proposing its removal. This retention was noted by commenters as important for dually eligible individuals. The agency also rescinded the requirement for MA quality improvement programs to include activities aimed at reducing health disparities and revised the “cultural considerations” provision to revert to pre-2023 language on equitable access. The Center for Medicare Advocacy opposed the rescission of mid-year notices in comments submitted on the November 28, 2025, proposed rule.

Most provisions of the rule will apply to coverage beginning January 1, 2027, while marketing and communications changes take effect October 1, 2026, according to CMS. The rule finalizes policy and technical changes to Medicare Advantage, Part D, and Medicare Cost Plan programs with the stated goal of improving quality and access to care. CMS officials highlighted the rule’s alignment with statutory requirements and efforts to balance beneficiary protections with program flexibility.