By Neil Patil
On January 26, 2026, the Centers for Medicare & Medicaid Services (CMS) announced, as part of the Calendar Year (CY) 2027 Advance Notice, a proposed 0.09 percent, or over $700 million, payment increase for MA plans in 2027. But inconsistencies in how this amount was reported may underestimate the actual proposed increase in MA payments for 2027.
Each year, the Advance Notice proposes updates to MA and Part D payment policies and the subsequent Rate Announcement, which is statutorily required to be issued by the first Monday in April, finalizes MA and Part D payment policies for the upcoming calendar year. CMS also issues a fact sheet for each Advance Notice and Rate Announcement, which includes a “year-to-year percentage change” table that provides the expected average change in MA payment relative to the previous year.
How this “year-to-year percentage change” table presents the information can influence the public’s perception of the proposed and final MA payment rates. Over the years, CMS has not consistently included projected increases in payment due to increases in MA diagnosis coding and risk scores in the calculation of the final expected average change in MA payment. In this blog, we will break down how to evaluate the presented “year-to-year percentage change,” and what the number might really mean once all factors are accounted for.
CMS’s 0.09 Percent Expected Average Increase in MA Payments for CY 2027 Does Not Include the MA Risk Score Trend of 2.45 Percent
Based on the proposed MA payment policies in the CY 2027 Advance Notice, CMS estimates that MA plans will receive a 0.09 percent average increase, or over $700 million, in MA payments from 2026 to 2027. However, a footnote below this table indicates that this total “does not include an adjustment for underlying coding trend in MA” and “For CY 2027, CMS expects the MA risk scores to increase, on average, by 2.45% due to the underlying coding trend.” This adjustment for the underlying coding trend is referred to as the MA risk score trend, which represents an estimated industry average annual change in risk scores for the upcoming year, and accounts for the average change in population and coding practices across all MA plans. The MA risk score trend is estimated as the average annual change in MA risk scores for MA enrollees over a three-year period calculated using the model(s) proposed for the payment year. It is also important to note that different MA risk adjustment models have resulted in different risk score trends, as evidenced by the lower trend under 2024 MA risk adjustment model (v28). Meaning, this model has resulted in less increases in codes year-over-year than the previous model (v24).
CMS has been Inconsistent in Including the MA Risk Score Trend in its Reported Calculation of the Expected Average Increase in MA Payments
CMS has historically been inconsistent in including the MA risk score trend in the “year-to-year percentage change bottom-line table” which can be found in each Advance Notice and Rate Announcement fact sheet, making it difficult to accurately compare the year-over-year expected percentage change in average MA payments. While the MA risk score trend is not incorporated into the risk adjustment model or benchmarks, CMS typically provides the MA risk score trend in the Advance Notice Fact Sheet and Rate Announcement Fact Sheet as an element for understanding the complete revenue picture for MA organizations in the payment year. In fact, in a 2023 Frequently Asked Questions on the MA 2024 Advance Notice, CMS stated “it is critical that MA plans consider the total impact of all proposed policies and factors in the Advance Notice together, including, for example, the MA risk score trend.”
However, CMS has only included the MA risk score trend as a row in the Advance Notice or Rate Announcement “year-to-year percentage change” table in six of the last twelve Advance Notices/Rate Announcements. In the six years where the MA risk score trend was not included in this table, CMS typically included the MA risk score trend figure as a footnote, with the exception of CY 2022 where CMS did not report the MA risk score trend in its Advance Notice or Rate Announcement fact sheet. This inconsistent approach can make it difficult to accurately assess the expected average change in MA revenue between different calendar years. For instance, CMS reported last year that the expected average change in MA revenue was 5.06 percent from CY 2025 to CY 2026 (which did not include the MA risk score trend), a modest increase from the 3.7 percent increase in the expected average change in MA revenue from CY 2024 to CY 2025 (which did include the MA risk score trend). However, when incorporating the MA risk score trend, the expected average change in MA revenue from CY 2025 to CY 2026 is closer to 7.16 percent, compared to the 3.7 percent increase in the expected average change in MA revenue from CY 2024 to CY 2025. Such inconsistencies in reporting of the top-line number can unintentionally skew stakeholders’ perception of what MA payment will look like compared to the previous year.
Year-to-Year Expected Average Change in MA Revenue when Incorporating the MA Risk Score Trend, Calendar Years 2016-2027
| Calendar Year | CMS Reported Expected Average Change in MA Revenue (%) | MA Risk Score Trend | Expected Average Change in MA Revenue, including the MA Risk Score Trend (%) | |||
| Advance Notice | Rate Announcement | MA Risk Score Trend | Is the MA Risk Score Trend Included? | Advance Notice | Rate Announcement | |
| 2016 | 1.05 | 3.25 | 2 | Yes | 1.05 | 3.25 |
| 2017 | 3.55 | Not Reported | 2.2 | Yes | 3.55 | Not Reported |
| 2018 | 2.75 | 2.95 | 2.5 | Yes | 2.75 | 2.95 |
| 2019 | 1.84 | 3.4 | 3.1 | No | 4.94 | 6.5 |
| 2020 | 1.59 | 2.53 | 3.3 | No | 4.89 | 5.83 |
| 2021 | 0.93 | 1.66 | 3.56 | No | 4.49 | 5.22 |
| 2022 | 2.82 | 4.08 | Not Reported | No | – | – |
| 2023 | 7.98 | 8.5 | 3.5 | Yes | 7.98 | 8.5 |
| 2024 | 1.03 | 3.32 | 4.44 | Yes | 1.03 | 3.32 |
| 2025 | 3.7 | 3.7 | 3.86 | Yes | 3.7 | 3.7 |
| 2026 | 2.23 | 5.06 | 2.1 | No | 4.33 | 7.16 |
| 2027 | 0.09 | N/A | 2.45 | No | 2.54 | N/A |
Sources: Data was compiled as reported in the CMS Advance Notice Fact Sheet and CMS Rate Announcement Fact Sheet, as reported by CMS with respect to each calendar year from 2016 to 2027.
For the CY 2027 Advance Notice, CMS did not include the MA risk score trend in its calculation of the expected average change in MA revenue. When incorporating the MA risk score trend, the expected average change in MA revenue is 2.54 percent, as opposed to the CMS reported figure of 0.09 percent. For CY 2027, the MA risk score trend represents the estimated average annual change in MA risk scores from 2026 to 2027 calculated by using MA risk scores from 2022 to 2024 and using the 2024 CMS-HCC risk adjustment model (v28). We also note that historically, the final Rate Announcement tends to report a higher expected average change in MA revenue, compared to the Advance Notice, largely due to increases in the effective growth rate.
CMS Should Maintain a Consistent Methodology in its Calculation and Reporting of the Expected Average Increase in MA Payments
There has been an ongoing debate regarding whether the MA risk score trend should be included in the calculation of the expected average change in MA revenue. Some have stated that including the trend is “neither supported nor relevant” in the calculation of the expected average change in MA revenue, because the estimate is not part of the benchmark calculation and the agency provides little information on how the figure is calculated. Others, including CMS, have supported the inclusion of the MA risk score trend as a “key factor in evaluating the total level of MA payments” and the exclusion of the MA risk score trend “would underestimate MA payment levels to MA plans.” Ultimately, CMS must determine whether to include the MA risk score trend in its calculation of the expected average change in MA revenue and use a consistent approach each year in calculating this expected average change in MA payments. This will ensure MA plans and the public fully understand the impact of each year’s Advance Notice and Rate Announcement on MA payments.