By Neil Patil and Carrie Graham
On January 26, 2026, the Centers for Medicare & Medicaid Services (CMS) proposed as part of the Calendar Year (CY) 2027 Advance Notice that Medicare Advantage Organizations (MAOs) will no longer be able to submit diagnoses gleaned through “unlinked” chart reviews to bolster their enrollees’ risk scores. CMS considers chart reviews to be “unlinked” if they are done outside of an actual clinical encounter. If finalized, this change is expected to decrease MA payments by 1.53%, or over $7 billion, in 2027 (compared to 2026). This, along with a lower-than-expected increase in payment rates, represents one of the most impactful changes to MA payment in the past decade.
Just over half of Medicare beneficiaries choose to enroll in private managed care plans called Medicare Advantage (MA). These plans are paid a per member per month (PMPM) rate for each enrollee that is based on a risk score. The risk score is determined by the diagnoses that the MA plan submits to CMS, with more serious diagnoses typically increasing the amount that the plan is paid—ensuring the plan is paid more for enrollees who need more complex care.
Diagnoses for Risk Adjusted Payment to MA plans
The diagnoses that are used to calculate the risk score and PMPM payment for every MA enrollee come from three different sources:
- Encounter data: In each clinical visit (including primary care, hospital visits, or in-home visits), the provider records—or “codes”—all the diagnoses they address during that visit. These codes are then recorded in encounter data, which is later submitted to CMS to inform risk scores.
- Health Risk Assessments (HRA): An HRA is a face-to-face assessment of a patient by a clinician to identify problems or diagnoses that were missed during previous visits, and potentially find gaps in care. HRAs are often conducted by third-party vendors hired by MAOs via home or video visits with enrollees, and diagnoses from HRAs are typically reported in an encounter data record. Government oversight bodies have estimated that in home HRAs account for $7.5 billion annually in additional risk adjusted payment to MA plans.
- Chart Review Records (CRR): Currently, MA plans can conduct retrospective chart reviews with the purpose of identifying diagnoses that were not recorded in encounter data. MAOs often contract with third-party vendors or use artificial intelligence (AI) to review records and automate the assignment of diagnostic codes. The majority of MAOs review their enrollees’ medical history to identify diagnoses that may have been left off of the claims submitted by the provider.
Linked vs. Unlinked Chart Review Records
Currently, there are two types of CRRs that are submitted by MAOs for payment: linked CRRs and unlinked CRRs. Linked CRRs refer to CRRs with diagnoses that appeared in a previously submitted encounter data record—meaning they were coded by a provider as a diagnosis that was addressed during a clinical visit. Unlinked CRRs are CRRs with diagnoses that do not appear in a separate encounter data record. Thus, they are not associated with a specific service or care.
CMS Proposed this Change to Reduce Overpayment to MA Plans
The original purpose of the MA program was to save Medicare money by leveraging managed care delivery systems to reduce the use of low-value care. However, a January 2026 analysis by the Medicare Payment Advisory Commission (MedPAC) found that MA payments are currently $76 billion above what spending would have been in Traditional Medicare (i.e. Medicare Fee-for-Service). The higher spending in MA is, in part, attributed to a practice called “upcoding,” a term that generally refers to providers or payers billing for services at a higher level of complexity than was actually provided or documented in the file.
Prohibiting the use of diagnoses gleaned from unlinked chart reviews is a step that has been recommended by government oversight bodies and MA payment experts to reduce the impact of upcoding. The Health and Human Services Office of the Inspector General (HHS-OIG), identified the use of CRRs (as well as HRAs) as a major driver of upcoding and overpayment in MA.
A 2019 HHS OIG study found that MAOs almost always used CRRs as a tool to add, rather than delete diagnoses, and that unlinked CRRs resulted in an estimated $2.7 billion in potential overpayments to MAOs in 2017. In its report, the HHS-OIG recommended that CMS reassess the risks and benefits of allowing unlinked CRRs to be used as a source of diagnoses for risk adjustment. CMS concurred with the recommendation and stated the agency would conduct a review of unlinked CRRs to determine whether they should be used as sources of diagnoses for risk adjustment. Nearly 58% of MA contracts submitted unlinked CRRs in 2022, and CMS specifically noted that excluding these unlinked CRRs from risk adjustment “may reduce differences in payment” due to “differential coding across MA organizations.” Ultimately, as part of the CY 2027 Advance Notice, CMS proposed to exclude diagnoses from unlinked CRRs for risk-adjusted payments to MAOs.
Other CMS Policies that could Improve MA Payment Accuracy
In the CY 2027 Advance Notice, CMS also proposed a 0.09% payment increase for MA plans in 2027, which amounts to over $700 million. Even when accounting for the 2.45% MA risk score trend, this proposed payment increase represents the second smallest proposed MA payment percentage increase over the past decade. Many expected a much larger proposed payment increase to MA. If the proposal to exclude unlinked CRRs is finalized, the policy is estimated by CMS reduce MA overpayments by $7.12 billion in 2027.
There are additional changes proposed in the CY 2027 Advance Notice that may further improve payment accuracy to MAOs:
- Version 28 Risk Adjustment Model: The full phase-in of the 2024 MA Risk Adjustment Model (v28) could further reduce overpayment to MA plans. This version, partially implemented in the CY 2024 Rate Announcement, restructured condition categories using the International Classification of Diseases-10 (ICD-10) system. It also removed several diagnoses associated with coding variation from risk-adjusted payments. The v28 model has been phased-in over three years, with the full phase-in beginning in 2026. In January 2026, MedPAC reported that the v28 model reduced coding intensity in recent years, and corresponded with reduced payments, stable supplemental benefits, and high plan availability.
- Updated Data Years: CMS is also proposing to calibrate the v28 model using more recent Traditional Medicare data. These updates reflect more up-to-date costs associated with various diseases, conditions, and demographic characteristics.
- Exclude Audio-Only Diagnoses: Under the MA program, diagnoses from telehealth visits may be used for risk adjustment if they are from an approved inpatient, outpatient, or professional service. CMS is also proposing to calibrate the v28 model by excluding the underlying Traditional Medicare diagnostic data from audio-only services.
The No UPCODE Act
CMS’s proposal to exclude unlinked CRRs aligns relatively closely to not only HHS-OIG recommendations, but also to bipartisan legislation in Congress. In March 2025, Senators Bill Cassidy (R-LA) and Jeff Merkley (D-OR) re-introduced the No Unreasonable Payments, Coding, or Diagnoses for the Elderly (No UPCODE) Act. The legislation goes further than CMS’s proposal as it would require CMS to exclude diagnoses from both linked and unlinked CRRs as well as HRAs. The Congressional Budget Office estimated the bill could result in $124 billion in savings over 10 years.
After early discussions in the Senate to potentially include provisions of the No UPCODE Act in the 2025 reconciliation package, many Republican senators raised concerns. Additionally, CMS raised some potential operational complexities with identifying and excluding diagnoses from HRAs. However, CMS’s proposal may signal a renewed congressional interest in No UPCODE Act.
Next Steps
Ensuring that MA payments are accurate and that beneficiaries are receiving the care they need is critical to an effective MA program. Policymakers must balance the appropriate use of tools such as HRAs and CRRs to ensure patients receive the care they need, while preventing these tools from being exploited to drive overpayments to MA plans. CMS’s proposal to exclude diagnoses from unlinked CRRs may improve MA payment accuracy and ensure MA plans are paid appropriately for the care provided to beneficiaries. As policymakers consider how to improve MA payment accuracy, they may want to consider proposals to further limit or eliminate the use of HRA and chart review data in risk adjustment.
The comment period on the CY 2027 Advance Notice is open, and all comments must be submitted to CMS by February 25, 2026. The CY 2027 Rate Announcement will be published no later than April 6, 2026.
Other proposals to modify the MA risk adjustment process can be found in MPI’s Compendium of MA and Part D proposals.