The day after CMS released its final 2027 Medicare Advantage and Part D payment rule, Chris Klomp, director of Medicare and deputy administrator at the agency, sat down with Health Tech Nerds Radio podcast to walk through what changed, what it means and what comes next.
On April 6, CMS said it would increase MA payments by 2.48%, or more than $13 billion, in 2027. The rate hike follows a proposed 0.09% rate change, which drew industry ire and saw more than 40,000 comments submitted. Last year, CMS finalized a 5.06% rate increase worth $25 billion.
Almost 35 million people were enrolled in MA plans in 2025, representing roughly 55% of eligible Medicare beneficiaries. In March, the Medicare Payment Advisory Commission estimated that MA payments will run 14% higher than fee-for-service Medicare in 2026, an overpayment the commission attributed to favorable enrollee selection and coding intensity, amounting to an extra $76 billion for the MA industry.
CMS said the finalized 2027 rate increase stemmed from updated medical cost trend data through the end of 2025, a continuation of its ongoing efforts to recalibrate risk adjustment payments to account for years of intensive coding, and delaying a proposed update to the risk adjustment model itself.
“V28 is obviously just on its third year of implementation,” Mr. Klomp said on the podcast. “That has been a significant change for the industry, and I don’t just mean the Medicare Advantage issuers. I mean for providers who also participate and provide care for our beneficiaries alongside those plans and who are in global or sub-capitated risk arrangements.”
In the final notice, CMS also finalized the exclusion of diagnoses from unlinked chart review records from risk score calculations.
“We will not reward risk coding games or rev cycle games,” Mr. Klomp said. “We want to reward participants who win on the basis of helping our beneficiaries lead their healthiest lives.”
CMS, he said, has “many additional policy levers” in its regulatory toolbox and will continue scrutinizing how plans approach risk adjustment coding.
“We are sending a very loud signal, not just to Medicare Advantage payers, but to providers who care for our beneficiaries, and frankly, to all segments of the healthcare economy, that the days of unlimited increases in rate must end,” he said.
Mr. Klomp’s comments come amid notable enforcement activity around MA risk adjustment practices this year alone. CMS is involved in an ongoing enrollment sanction threat with Elevance Health over risk adjustment data reporting issues, which Elevance has said is a broader policy and payments dispute rather than a data submission problem.
Separately, Kaiser Permanente agreed earlier this year to pay a record $556 million to resolve Justice Department allegations that it violated the False Claims Act by submitting invalid diagnosis codes for MA enrollees. Prosecutors alleged Kaiser pressured physicians to add diagnoses to patient records after visits had occurred to inflate payments. Kaiser said it settled to avoid prolonged litigation and admitted no wrongdoing.
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