In this conversation, Andrea Maresca, Senior Principal at Health Management Associates (HMA), caught up with Tim Courtney, Director, Wakely, and Jonathan Blum, Co-Founder & Managing Partner at Health Transformation Strategies, LLC, to unpack the biggest questions emerging from the Calendar Year (CY) 2027 Medicare Advantage (MA) and Part D Advance Notice. Of particular interest was the Centers for Medicare & Medicaid Services’s (CMS’s) proposed risk adjustment and diagnosis source changes, which are drawing significant attention across the industry. 

Q: The headline is “flat” payments. How should the market interpret CMS’s projected rate change? 

Tim Courtney: CMS projects a net average payment change of just +0.09 percent for CY 2027—about $700 million (M). The effective growth rate is about 4.97 percent, but it’s largely offset by risk model and normalization changes and the proposed diagnosis source policy. 

Jon Blum: Exactly. It’s important to note that CMS’s impact projections are based on the change in its average payments. Its proposed policies will have much more far-reaching distributional impacts, depending on the diagnoses of their enrolled members. At the same time CMS recently proposed changes to its Star Ratings methodologies. Over time, we could see quite significant changes to the balance of Medicare Advantage payments distributed across the country that could significantly affect benefit offerings and premium amounts. 

Q: What’s most surprising in the Advance Notice for 2027? 

Blum: The diagnosis source tightening is the big one. CMS proposes excluding diagnoses from “unlinked Chart Review Records” from risk score calculation starting in CY 2027. That signals a continued progression by the agency toward encounter-anchored data integrity. Assuming this policy is finalized, Medicare Advantage plans must continue to invest in systems to respond to CMS’s program integrity focus. 

Courtney: And it’s not only chart review. CMS also proposes excluding diagnoses from audio-only services for Part C and similarly for Part D. Operationally, that’s a big deal. Plans need to understand where diagnoses originate, how they’re supported, and what the downstream risk adjustment factor (RAF) impact looks like by segment and provider channel. 

Q: The Wakely team estimates a different “feel” than CMS’s topline. What does Wakely’s analysis add? 

Courtney: Wakely’s summary helps translate CMS components into both benchmark and plan payment change. 

Blum: This point is really key. Wakely’s analysis flags that rebasing/repricing impacts aren’t fully reflected yet, which means county-level outcomes can diverge materially once the final Rate Announcement is released. The rebasing could be particularly volatile this year as CMS adjusts for rural emergency hospital payments and the removal of anomalous and suspect DME claims. Both adjustments vary by geographic area. 

Q: How should plans think about bid strategy and benefit pressure for 2027? 

Courtney: The tighter risk adjustment environment could squeeze rebates and supplemental benefit richness—especially if bids don’t adjust quickly. Wakely estimates risk-adjusted bid and rebate revenue is down roughly 0.35 percent under a set of simplifying assumptions, underscoring the margin sensitivity. 

Practically this means plans should run a few scenarios: 1) RAF compression from diagnosis source changes, 2) normalization updates, and 3) Star-related shifts—even if the Star change is estimated to be small nationally. 

Blum: I’d add provider contracting and clinical program return on investment (ROI) will likely be an even greater focus for Medicare Advantage plans. When risk score lift is constrained, the value of medical cost management and quality performance becomes more important. We have seen tremendous pushback by healthcare providers over the greater use of prior authorization, with some major health systems dropping their contracts with Medicare Advantage plans altogether. Medicare Advantage plans will have to carefully balance the need to reduce medical expenditures and maintain their provider networks to attract enrollment. Establishing strong partnerships with provider systems will be more important than ever. 

Q: What do plans need most right now? 

Courtney: This is where integrated strategy and actuarial and policy expertise really matter. HMA is supporting stakeholders with payment impact modeling, scenario analysis, and advisory services tied to benchmark rebasing, risk adjustment, Star Ratings, product strategy, and Part D payment policy, so clients can translate the Notice into concrete bid and operating decisions. 

From Wakely’s side, the detailed benchmarking and methodology interpretation helps clients quantify what CMS’s technical updates mean in dollar terms and across geographies. 

The CY 2027 Advance Notice is also a reminder that average impacts hide portfolio impacts. The plans that model “where the change hits” (diagnosis sources, provider channels, county mix, Stars trajectory) will be best positioned heading into April’s final Rate Announcement. 

Blum: And from a policy lens, plans need to connect the dots. CMS’s proposed rate notice is both an articulation of its current priorities and continued progression toward more payment accuracy, encounter-linked data, and program integrity. Medicare Advantage plans should be both prepared to operationalize these policies and to work with the agency to ensure its policies better serve Medicare beneficiaries. 

Medicare Advantage plan leaders will be those organizations that operationalize these policy directions early, constructively engage in the policy process, and form far stronger partnerships with health care providers. 

You can find more insights on the important proposed changes in plan payments, risk adjustment, and other financial and regulatory requirements for 2027 in Wakely’s summary analysis, Advance Notice of Methodological Changes for CY 2027 MA Capitation Rates and Part C and Part D Payment Policies. 

The Centers for Medicare & Medicaid Services (CMS) 2027 Notice of Benefit and Payment Parameters (NBPP) proposed rule, published February 11, 2026, arrived at a pivotal moment for the Affordable Care Act (ACA) Marketplaces. The temporary enhanced premium tax credits (ePTCs), first expanded in 2021 and extended through 2025, expired at the end of last year, returning Marketplace subsidies to their original ACA structure in 2026. As we discussed in earlier articles (here and here), that shift is already affecting affordability, plan selection, and enrollment dynamics—particularly for consumers who are ineligible for premium assistance. 

The proposed 2027 NBPP represents a significant reset for the Marketplace, reflecting CMS vision and policy priorities to strengthen program integrity while expanding plan design flexibility and consumer choice as a pathway to affordability, as well as policies to defer to state authority. Healthcare organizations and other interested stakeholders may submit comments on the proposed rule through March 13, 2026. 

The remainder of this article addresses the key policy proposals and considerations for issuers, states, and consumer groups. 

CMS’s Proposals 

The proposed NBPP for 2027 sets standards for the Exchanges and ACA-compliant individual and small group markets and updates payment parameters for risk adjustment and risk adjustment data validation (RADV). The rule also implements changes approved under the 2025 Budget Reconciliation Act, (P.L. 119-21, OBBBA) and includes a range of policies spanning plan certification, eligibility and verification, and Exchange oversight. 

Expanded Plan Design Flexibility 

CMS proposes to discontinue standardized plan options in the Federally-facilitated Marketplace (FFM) and remove limits on the number of non-standardized plans offered by issuers on the FFM and state-based Marketplaces on the federal platform (SBE-FPs). Issuers would be permitted to decide whether to discontinue existing standardized or chronic condition plans or continue them with modified cost sharing. 

Considerations: This change is designed to allow greater innovation in plan design. It also raises questions about the potential return of a more complex Marketplace shopping experience for consumers who will have to shift through more plans. 

Certification of Non-Network QHPs 

One of the most consequential proposals would allow “non-network” plans to be certified as qualified health plans beginning in 2027. These plans would not rely on contracted provider networks. Instead, they would set benefit payment amounts and require issuers to demonstrate that sufficient providers—including Essential Community Providers (ECPs) and mental health and substance use disorder providers—are willing to accept those amounts as payment in full. 

Considerations: CMS positions non-network plans as a way to create lower premium options. For states and issuers, this proposal introduces new oversight and operational considerations related to access standards, consumer protections, the risk of balance billing or access gaps for consumers, and potential market instability. 

Changes in Catastrophic and Bronze Cost Sharing 

The proposed rule would further expand access to catastrophic plans by codifying hardship exemptions for individuals ineligible for advance premium tax credits (APTCs) or cost-sharing reductions (CSRs) because of projected income. CMS also proposes to allow multiyear catastrophic plans with contract terms of up to 10 consecutive years. In addition, CMS proposes new flexibility for certain bronze plan designs in the individual market. In both cases, CMS proposes to allow catastrophic and bronze plans to exceed the annual maximum out-of-pocket limit. 

Consideration: These policies reflect CMS’s emphasis on affordability through lower premiums and expanded consumer choice, while shifting more financial risk to enrollees through higher cost sharing. 

Network Adequacy and Essential Community Providers 

CMS proposes to give states greater discretion in provider access for network adequacy and ECP certification reviews, including allowing federally funded exchange (FFE) states to conduct their own reviews if CMS determines they have sufficient authority and technical capacity. CMS also proposes to reduce the minimum percentage of ECPs that issuers must include in their networks from 35 percent to 20 percent. 

Considerations: These changes reduce federal prescriptiveness and could lower issuer compliance costs but also place more responsibility on states to monitor access and ensure that vulnerable populations are not adversely affected. 

Essential Health Benefits and State Mandates 

The proposed rule would prohibit issuers from including routine non-pediatric (adult) dental services as an Essential Health Benefit (EHB). More significantly for states, CMS proposes changes to cost defrayal requirements for state-mandated benefits, requiring states to cover the cost of benefits considered “in addition to EHB” under specified criteria, even if those benefits are embedded in the state’s EHB benchmark plan. 

Consideration: These changes could have direct budgetary implications for states, pricing implications for issuers, and could stunt or potentially decrease benefits for consumers. 

Program Integrity and Increased Eligibility Verification 

CMS includes a robust set of program integrity provisions, including: 

• Strengthened standards for agent, broker, and web broker marketing practices 
• Required use of a US Department of Health and Human Services (HHS)-approved consumer consent and application review form 
• Codification of OBBBA policies and reintroduction of Program Integrity rule provisions not previously implemented, including expanded special enrollment period (SEP) verification and increased eligibility standards for enrollees applying for APTCs (see Navigating CMS’s 2025 Marketplace Rule: What It Means for ACA Marketplaces, Insurers, and Consumers) 
• Implementation of the State Exchange Improper Payment Measurement (SEIPM) program for state-based Marketplaces 

Consideration: These policies continue CMS’s heightened scrutiny of enrollment activity and subsidy eligibility. CMS’s policies are likely to increase data matching issues (DMIs), which could increase burden on Marketplaces and enrollees, resulting in reduced enrollment. 

Preparing for Policy Driven Changes in ACA Marketplaces 

The 2027 NBPP underscores a clear policy shift away from extending federal subsidies toward advancing a Marketplace framework that emphasizes program integrity, state flexibility, and expanded plan design options as mechanisms to promote affordability and consumer choice. 

The proposed rule sets the stage for significant strategic and operational decisions for issuers and states ahead of the 2027 plan year. Health Management Associates (HMA), including Wakely, an HMA company, works with issuers modeling enrollment and risk shifts and to assist in pricing decisions. States also should consider the need for new strategies and approaches to adapt to federal policy changes that are expected for ACA Marketplace programs. 

For more information about the policies described in this article, support with scenario-based modeling of enrollment and data-informed strategy development for 2027 and beyond, please contact our experts Michael Cohen, Lina Rashid, or Zach Sherman.