Key Points
- CMS will exclude most unlinked chart review diagnoses from 2027 risk scores, increasing the importance of complete encounter data.
- Better encounter submission and documentation during visits can support risk adjustment and help plans capture evidence for clinical Star measures.
- Coordinated outreach can connect risk adjustment and quality work, while unsupported diagnoses still require separate review and removal.
CMS now wants to see that care was actually provided for the conditions eligible for payment. I call this a care trail, and much of the work needed to build it also supports the clinical Star measures.
In April, CMS changed which diagnoses can be counted toward a Medicare Advantage plan’s risk-adjusted payment. The revenue impact is the obvious concern. I think the more useful question is what risk adjustment teams should do differently now, because several of those changes can also help Star Ratings. That question became more important on October 8, when CMS released the 2027 Star Ratings and fewer contracts reached four stars.
What Changed in Risk Adjustment, and What It Costs
Medicare Advantage plans are paid more for members who have more documented health conditions. For years, many plans have added conditions by reviewing medical charts after the visit. Starting with 2026 dates of service, CMS will no longer count diagnoses from chart reviews that are not linked to an encounter with a provider. There is an exception for members who join from a plan owned by a different parent company [1].
CMS put it this way: “diagnoses that are not associated with a service will not be considered for risk adjustment” [2]. I call this a care trail. CMS wants to see that care was actually provided for each condition it pays for.
CMS estimates the average impact at -1.53% of payments, which is already included in the 2.48% overall payment increase it projected for 2027 [3]. To give a simple example, 1.53% of $1 billion is about $15 million. This is an average and not a forecast for any one plan. CMS expects plans that relied heavily on unlinked chart reviews to be impacted more [2].
The timing is important for finance teams. Payments for January through June 2027 will not include this change. CMS will apply it in the midyear risk score update and adjust the first-half payments in July 2027. In November 2026, CMS will reissue the reports that show which submitted diagnoses it will allow, so plans will see CMS’s view of their own numbers [1].
Four Changes for the Risk Adjustment Team, and What Each One Means for Stars
Fix Encounter Submission First
Not every excluded diagnosis means the member was never seen. In some cases the visit happened, but the encounter was never sent to CMS, was rejected, or was not linked to the chart review. That is a data and provider services problem, and it can be fixed without another appointment.
For Stars, the same work can help. Many HEDIS measures can be met from claims and encounter data. When provider groups do not send complete encounter data to the plan, the plan can miss quality results as well as diagnoses.
Move Documentation Into the Visit
With unlinked chart reviews no longer counting, more of the work has to happen when the member is actually seen. That means helping members get in for care that is due, and helping provider offices document what they evaluate and treat during that visit.
This is where risk adjustment and Stars overlap the most. The same visit can close quality gaps such as cancer screenings, blood pressure control and diabetes care [4].
The visit has to be about care. Outreach should be based on care needs, using the same criteria whether or not a condition affects the risk score. A member’s expected risk score should not decide who gets called first, and the scheduling call should not mention suspected conditions. The HHS Office of Inspector General (OIG) has warned plans against prompting physicians, including through AI-generated prompts, to add diagnoses that patients did not have or that did not affect their care [5].
Keep Removing Unsupported Diagnoses
Chart review should work in both directions: adding valid diagnoses and removing the ones the medical record does not support. OIG’s February 2026 guidance lists failure to remove unsupported diagnosis codes among the problems found in federal investigations [6].
To be clear, this change does not improve Star Ratings. It protects the accuracy of the plan’s payments and its position in an audit, and CMS has said it plans to audit every eligible Medicare Advantage contract each year [7].
Plan Outreach With the Quality Team
Risk adjustment outreach, HEDIS gap closure, pharmacy adherence calls and care management may each contact the same member, with separate teams, budgets and scorecards. Several technology vendors now sell a single worklist across these programs. The harder part is the operations. Someone still has to call the member, follow up on the missing encounter, review the code and decide which program goes first.
For Stars, one coordinated call can schedule a visit that serves both programs, and the plan can avoid contacting the same member several times. OIG made a similar point. It said that combining efforts to find diagnoses with efforts to make sure they are accurate and that members get appropriate care “could increase quality of care and organizational efficiencies and simultaneously decrease the risk of submission of unsupported diagnoses codes” [6].
Even when the outreach is shared, the plan should track each result separately: visits completed, quality gaps closed, encounters accepted by CMS and unsupported diagnoses removed.
Why the Stars Connection Matters Now
About 37% of Medicare Advantage drug plan contracts received four stars or more for 2027. That is down from 44% in CMS’s updated 2026 numbers. However, about 71% of members are enrolled in these contracts, up from 67% [8]. This suggests that larger contracts did better than many smaller ones.
Four stars is the cutoff for bonus payments. A plan with four stars generally gets a five-percentage-point increase to its benchmark, although a cap set in law limited this bonus in about one-third of counties in 2026. The star rating also determines how much of the difference between a plan’s bid and its benchmark is paid back as a rebate, and that rebate has to go to members as extra benefits or lower costs [9].
There is also some legal uncertainty around the ratings. In May, a federal court in Georgia ruled that CMS had used data outside its authority for some measures. CMS then recalculated the 2027 bonus ratings for certain contracts, and other plans have since filed their own cases.
What These Changes Will Not Do
Executives should be clear about the limits. A visit will not directly improve member experience survey scores or medication adherence through the year. It also will not quickly move the two health outcome measures that CMS just tripled in weight, because those measures track members over two years [8]. Those areas need separate efforts.
How We Do This at Sutherland
At Sutherland, we provide these services to health plans. In risk adjustment, our analytics compare each member’s reported conditions with claims, pharmacy and lab data, and our coding solution remove unsupported diagnoses as well as add valid ones. We also run Stars and HEDIS operations, provider services and member services. For appointment scheduling, we use AI agents for both inbound and outbound calls.
These services line up with the four changes above. Provider services help with encounter submission. Member services and scheduling help members get to their visits. Coder review removes unsupported diagnoses. Our Stars and HEDIS operations work alongside risk adjustment on shared outreach.
Start with the November Reports
When CMS reissues the MAO-004 reports in November, start with one question: how many excluded diagnoses are tied to encounters that occurred but were never submitted or linked, and how many require a new opportunity for care?
That distinction can help your teams prioritize encounter fixes, provider support and appropriate member outreach. If you would like to review the findings and build a coordinated plan for risk adjustment and Stars, message me.
Rajesh Reddy
VP, Healthcare Vertical
References
- CMS – 2027 Risk Adjustment Implementation Information
- CMS – CMS Finalizes 2027 Medicare Advantage and Part D Payment Policies
- CMS – 2027 Medicare Advantage and Part D Rate Announcement
- CMS – 2027 Star Ratings Measures and Weights
- OIG – Industry Segment-Specific Compliance Program Guidance – Feb 2026
- Sidley – OIG Releases Long-Awaited Medicare Advantage Compliance Program Guidance
- CMS – Aggressive Strategy to Enhance and Accelerate Medicare Advantage Audits
- CMS – 2027 Medicare Advantage and Part D Star Ratings
- CRS – Medicare Advantage (MA): Proposed Benchmark Update CY2027
