In February, we published our analysis of the 2027 Advance Notice under the title "Don't Panic." The prevailing industry reaction at the time was, to put it charitably, panicked. Healthcare stocks cratered. UnitedHealth shed $62 billion in a single day. Pundits called it a shot across the bow. Everyone seemed to agree that CMS was coming for Medicare Advantage.

We disagreed. Publicly.

Our analysis made two core claims. First, that the headline 0.09% increase was not reflective of the actual impact organizations would see because CMS had changed how they presented the fact sheet, omitting a risk score trend assumption they had included the prior year. We estimated that including it would bring the implied revenue change to approximately 2.5%. Second, that this was not a fundamental shift in CMS's posture toward risk adjustment, and that organizations not relying on unlinked chart submissions would see an overall increase roughly in line with last year.

On April 6, CMS published the Final Rate Announcement. The headline increase: 2.48%. Including risk score trend: 4.98%.

We were off by two basis points.

Let's go through what happened and why it matters.

CMS Pulled the Model Recalibration

The single biggest driver of the scary January number was CMS's proposed recalibration of the risk adjustment model from 2018/2019 data to 2023/2024 data. That accounted for a -3.32% normalization hit in the Advance Notice. In the Final Rate Announcement, CMS withdrew it entirely. They kept the 2024 model, citing the need to give plans more time to absorb the V28 phase-in that just completed in 2026. The normalization impact dropped from -3.32% to -1.12%.

This is not a surprise if you were reading the Advance Notice in context rather than in isolation. CMS has a long and consistent history of proposing aggressive changes in the Advance Notice and walking them back in the Final. That is exactly what we said would happen. That is exactly what happened.

Unlinked Chart Reviews: Confirmed

CMS did finalize the exclusion of diagnoses from unlinked chart review records. This is the one piece that stuck, and it is entirely appropriate. If a diagnosis is not tied to a documented clinical encounter, it should not drive payment. 85% of the 88.8 million unlinked chart review records submitted in 2023 could not be matched to any encounter data. That is a staggering number and a legitimate integrity concern.

But here is the part everyone missed in January: this only hurts you if you rely on unlinked submissions. We said at the time that organizations using technology such as ours for accurate linking do not do unlinked submissions, and therefore the -1.53% impact (now finalized at -1.24% with the switcher exception) simply does not apply to them. Remove that from the equation and you are looking at a number fully in line with recent years.

The Strategic Takeaways Hold

Everything we recommended in February still stands, and is now more urgent:

Claim-linked documentation is table stakes. This is no longer a nice-to-have. CMS has drawn a clear line: if your diagnosis is not tied to an encounter, it does not count. Organizations still running unlinked chart review programs are leaving money on the table and accumulating regulatory risk simultaneously.

Documentation quality matters more every year. CMS's stated principles for risk adjustment going forward center on simplicity, competition based on value rather than coding practices, and payment accuracy. The direction is clear. The organizations that invest in audit-durable, clinically grounded documentation will outperform. The ones that rely on volume-based approaches will fall behind.

This reprieve is temporary. CMS pulled the model recalibration for 2027. They did not abandon it. Chris Klomp said on the press call that CMS will keep a "careful eye" on insurer practices and left the door open for future model changes. The -3.32% is still sitting in the chamber. If your 2028 planning assumes 2027 rates as a new baseline, you are mispricing what is ahead.

The Real Lesson

When the Advance Notice dropped in January, the industry collectively lost its mind because it read a headline number without reading the methodology. Stocks moved on a fact sheet. Commentary followed the stock move. And the actual substance of what CMS proposed, which was entirely consistent with years of incremental tightening, got lost in the noise.

We read the substance. We said don't panic. We were right.

The organizations that used the last three months to build real infrastructure around linked documentation, audit readiness, and clinical accuracy are better off today than the ones that spent it lobbying for a higher number. CMS gave the industry a reprieve on the model recalibration, but the trajectory has not changed. Revenue growth in MA will continue to moderate. The winners will be the ones who were already preparing.

We are still here to help with that.