In the hours before Thanksgiving, the Centers for Medicare and Medicaid Services (CMS) released its Contract Year 2027 Policy and Technical Changes to the Medicare Advantage Program. The CMS proposed rule focuses primarily on refining plan performance metrics for the 2027 Medicare Advantage (MA) and Part D contract year. The proposed policy aims to sharpen the program’s value for beneficiaries and taxpayers while simplifying plan enrollment.
Here’s a look at the proposed modifications:
Star Ratings Revisions
A central feature of the rule is a comprehensive revamp of the Star Ratings system, which guides beneficiaries in comparing plan quality and determines Quality Bonus Payments (QBPs). The CMS proposed rule aims to rebalance the measure inventory to focus on health outcomes and preventive care, reducing unnecessary administrative burden on plans.
CMS proposes removing 12 unique measures from the Star Ratings system in 2027, focusing the program on quality improvements and reducing administrative burden. The measures considered for removal mostly address administrative processes or show limited variation in quality across plans.
- Focus on Outcomes: The changes aim to “rebalance” the inventory of measures to focus more on health results and preventive care.
- New Measure Addition: CMS proposes adding a Part C Depression Screening and Follow-Up measure, which will begin with the 2027 measurement year and inform the 2029 Star Ratings, addressing persistent behavioral health gaps.
- Quality Bonus Payments (QBP) Adjustment: CMS proposes not to implement the Excellent Health Outcomes for All (EHO4All) reward (formerly the Health Equity Index reward) for the 2027 Star Ratings cycle. Instead, the agency plans to continue using the historical reward factor. That factor encourages consistently high performance across measures.
- Data Transparency: CMS proposes to codify the practice of making de-identified contract-level sample data for certain measures available to plans during the second plan preview period. Doing so will help them validate cut point calculations.
Enrollment and Beneficiary Protections
The CMS proposed rule includes several significant amendments to MA and Dual Eligible Special Needs Plan (D-SNP) regulations, primarily focused on enhancing enrollment flexibility and improving beneficiary protections, particularly for dually eligible individuals. These changes introduce a new Special Enrollment Period (SEP) to safeguard beneficiaries against mid-year provider network disruptions, formalize the process for approving high-risk SEPs, and establish new standards for continuity of care for beneficiaries passively enrolled into integrated D-SNPs. Furthermore, the rule aims to provide greater enrollment flexibility for specific types of D-SNPs to ensure dually eligible individuals in certain Medicaid Fee-for-Service (FFS) States maintain access to specialized coordinated care. Here’s more detail about these proposed changes:
- New Special Enrollment Period (SEP): A new SEP is proposed to allow MA enrollees to switch plans if one or more of their providers leave the plan’s network mid-year. This adjustment eliminates the previous requirement that the network change be deemed “significant.”
- Codification of SEP Approval: The rule proposes to codify the policy that specific, high-risk SEPs (such as those for sanction, contract violation, or exceptional circumstances) require prior agency approval.
- D-SNP Continuity of Care: For passive enrollment into integrated Dual Eligible Special Needs Plans (D-SNPs), the receiving plan must provide continuity of care for a minimum of 120 days, removing the prior requirement that receiving plans have “substantially similar networks”.
- Dual Eligible Enrollment Flexibility: The rule proposes to amend existing policies to allow certain D-SNPs (specifically HIDE SNPs and coordination-only D-SNPs) to continue enrolling full-benefit dually eligible individuals enrolled in Medicaid Fee-for-Service (FFS), primarily in States without mandatory Medicaid managed care programs.
Inflation Reduction Act (IRA) Implementation (Part D)
The proposed rule implements congressionally mandated reforms to the Medicare Part D prescription drug benefit structure under the Inflation Reduction Act (IRA). These changes are designed to reduce out-of-pocket costs for beneficiaries with high drug expenditures and reallocate financial liability among the government, plans, and drug manufacturers. Key provisions being codified include a simplified benefit structure starting in 2025, which features a much lower annual out-of-pocket (OOP) spending cap and the elimination of the coverage gap phase.
Here’s an overview of the modifications:
- Part D Benefit Structure Redesign: The rule codifies major structural changes to the Part D benefit mandated by the IRA, including:
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- The elimination of the coverage gap phase, effective beginning in 2025.
- The establishment of a reduced annual out-of-pocket (OOP) threshold.
- The elimination of beneficiary cost sharing in the catastrophic phase.
- Manufacturer Discount Program (MDP): Codification of regulations establishing the MDP, which replaced the Coverage Gap Discount Program (CGDP) beginning January 1, 2025.
- Creditable Coverage Methodology: The CMS proposed rule codifies a revised simplified determination methodology for non-Retiree Drug Subsidy (RDS) group health plans to determine creditable coverage. The required percentage of prescription drug costs coverage increases to 73% for 2027.
Regulatory Simplification and Marketing Changes
CMS has proposed a set of policy and technical changes aimed at reducing the administrative and financial burden on MA organizations and Third-Party Marketing Organizations (TPMOs). These proposals primarily involve rescinding several recent health equity requirements for MA plan operations and increasing flexibility within MA and Part D marketing and sales practices, while still maintaining essential beneficiary protections.
Here’s an overview of those changes:
Elimination of Health Equity Requirements
CMS proposes to remove several requirements associated with previous health equity mandates, including:
- Removing the requirement that the Utilization Management (UM) Committee include a health equity expert member.
- Rescinding the requirement for the UM Committee to conduct an annual health equity analysis of utilization management policies.
- Removing the requirement that Quality Improvement programs incorporate activities explicitly designed to reduce health disparities.
Mid-Year Notice Rescission
CMS proposes to rescind the requirement for MA organizations to provide enrollees with a mid-year notice regarding unused supplemental benefits. CMS initially set this mandate to take effect in 2026.
Call Recording Retention
The record retention requirement for Third-Party Marketing Organization (TPMO) marketing and sales call recordings would be reduced from 10 years to 6 years.
Marketing Flexibility
CMS proposes to reduce marketing restrictions by:
- Eliminating the requirement for a 12-hour separation between educational and marketing events in the same location.
- Eliminating the 48-hour waiting period between completing a Scope of Appointment (SOA) form and conducting a personal marketing appointment.
- Permitting the collection of SOA forms at educational events.
- Allowing the use of superlatives in marketing materials without requiring supporting documentation to be referenced in the material itself.
TPMO Disclaimer
The verbal disclosure provided by TPMOs during sales calls would be required “prior to the discussion of any benefits.” That language replaces the “within the first minute” requirement. CMS would remove references to State Health Insurance Assistance Programs (SHIPs) from the disclaimer.
What’s Next?
The proposed changes initiate a defined regulatory process involving public feedback, agency review, and finalization.
The key steps in the immediate future include:
Public Comment Period
The proposed rule is immediately subject to a 60-day public comment period following its publication. CMS expects interested parties, including insurers, drugmakers, device manufacturers, patient advocates, and policy experts, to provide extensive feedback.
Comments must be received no later than 5 p.m. Eastern Time on January 26, 2026. Interested parties may submit comments electronically via the specified government website or by regular or express mail. CMS has explicitly requested public input on how to steer the Medicare Advantage (MA) program in the years ahead, including ways to modernize care models and redesign benefits.
Final Rule Publication
Following the 60-day comment period, CMS will likely publish a final rule in spring 2026.
Implementation and Effective Dates
Most of the provisions finalized in the rule will take effect for Contract Year (CY) 2027.
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