Contract Year 2027 Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program (CMS-4212-P)
Background
On November 25, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would revise the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit Program (Part D), and Medicare Cost Plan Program. The Contract Year (CY) 2027 MA and Part D proposed rule aims to improve quality and access to care for people enrolled in these programs by proposing updates to MA and Part D Star Ratings quality measurements and streamlining certain enrollment processes. In addition, CMS is seeking public feedback on the future direction of MA that would inform actions on maximizing the value of the MA program for beneficiaries and taxpayers, driving innovation in care models as well as benefit designs, and producing improved health outcomes for beneficiaries.
Updates to Star Ratings
The Star Ratings system helps Medicare beneficiaries compare health and drug plan quality and determines Quality Bonus Payments and rebates for MA contracts, currently rating MA-PD contracts on up to 43 measures, MA-only contracts on up to 33 measures, and Part D plans on up to 12 measures across five categories: outcomes, intermediate outcomes, process, patient experience, and access.
CMS is proposing two sets of major changes to the Part C and Part D Star Ratings system. First, CMS is proposing not to implement the Excellent Health Outcomes for All reward (previously called the Health Equity Index reward) -- which was designed to reward high measure-level scores for the subset of enrollees with specified social risk factors– from the 2027 Star Ratings, and CMS would continue the historical reward factor that encourages consistently high performance across all quality measures. Second, CMS is proposing to streamline and refocus the measure set by removing for the 2027 measurement year 12 measures focused on administrative processes and areas where beneficiaries cannot distinguish performance between plans due to high performance and little variation, while adding a new Part C Depression Screening and Follow-Up measure to address behavioral health gaps starting with the 2027 measurement year and 2029 Star Ratings.
These proposed changes aim to refocus the program on clinical care, outcomes, and patient experience where there is meaningful variation in performance across contracts, while reducing administrative burden on plans by removing operational and process measures that have achieved high performance with little variability, allowing plans to concentrate resources on areas that directly impact patient care and health outcomes.
Improving the Enrollment Experience
CMS is proposing two improvements to streamline the enrollment experience, a new special enrollment period (SEP) for provider terminations and codifying long-standing policy regarding utilization of SEPs. More specifically, CMS is proposing:
- To modify an SEP for enrollees to change plans when one or more of their providers are leaving their plan’s network. MA enrollees who experience provider network changes mid-year may want to stay with their current provider who is leaving the network. To allow these enrollees to change their coverage more easily, this proposal removes the limitation on the existing SEP that required the MA organization and then CMS to deem the network change “significant.”
- To codify our existing policy that certain SEPs require prior CMS approval. This will provide transparency and stability for stakeholders about the MA and Part D programs and about the nature and scope of these SEPs by ensuring that the SEPs are changed only through rulemaking.
Requesting Public Feedback on MA Program Improvements
CMS is seeking stakeholder feedback through three comprehensive Requests for Information (RFIs) designed to strengthen the MA program and better serve dually eligible beneficiaries. The first RFI focuses on enhancing competition within the MA program by soliciting input on risk adjustment and quality bonus payment changes. CMS recognizes that the current risk adjustment system may disadvantage smaller, newer, and less well-resourced plans and may encourage plans to prioritize investment in coding activities that could lead to MA plans coding more intensely than Original Medicare. CMS is exploring modernization opportunities including a next-generation risk adjustment model that could leverage artificial intelligence and alternative data sources, as well as ways to streamline the quality measurement timeline and reduce the current two-year lag between measurement and payment.
The second RFI addresses the significant growth in chronic condition special needs plans (C-SNPs) enrollment, with particular concern about dually eligible individuals enrolling in these plans rather than dual eligible special needs plans (D-SNPs) that offer integrated Medicare-Medicaid benefits. CMS is exploring potential solutions including adopting a State Medicaid Agency Contract requirement for C-SNPs and/or institutional special needs plans (I-SNPs) with high concentrations of dually eligible individuals, like existing D-SNP requirements.
The third RFI is seeking public input on well-being and nutrition policy changes for future years. Specifically, the RFI is seeking comments on tools and policies that improve overall health, happiness, and satisfaction in life that could include aspects of emotional well-being, social connection, purpose, and fulfillment, in addition to tools that would achieve optimal nutrition and improve preventive care in Medicare Advantage, including possible incentives for MAOs to support beneficiaries seeking to improve their nutrition.
These RFIs reflect CMS’s commitment to maximizing program value for beneficiaries and taxpayers while promoting integrated care for vulnerable populations. The RFIs seek comprehensive input from MA organizations, beneficiary advocates, healthcare providers, and industry experts to inform future policy decisions that could be implemented through regulatory changes or CMS Innovation Center models. The feedback will help guide the modernization of MA to ensure enhanced competition, improved health outcomes, and better coordination of care for the nation's most vulnerable Medicare beneficiaries.
Implementing Certain Provisions of the Inflation Reduction Act of 2022
The Inflation Reduction Act of 2022 (IRA) made transformative changes to the Medicare Part D prescription drug benefit and granted CMS temporary authority through 2026 to implement these changes through program instructions. With this program instruction authority expiring, CMS is now proposing to codify these changes for 2027 and beyond. The proposed regulations include eliminating the coverage gap phase, establishing a reduced annual out-of-pocket threshold, removing cost sharing for enrollees in the catastrophic phase, and implementing the Manufacturer Discount Program that replaced the Coverage Gap Discount Program on January 1, 2025. CMS is also proposing to codify additional operational changes including updates to True Out-Of-Pocket (TrOOP) cost calculations, specialty-tier rules, reinsurance payment methodologies, and implementation of the Selected Drug Subsidy. These proposed changes would codify the most significant transformation of the Part D benefit since the program's inception and aim to reduce prescription drug costs for Medicare beneficiaries while maintaining program sustainability.
Revise List of Non-Allowable Special Supplemental Benefits for the Chronically Ill (SSBCI)
CMS is proposing to refine its regulations regarding cannabis products by amending current regulatory language to state more precisely that cannabis products that are illegal under applicable State or Federal law, including the Federal Food, Drug, and Cosmetic Act, are not allowable as Special Supplemental Benefits for the Chronically Ill (SSBCI). This regulatory clarification reflects CMS’s effort to align MA benefit policies with current federal law while maintaining appropriate safeguards, ensuring that MA plans can offer certain products that may benefit chronically ill beneficiaries while continuing to prohibit products that remain illegal under federal or applicable state law.
Reducing Regulatory Burden and Costs in Accordance with Executive Order 14192
CMS is proposing several changes to reduce burden and remove requirements that are duplicative or no longer necessary or applicable.
Proposals include:
- Exempting account-based plans (such as health reimbursement arrangements (HRAs), flexible spending accounts (FSAs), and health savings accounts (HSAs)) from creditable coverage disclosure requirements.
- Rescinding the requirement for MA plans to send mid-year notices about unused supplemental benefits.
- Eliminating the requirement for MA quality improvement programs to include activities that reduce health disparities.
- Eliminating health equity requirements for MA Utilization Management (UM) Committees, including requiring a health equity expert member, conducting annual health equity analyses, and publicly posting these analyses.
- Waiving the requirement for the Limited Income Newly Eligible Transition (LI NET) program to maintain toll-free customer call centers open from 8 a.m. to 8 p.m. in all regions.
Request for Information on Streamlining Regulations and Reducing Administrative Burdens in Medicare
Additionally, CMS is seeking public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program through a standalone RFI available at https://www.cms.gov/medicare-regulatory-relief-rfi. The public should submit all comments in response to this RFI through the provided weblink.
View the proposed rule on the Federal Register at https://www.federalregister.gov/public-inspection/current.
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