Medicare Beneficiaries to See Simpler and More Flexible Plan Choices, Better Drug Coverage, Higher Quality and Lower Costs in 2027
The Centers for Medicare & Medicaid Services (CMS) is improving health plan quality, making it easier to understand and compare Medicare Advantage (MA) and prescription drug plans, strengthening financial protections in Part D, and cutting unnecessary red tape for plans and providers. These changes, part of the Contract Year 2027 MA and Part D final rule, empower beneficiaries to make more informed plan choices, reduce unexpected costs, and access more reliable coverage while keeping the focus where it belongs: on patients’ health outcomes and experience. They will focus improvement efforts on areas where quality gaps remain and where patient outcomes can be improved.
“Medicare should be easy to navigate and focused on results,” said CMS Administrator Dr. Mehmet Oz. “These changes simplify the system, reward real improvements in health outcomes, protect patients when their providers leave their network, and reduce burdens that drive up costs.”
“We are fundamentally shifting our approach to quality,” said Chris Klomp, Director of the Center for Medicare and Chief Counselor of the U.S. Department of Health and Human Services. “This isn't just about adjusting measures; it's about redefining success. We are moving away from a system that incentivizes administrative box-checking and are instead laser-focused on what truly matters: the clinical outcomes and health of our beneficiaries. This is a critical first step toward a more efficient, effective, and patient-first healthcare system.”
Making it Easier to Compare Plans Based on What Matters
For 2027, CMS is improving the MA and Part D Star Ratings system so it better reflects clinical quality, health outcomes, and patient experience.
Key changes include:
- Refocusing the Star Ratings measure set: CMS is streamlining the measure set to provide beneficiaries with clearer, more meaningful information when choosing a plan. Certain measures will be removed that focused on administrative processes and measures where plans perform similarly and provide little useful comparison for beneficiaries, while a new Part C Depression Screening and Follow-Up measure to address behavioral health gaps is being added. Based on stakeholder feedback, CMS is retaining the Diabetes Care – Eye Exam measure in the Part C Star Ratings, recognizing its importance in preventing serious complications.
- Rewarding sustained high performance: For 2027 Star Ratings, CMS will not implement the Excellent Health Outcomes for All reward (previously referred to as the Health Equity Index reward) which was developed to encourage improved performance for a subset of enrollees. Instead, CMS will keep the historical reward factor to encourage consistently high performance across all enrollees while it works to simplify the Star Ratings methodology.
- Reducing regulatory burden: In accordance with the President’s Executive Order on Unleashing Prosperity Through Deregulation, CMS will remove a number of duplicative and burdensome regulatory requirements, including restrictions on beneficiaries’ ability to obtain enrollment information and certain documentation rules for MA and Part D organizations.
Strengthening Prescription Drug Protections
The rule codifies provisions of the Inflation Reduction Act that redesigned the Medicare Part D benefit, including:
- Eliminating the coverage gap phase, establishing a reduced annual out-of-pocket threshold, and removing cost sharing for enrollees in the catastrophic phase.
- Reflecting the statutory end of the Coverage Gap Discount Program and incorporation of the new Manufacturer Discount Program.
Protecting Supplemental Benefits and Combating Fraud
To promote transparency and prevent misuse of funds, CMS is clarifying requirements for debit cards used to administer supplemental benefits in MA. The updated policy establishes clearer, more consistent rules across plans, promotes informed beneficiary choice, helps combat fraud, waste, and abuse, and ensures enrollees receive actual covered benefits, including healthy food benefits.
For more information, please view the fact sheet at: https://www.cms.gov/newsroom/fact-sheets/contract-year-2027-medicare-advantage-part-d-final-rule.
To view the final rule, visit: https://www.federalregister.gov/d/2026-06600.
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