The Centers for Medicare & Medicaid Services (CMS) on Thursday released the 2027 Medicare Advantage and Part D Final Rule, making changes to Star ratings and updates to supplemental benefits. Here is a first look at what the agency finalized. Watch RISE for more analysis in the week ahead.
CMS said the final rule aims to improve health plan quality, make it easier to compare Medicare Advantage and prescription drug plans, strengthening financial protections in Part D, and cutting unnecessary red tape for plans and providers. The changes will help Medicare beneficiaries 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.
The 731-page final rule is scheduled to be published in the Federal Register on April 6.
“Medicare should be easy to navigate and focused on results,” said CMS Administrator Dr. Mehmet Oz in the announcement. “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.”
Chris Klomp, director of the Center for Medicare and chief counselor of the U.S. Department of Health and Human Services, said that the changes will fundamentally shift the agency’s approach to quality.
“This isn't just about adjusting measures; it's about redefining success,” he said. “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 health care system.”
Changes to Star ratings
CMS said that the agency is improving the Star ratings system to better reflet clinical quality, health outcomes, and patient experience.
Among the key changes:
Streamlined measures: CMS wants to provide Medicare beneficiaries with clearer and more meaningful information when choosing a plan. The agency will remove certain measures that were focused on administrative processes and measure and provide little useful comparison. It is also adding a new Part C Depression Screening and Follow-up measure to address behavioral health gaps.
Although CMS initially proposed removing the diabetes care eye exam measure, it will retain it based on stakeholder feedback. The agency said it recognizes “its importance in preventing serious complications.”
Rewarding sustained high performance: CMS will not implement the Excellent Health Outcomes for All reward (previously referred to as the Health Equity Index reward) for 2027. The reward 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: 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 Medicare Advantage 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.
Protection of 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 Medicare Advantage. 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.
Reduces regulatory burden
In a fact sheet, CMS said it will remove duplicative and burdensome regulatory requirements that have limited beneficiary choice, hindered innovation and increased costs by:
- Exempting account-based plans (such as health reimbursement arrangements, flexible spending accounts, and health savings accounts) from creditable coverage disclosure requirements.
- Rescinding the requirement for Medicare Advantage plans to send mid-year notices about unused supplemental benefits.
- Eliminating the requirement for Medicare Advantage quality improvement programs to include activities that reduce health disparities.
- Eliminating health equity requirements for Medicare Advantage Utilization Management 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 program to maintain toll-free customer call centers open from 8 a.m. to 8 p.m. in all regions.
- Removing restrictions on the time and manner by which beneficiaries can have conversations with licensed agents and brokers.