CMS Finalizes Medicare Advantage 2027 Rule with $18.6 Billion Increase and Reduced Star Ratings Measures

The Centers for Medicare & Medicaid Services finalized its Contract Year 2027 Medicare Advantage and Part D rule on April 2, 2026, providing an additional $18.6 billion to health plans while significantly reducing regulatory requirements. The rule removes 11 administrative measures from the Star Ratings system that currently evaluates plans on up to 43 measures, and eliminates health equity requirements including mandates for disparities reduction activities, health equity expert members on Utilization Management Committees, and annual equity analyses. The rule codifies Inflation Reduction Act of 2022 changes including elimination of the Part D coverage gap, reduced out-of-pocket thresholds, and removal of cost sharing in the catastrophic phase. CMS also rescinded requirements for mid-year notices about unused supplemental benefits and relaxed restrictions on agent and broker communications with beneficiaries.

Star Ratings System Overhaul and Measure Reduction

• ▪The Centers for Medicare & Medicaid Services is not implementing the Excellent Health Outcomes for All reward for the 2027 Star Ratings
• ▪The Centers for Medicare & Medicaid Services is adding a new Part C Depression Screening and Follow-Up measure starting with the 2027 measurement year and 2029 Star Ratings
• ▪Medicare Advantage-PD contracts are currently rated on up to 43 measures in the Star Ratings system
• ▪The Centers for Medicare & Medicaid Services is removing 11 measures focused on administrative processes from the Medicare Advantage and Part D Star Ratings system
• ▪The Centers for Medicare & Medicaid Services issued a final rule on April 2, 2026 revising the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program

Codification of Inflation Reduction Act Part D Changes

• ▪The Manufacturer Discount Program replaced the Coverage Gap Discount Program on January 1, 2025
• ▪The Centers for Medicare & Medicaid Services is codifying Inflation Reduction Act of 2022 Medicare Part D changes for 2027 and beyond after program instruction authority expired

Perspective of Centers for Medicare & Medicaid Services

• ▪The Centers for Medicare & Medicaid Services is providing an additional $18.6 billion to Medicare Advantage plans for Contract Year 2027

Perspective of Health equity advocates

• ▪The Contract Year 2027 Medicare Advantage rule removes requirements that previously mandated health equity activities in quality improvement programs