CMS Releases the Proposed 2027 Medicare Advantage and Part D Rules

Last week, the Centers for Medicare & Medicaid Services (CMS) released its proposed Contract Year 2027 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program (Proposed 2027 Rules).

As is common for the annual proposed rules, the Proposed 2027 Rules cover a broad range of topics. In the last few years, the agency has lost multiple legal cases challenging the validity of its rules and/or how it implements its rules – it has lost cases relating to Star Ratings, its updated marketing and communications rules that were adopted for 2025, and most recently, the risk adjustment extrapolation rule. The Proposed 2027 Rules broadly touch on all of these regulatory areas. In its very brief summary of the Proposed 2027 Rules, CMS also highlights changes to Part D drug coverage, the enrollment process, and special needs plans. The Proposed 2027 Rules also include multiple Requests for Information (RFI). Below are some initial takeaways.

Star Ratings

With the Proposed 2027 Rules, CMS explains that its aim is to simplify and refocus on the Star Ratings system. It proposes to refocus the measure set on clinical care, outcomes, and patient experience measures where plans have not topped out performance and believes that decreasing the number of measures will allow more focus on the measures that remain, including those aligned with the Make America Healthy Again initiative. Specifically, CMS is seeking to remove 12 measures: seven focused on operational and administrative performance, three focused on the process of care, and two focused on patient care experience. CMS also does not intend to move forward with the Health Equity Index rewards under the Star Ratings program. As discussed below, CMS is also seeking interested parties’ thoughts on the quality bonus payment system that is driven by Star Ratings.

Marketing and Communications

The Proposed 2027 Rules include both proposed changes to the Medicare Advantage and Part D rules addressing marketing and communications and an RFI relating to this area. For regulatory changes, CMS proposes changes to the definition of third-party marketing organizations (TPMOs) and changes to rules regarding translations, enrollment verification, and the use of testimonials, among other things. CMS requests that interested parties provide information regarding ways to modernize the agency’s marketing oversight that will help reduce the general burden, but at the same time ensure beneficiaries continue to receive accurate information. CMS is specifically interested in finding ways that it can take appropriate actions against TPMOs that are “bad actors” in a manner that does not hinder organizations that are operating appropriately.

Risk Adjustment

CMS proposed changes to the permissible uses for risk adjustment data. Historically, CMS has been limited in the ways that it can use risk adjustment data, and many of those permitted uses were adopted in regulation. The Proposed 2027 Rules propose to remove the enumerated permitted uses and instead recognize CMS’s ability to more broadly use and release the data to government entities and external parties. CMS specifically states that “CMS does not believe the statute restricts our use of risk adjustment data.” The proposed changes also allow risk adjustment data to be released prior to reconciliation, much more broadly than the current rules. CMS intends to continue to protect beneficiary confidentiality. CMS does not directly address the court decision that invalidated its extrapolation methodology.

IRA

Over 25% of the Proposed 2027 Rules address the many changes that aim to fully implement the redesign of Medicare Part D that was adopted in the Inflation Reduction Act (IRA). Similar to past years, many of the changes that CMS is proposing have been previously introduced through sub-regulatory guidance over the last few years. Some of the changes include formally sunsetting the Coverage Gap Discount Program, further implementing the Manufacturer Discount Program, clarifications regarding medical loss ratio, and changes relating to amounts that accrue towards TrOOP.

Reporting and Data Simplification

CMS is exploring ways that current Medicare reporting obligations can be simplified. Some of the referenced considerations would appear to reduce the burden on Medicare Advantage organizations and Part D plan sponsors, and others aim to reduce the burden on the agency. CMS gives examples of reporting obligations relating to provider networks, medical loss ratios, the utilization of benefits, and special needs plans’ models of care. CMS is specifically looking for ways that the reporting can be streamlined, potentially through the use of automated data sharing and different technology solutions that would make the import and use of the data less burdensome.

Very Broad RFI

The Proposed 2027 Rules include a broad RFI regarding the future direction of the Medicare Advantage program and specifically focus on risk adjustment and quality bonus payments. The agency is looking for ways to improve the program and positively impact the following areas: data transparency, beneficiaries’ ability to select the best plan for them, overall quality, enhance competition, reduce fraud, waste and abuse, and generate taxpayer savings.

Parties who are interested in commenting on the Proposed 2027 Rules must submit their comments by January 26.

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