CMS 2027 Medicare Advantage Proposed Rule Explained: What Health Plans Need to Know and Why It Matters

On November 28 2025, the proposed rule for Contract Year 2027 Medicare Advantage and Part D was published in the Federal Register.

The rule addresses several areas of the Medicare Advantage program, including Star Ratings, Part D benefits, dual eligible alignment, marketing requirements, and long standing operational and governance policies.

Rather than introducing a single sweeping reform, the proposals reflect a broader shift in how CMS is refining the Medicare Advantage program based on implementation experience and recent legislation. This blog focuses on the changes and signals that health plans should pay closest attention to.

What CMS Is Trying to Accomplish with This Rule

Across its many sections, the proposed rule reflects a consistent regulatory philosophy.

CMS is seeking to reduce complexity that has accumulated over time, align regulations with newer statutory changes, and focus incentives on areas that more clearly differentiate plan performance and beneficiary experience.

Rather than layering on new requirements, CMS is reassessing whether existing rules are achieving their intended objectives and adjusting where they are not.

Key Takeaways

• CMS is simplifying the Star Ratings program by removing measures with limited differentiation and removing the proposed health equity reward for 2027
• Part D regulations are being updated to reflect the drug benefit redesign under the Inflation Reduction Act
• Marketing and enrollment rules are being adjusted to reduce operational friction while maintaining beneficiary protections
• Dual eligible alignment and integrated care models remain a long term CMS priority
• CMS is soliciting stakeholder input on the future direction of Medicare Advantage including Star Ratings and potential risk adjustment modernization

1. Star Ratings Program Changes

Star Ratings remain one of the most influential elements of Medicare Advantage, affecting plan revenue, enrollment, and public reporting.

In this proposed rule, CMS outlines several changes intended to streamline the Star Ratings program and improve its usefulness for beneficiaries and plans.

What CMS Is Proposing

A. Removal of the Health Equity Index Reward for 2027

CMS proposes not to implement the Excellent Health Outcomes for All reward for the 2027 Star Ratings and instead continue using the historical reward factor, following its review of the Health Equity Index reward approach. This reward, previously referred to as the Health Equity Index, was designed to provide additional credit for strong performance among beneficiaries with social risk factors.

CMS explains that this proposal aligns with its broader effort to simplify the Star Ratings structure for Contract Year 2027, while continuing to evaluate how health equity should be reflected in future quality measurement.

B. Removal of Measures with Limited Performance Variation

CMS proposes removing 12 specific measures from the Star Ratings measure set beginning with the 2027 measurement year. CMS notes that these measures are largely topped out, meaning most plans already perform at similarly high levels and the measures provide limited differentiation for beneficiaries.

The proposed measures for removal and the associated Star Ratings years are listed below.

CMS also proposes adding a new measure for Depression Screening and Follow Up beginning with the 2027 measurement year, which would be reflected in the 2029 Star Ratings.

What This Means for Health Plans

Plans that have historically distributed quality improvement efforts across a broad set of measures should prepare for a Star Ratings environment that places greater emphasis on outcomes, care experience, and areas with meaningful performance variation.

By removing measures that no longer differentiate performance, CMS is narrowing the focus of the program and signaling that future Star Ratings performance will be driven by fewer but more impactful measures.

2. Medicare Part D Regulatory Updates

Part D benefit rules continue to evolve as CMS updates regulations to align with statutory changes enacted under the Inflation Reduction Act.

What CMS Is Updating

CMS proposes revising regulatory definitions and requirements so that the Part D benefit structure in the Code of Federal Regulations reflects the redesigned benefit that took effect beginning in 2025.

Specifically, CMS is updating references to legacy benefit phases such as the initial coverage limit and coverage gap, which no longer exist under the current Part D design. These updates are conforming changes intended to ensure regulatory language matches how the benefit operates today. CMS retains historical language only for purposes such as audits and reconciliation of prior plan years.

What This Means for Health Plans

Aligning regulatory text with the current Part D benefit structure reduces confusion for plans and beneficiaries. It also ensures that compliance documentation, member materials, and operational processes reflect the actual benefit design rather than outdated concepts.

3. Marketing and Enrollment Policy Updates

CMS proposes several changes to marketing and enrollment requirements based on industry feedback and implementation experience.

Key Proposed Marketing Changes

• Educational and marketing events may occur on the same day if there is a clear transition and an opportunity for attendees to leave before marketing begins
• Scope of Appointment forms may be collected at educational events. CMS proposes more flexibility by removing the concept that appointments must be scheduled at least 48 hours in advance, while still requiring documented consent before any benefit discussion.
• TPMO disclaimers must be delivered before benefit discussion rather than within a fixed early time window
• CMS is seeking comment on whether call recording and retention requirements should be further revised

Enrollment Process Updates

CMS also proposes updates related to Special Enrollment Periods associated with provider network changes, with the goal of improving clarity for affected beneficiaries and facilitating timely plan changes when appropriate.

What This Means for Health Plans

These changes reflect CMS effort to reduce unnecessary operational friction while maintaining beneficiary protections. For plans and distribution partners, the proposals introduce greater flexibility while preserving oversight of marketing practices.

4. Dual Eligible Alignment and Special Needs Plan Policy Direction

Improving care coordination for individuals eligible for both Medicare and Medicaid continues to be a central priority for CMS. In this proposed rule, CMS focuses on making passive enrollment into aligned plans more practical and easier to execute in real world settings.

CMS acknowledges that earlier requirements related to passive enrollment were difficult to operationalize, particularly the requirement for substantially similar provider networks between relinquishing and receiving plans. In practice, this approach created administrative complexity without consistently improving member experience.

To address this, CMS proposes exempting certain aligned D SNP enrollments from the network overlap requirement and instead requiring receiving integrated plans to provide a continuity of care period of at least 120 days for passively enrolled members.

This approach places greater emphasis on ensuring uninterrupted access to services during transitions rather than on technical network comparisons.

CMS also proposes that receiving plans demonstrate sufficient staffing readiness to support onboarding activities such as health risk assessments, care planning, and ongoing care coordination. In addition, CMS reiterates its longer term goal of reducing misaligned enrollment by more closely aligning future Special Needs Plan enrollment with Medicaid managed care plans operating in the same service areas.

What This Means for Health Plans

These changes shift the focus from structural requirements to execution during member transitions. For health plans, this increases the importance of transition management, care coordination capacity, and maintaining continuity of care during the initial months of enrollment, particularly for medically complex and high need populations.

5. Administrative and Governance Requirement Updates

CMS proposes rescinding or modifying several administrative and governance requirements where it believes the compliance burden outweighs the benefit delivered to beneficiaries. In the proposed rule, CMS explicitly acknowledges that some requirements introduced in recent years added operational complexity without meaningfully improving member understanding or outcomes.

Key proposals include:

• Eliminating the mid-year unused supplemental benefits notice requirement, which CMS states would require significant tracking, mailing, and compliance effort while offering limited incremental value to beneficiaries
• Rescinding certain health equity related utilization management governance and reporting requirements, particularly those that focused on committee composition and documentation rather than demonstrable impact
• Rescinding a separate regulatory pathway for certain Special Needs Plan supplemental benefits that can already be offered under existing authorities, reducing duplication in benefit approval and oversight processes

What This Means for Health Plans

These proposals reflect CMS intent to focus oversight on requirements that directly affect beneficiary experience and program integrity. For health plans, this reduces time spent on compliance activities that primarily generate documentation and reporting artifacts, and allows greater flexibility to redirect resources toward care delivery, member engagement, and operational improvement.

6. CMS Is Soliciting Industry Input on the Future of Medicare Advantage

In addition to the specific proposals outlined in the rule, CMS includes several Requests for Information that offer a window into how the agency is thinking about the longer term direction of Medicare Advantage.

Unlike routine RFIs, these questions focus on foundational elements of the program rather than isolated operational issues. CMS explicitly references the growth of Medicare Advantage enrollment, increasing program complexity, and the need to ensure that incentives remain aligned with beneficiary outcomes and program sustainability.

CMS is seeking stakeholder input on topics including:

• Potential modernization of the risk adjustment system, including whether current models appropriately balance accuracy, incentives, and competition, and whether refinements are needed as the Medicare Advantage population continues to evolve
• Refinements to the quality bonus payment and Star Ratings framework, including whether the current structure continues to drive meaningful performance improvement or unintentionally encourages administrative optimization
• Enrollment patterns and care integration for dual eligible populations, particularly as enrollment in Special Needs Plans grows and CMS continues to push for greater alignment between Medicare and Medicaid coverage

CMS also notes that future changes could be pursued through multiple pathways, including traditional notice and comment rulemaking as well as testing under the CMS Innovation Center. This indicates that CMS is keeping both incremental and more structural reform options on the table.

What This Means for Health Plans

These Requests for Information are a strong signal that CMS is actively evaluating the core mechanics of Medicare Advantage, not just adjusting the edges of the program. For health plans, this section matters because it may shape how risk adjustment, quality incentives, and integrated care models evolve over the next several years.

Plans that engage with these RFIs have an opportunity to influence future policy direction, while those that ignore them may find themselves reacting to changes rather than helping shape them. From a strategic standpoint, this section suggests that CMS views the 2027 rule as part of a broader transition rather than a one time regulatory update.

Conclusion

The CMS 2027 Medicare Advantage Proposed Rule reflects a broader regulatory movement toward simplification, alignment with statutory changes, and operational practicality. While some longstanding policies are being refined or removed, areas such as Star Ratings, Part D alignment, dual eligible integration, and stakeholder engagement remain central to CMS vision for the program.

At Annova Solutions, we work at the intersection of CMS policy and day to day Medicare Advantage operations.

Changes in Star Ratings, enrollment alignment, and program governance can influence documentation quality, data continuity, and risk adjustment outcomes. We help health plans operationalize regulatory expectations in a way that supports accuracy, compliance, and long-term performance.

If you would like to discuss how these policy changes may impact your organization, click here to connect with Annova Team.