CMS published its final 2027 Medicare Advantage and Part D rule on April 2, enacting changes to star ratings, supplemental benefits administration, Part D coverage, and a series of deregulatory provisions.
The rule is effective June 1 and applies to coverage beginning in 2027.
Ten notes:
1. The final rule does not implement the Excellent Health Outcomes for All reward (previously called the Health Equity Index), which had been finalized under the Biden administration and was set to take effect in the 2027 star ratings. CMS will instead continue the historical reward factor, which incentivizes high performance across all enrollees and all quality measures.
2. CMS finalized the removal of 11 star ratings measures it characterized as focused on administrative processes or areas with too little variation to be meaningful to beneficiaries. The agency had originally proposed removing 12 measures, but the “diabetes care – eye exam” measure was kept in after the comment period. Most removals will take effect with the 2027 measurement period and 2029 star ratings. CMS estimates the star ratings changes will have a net impact of $18.6 billion on the Medicare Trust Fund from 2027 through 2036, or 0.21% of Medicare payments to insurers.
3. CMS is adding a new MA depression screening and follow-up measure to address behavioral health gaps, beginning with the 2027 measurement year and reflected in 2029 star ratings.
4. A proposed special enrollment period that would have allowed enrollees to switch plans when their provider leaves their MA network was not finalized. CMS cited broad interest in the topic and said it will consider it for future rulemaking.
5. CMS finalized the codification of Part D changes under the Inflation Reduction Act, including the elimination of the coverage gap (already in effect since 2025), the $2,000 annual out-of-pocket threshold, zero cost sharing in the catastrophic phase, and the Manufacturer Discount Program that replaced the Coverage Gap Discount Program.
6. CMS finalized supplemental benefit debit card guardrails. Plans using debit cards to administer supplemental benefits must link cards to a real-time point-of-sale verification mechanism and limit card use to the specific plan year. A proposed ban on marketing the dollar value of supplemental benefits was not finalized. CMS also finalized a requirement that plans publicly post their eligibility criteria for special supplemental benefits for the chronically ill.
7. CMS finalized a clarification to its special supplemental benefits for the chronically ill regulations saying that cannabis products that are illegal under state or federal law are not allowable as SSBCI benefits.
8. CMS finalized four health equity rollbacks. Utilization management committees will no longer be required to include a health equity expert member, conduct annual health equity analyses, or post those analyses publicly. MA quality improvement programs will no longer be required to include activities specifically designed to reduce health disparities. CMS also rescinded the requirement for plans to send mid-year notices reminding enrollees of unused supplemental benefits.
9. Account-based plans, including health reimbursement arrangements, flexible spending accounts, and health savings accounts, are exempt from creditable coverage disclosure requirements. Restrictions on the time and manner that beneficiaries can have conversations with agents and brokers have also been removed.
10. Three requests for information from the proposed rule drew comments CMS said it will consider for future rulemaking. The RFIs covered risk adjustment modernization (including a model that potentially uses AI), the major enrollment growth of dually eligible individuals in C-SNPs over D-SNPs, and policies to support enrollee wellbeing, nutrition, and preventive care. The agency received more than 42,000 comments on the proposed rule overall.
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