TL/DR –
The Centers for Medicare & Medicaid Services (CMS) has published its final 2027 rule for Medicare Advantage and Part D, which will come into effect from June 2027. The rule removes 11 star rating measures, adds a new depression screening measure, and does not implement the Excellent Health Outcomes for All reward. The CMS also made changes to the supplemental benefit administration and Part D coverage, and introduced deregulatory provisions.
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Finalized 2027 Medicare Advantage and Part D Rule Published by CMS
The Centers for Medicare & Medicaid Services (CMS) has released its final rule for Medicare Advantage and Part D for the year 2027. The rule, which will take effect on June 1, involves changes to star ratings, benefits administration, Part D coverage, and several deregulatory provisions.
The rule will apply to coverage starting in 2027.
Key Highlights from the Final Rule
The Excellent Health Outcomes for All reward (formerly known as the Health Equity Index) will not be implemented as part of this final rule. Instead, the historical reward factor, which encourages high performance across all enrollees and quality measures, will continue. This reward was finalized under the Biden administration and was initially set to take effect in the 2027 star ratings.
Eleven star ratings measures focused on administrative processes or areas with too little variation to be useful to beneficiaries will be removed, however, the “diabetes care – eye exam” measure was retained after public feedback. Most of these removals will take effect in the 2027 measurement period, reflected in 2029 star ratings. CMS estimates these changes will have a net impact of $18.6 billion on the Medicare Trust Fund from 2027 through 2036, accounting for 0.21% of Medicare payments to insurers.
A new Medicare Advantage depression screening and follow-up measure will be added to address behavioral health gaps, starting from the 2027 measurement year. This will be reflected in the 2029 star ratings.
A proposed special enrollment period that would allow enrollees to change plans when their provider leaves their Medicare Advantage network was not finalized. CMS stated it will consider this issue for future rulemaking due to its broad interest.
Changes to Part D and Supplemental Benefits
The final rule codified changes to Part D under the Inflation Reduction Act. Changes include the elimination of the coverage gap (already in effect since 2025), a $2,000 annual out-of-pocket threshold, zero cost sharing in the catastrophic phase, and the introduction of the Manufacturer Discount Program which replaced the Coverage Gap Discount Program.
Further, CMS established guidelines for the use of debit cards to administer supplemental benefits. These guidelines state that plans 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. Nonetheless, it was finalized that plans must publicly post their eligibility criteria for special supplemental benefits for the chronically ill.
Further Provisions
CMS clarified that cannabis products that are illegal under state or federal law are not eligible as special supplemental benefits for the chronically ill (SSBCI).
Furthermore, four provisions aimed at promoting health equity were rolled back. Utilization management committees are no longer required to include a health equity expert or conduct annual health equity analyses. Medicare Advantage quality improvement programs will no longer be required to include activities specifically aimed at reducing health disparities. CMS also rescinded the requirement for plans to send mid-year notices reminding enrollees of unused supplemental benefits.
The new rule exempts account-based plans, including health reimbursement arrangements, flexible spending accounts, and health savings accounts, from creditable coverage disclosure requirements. Restrictions on when and how beneficiaries can converse with agents and brokers have also been lifted.
Finally, CMS received three requests for information from the proposed rule that it will consider for future rulemaking. The requests cover risk adjustment modernization, the major enrollment growth of dually eligible individuals in C-SNPs over D-SNPs, and policies to support enrollee wellbeing, nutrition, and preventive care. CMS received over 42,000 comments on the proposed rule overall.
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