Final 2027 Medicare Advantage and Part D Rule Increases Plan Pay and Relaxes Marketing Restrictions

Earlier this month, CMS released the Final Part C and D Rule for 2027, which revises Medicare Advantage (MA) and Part D regulations to implement various policy changes. With a few notable exceptions, the final rule comports largely with the proposed rule, to which Medicare Rights provided comments in January.

Increased Payments Likely from Star Ratings Changes

The final rule changes the Star Ratings system—under which plans can obtain bonus payments—by eliminating 11 measures, including several that address call center performance, and reinstating a “reward” factor that was previously set to be replaced by a health equity factor. CMS commentary notes that “These impacts will likely vary significantly from plan to plan (or contract to contract) based on the business strategies and the competitive landscape for each plan and contract.”

The rule estimates that these changes will add about $19 billion in program costs between 2028 and 2036, reflecting that the changes will mean fewer hurdles for insurers to get bonus payments. This boost to MA plans’ bottom lines comes as CMS finalized a higher-than-proposed rate hike for next year, failing to address problematic overpayment.

No New Special Enrollment Period for Provider Terminations

Disappointingly, the final rule does not include a new Special Enrollment Period (SEP) for provider terminations. This SEP would have allowed MA enrollees to switch plans when their preferred providers left the network. CMS did not give any reason for its decision.

Rolling Back Marketing Restrictions

The final rule also retains significant changes rolling back marketing requirements for plans and their agents. This includes limiting the requirement to retain recordings or transcripts of communications to 3 years, down from 10, relaxing restrictions on the use of superlative language in marketing materials, blurring the lines between educational and marketing events, removing requirements for agents to point callers to State Health Insurance Assistance Programs (SHIPs), and allowing agents to deliver disclaimer information about what plans they do and don’t represent at any time before discussing plan benefits, rather than within the first 60 seconds of a call or meeting.

Positive Changes Around Prior Authorization and Formularies

With regard to coverage determinations and utilization management, Medicare Rights is pleased to see that the final rule retains proposals that strengthen transparency and oversight of Part D formularies and coverage decisions through standardized documentation requirements and public availability of CMS formulary evaluations. 

Unfortunately, the rule also eliminates the requirement for an annual analysis to assess any disparate impact the plan’s utilization management policies may have. 

Supplemental Benefits Regulations a Mixed Bag

Medicare Rights also supports the finalization of the previously proposed requirement to publish objective criteria for accessing supplemental benefits.

At the same time, however, the proposed rule eliminates the requirement that plans provide midyear notice to people who are eligible for but have not accessed a supplemental benefit, which leaves many enrollees without vital information and access to benefits.