CMS Proposes 2027 Medicare Advantage Rule Updates on Star Ratings, Risk Adjustment, and Reporting

The Centers for Medicare & Medicaid Services (CMS) has released its proposed Contract Year 2027 rules for the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program. These proposals address a wide range of topics following recent legal challenges related to Star Ratings, marketing regulations, and risk adjustment methodologies. CMS aims to simplify the Star Ratings system by reducing the number of measures and focusing on clinical care, outcomes, and patient experience, while also discontinuing the Health Equity Index rewards.\n\nIn marketing and communications, CMS proposes updates including new definitions for third-party marketing organizations (TPMOs) and changes to translation and enrollment verification rules. The agency seeks input on modernizing marketing oversight to balance reducing administrative burdens with maintaining beneficiary protections and ensuring accountability for TPMOs acting in bad faith.\n\nRisk adjustment proposals suggest expanding CMS’s ability to use and disclose risk adjustment data beyond currently enumerated purposes, including broader data sharing with government entities and others before reconciliation occurs. CMS underscores continued protection of beneficiary confidentiality despite these planned expansions but does not directly address recent court decisions invalidating its extrapolation method.\n\nSignificant portions of the proposed rules implement changes stemming from the Inflation Reduction Act (IRA), such as sunsetting the Coverage Gap Discount Program and clarifying new programs like the Manufacturer Discount Program, medical loss ratio requirements, and true out-of-pocket (TrOOP) cost calculations under Part D.\n\nCMS is also considering ways to simplify Medicare reporting requirements to reduce administrative burden on Medicare Advantage organizations and Part D plan sponsors. Potential technological solutions, such as automated data sharing, are being explored to streamline reporting on provider networks, utilization, and special needs plans models of care.\n\nLastly, CMS issued a broad Request for Information focused on the future of Medicare Advantage, specifically its risk adjustment and quality bonus payment systems. This initiative aims to enhance program quality, transparency, competition, fraud prevention, and cost-effectiveness. Stakeholders are invited to comment on these proposals by January 26, 2025.