CMS Proposes Comprehensive CY2027 Medicare Advantage and Part D Regulatory Updates

On November 25, 2025, CMS released the proposed rule for the CY 2027 Medicare Advantage (MA) and Part D programs, introducing substantial revisions impacting payment structures, enrollment, marketing, and quality measurement. The proposal incorporates implementation details for key provisions from the Inflation Reduction Act of 2022 (IRA) and the SUPPORT Act of 2018. Notably, the IRA's Part D redesign eliminates the coverage gap phase by 2025 and establishes a $2,000 out-of-pocket cap for enrollees beginning in 2025, fundamentally altering enrollee cost-sharing and manufacturer discount obligations with new frameworks for manufacturer discount agreements and enhanced reporting requirements. The SUPPORT Act's opioid-related mandates would introduce procedures to identify and report persistent outlier prescribers to improve oversight. CMS proposes revisions to the Special Supplemental Benefits for the Chronically Ill (SSBCI) prohibiting cannabis products illegal under federal or state law while permitting certain FDA-recognized hemp seed-derived ingredients as benefits. MA and Part D plans face new operational mandates, including tightening documentation standards for coverage determinations and modifying marketing rules. Changes include revising Special Enrollment Periods (SEPs) related to provider terminations and increasing CMS oversight over election mechanisms for greater regulatory control. The proposed rule seeks to relax restrictions on risk adjustment data use and disclosure, promoting broader access while maintaining confidentiality safeguards. Marketing regulations would be adjusted to ease timing restrictions on educational and marketing events, remove the 48-hour waiting period after Scope of Appointment (SOA) form completion, and expand scenarios classified as personal marketing appointments. Additionally, CMS plans to reduce call recording retention from ten to six years, limit recording retention to marketing and sales calls, and rescind the Notice of Availability for language assistance to reduce duplication with other federal oversight. Significant updates to the Star Ratings system would include removal of 12 measures to sharpen focus on key clinical and patient experience metrics, addition of a depression screening and follow-up measure to address behavioral health gaps, and retention of traditional quality improvement incentives over newly introduced Health Equity Index rewards. CMS projects these changes would modestly affect plan ratings and quality bonus payments, impacting plan financial performance and benchmarking. For special needs plans (SNPs), CMS proposes technical adjustments in the Model of Care (MOC) submission timetable, revisions to passive enrollment policies aiming to reduce coverage disruptions for dually eligible beneficiaries, and amends the one D-SNP policy to accommodate states without mandatory Medicaid managed care by creating new exceptions. Clarifications on contract termination processes and marketing submission identifiers aim to enhance plan operational compliance. Further CMS action is sought via requests for information on SNP enrollment growth, integration of care for dually eligible populations, and potential reforms to payment and quality frameworks within Medicare Advantage to foster competition and improve beneficiary outcomes. CMS also invites comment on modernizing risk adjustment methodologies, the structure of quality bonus payments, and policies addressing well-being and nutrition. The proposal aligns with Executive Order 14192 focusing on deregulation to reduce administrative burdens and costs within the Medicare program. Stakeholders have until January 26, 2026, to submit comments. The rule reflects a complex regulatory evolution addressing cost management, program integrity, data transparency, and quality measurement aimed at balancing plan flexibility with consumer protection and program sustainability. Collectively, the proposed MA and Part D regulatory changes represent a significant shift in the administration of these programs, emphasizing streamlined operations, enhanced data utilization, and refined quality incentives. The changes are expected to require substantial adaptations by Medicare Advantage and Part D plan sponsors, including updates to enrollment processes, contract management, marketing compliance, and reporting practices. Market participants and regulators will closely monitor potential legal challenges arising from some contentiously proposed amendments, particularly those affecting Star Ratings metrics and SEP eligibility. Overall, the CMS CY 2027 Proposed Rule underscores ongoing efforts to recalibrate the Medicare Advantage and Part D landscape in the context of evolving legislation and policy priorities, with an emphasis on reducing complexity, improving care coordination for vulnerable populations, and fostering competitive, quality-driven plan offerings.