CMS Proposes Major Medicare Advantage and Part D Program Updates for 2027

On November 25, 2025, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule outlining substantial policy and technical changes to the Medicare Advantage (MA) and Part D programs, effective in 2027 and beyond. Key revisions include a restructuring of the Star Ratings system, integration of Inflation Reduction Act provisions, and multiple regulatory relief initiatives aimed at streamlining program operations. These changes notably involve the removal of the Health Equity Index reward, elimination of 12 Star Ratings measures, and modifications to marketing and enrollment protocols. CMS projects that these revisions will increase Medicare spending by approximately $13.8 billion over the next decade. The primary financial impact is driven by enhanced quality bonus payments linked to the updated Star Ratings. However, the distribution of rating changes is varied; CMS anticipates that 62% of contracts will see no change, 13% will improve by a half-star, 25% will decline by a half-star, and one contract will decrease by a full star. Quality bonus payments will increase for 5% of contracts and decrease for 4%. The proposal also explores avenues to reduce the lag time between the assessment of program performance and the disbursement of quality bonus payments (QBPs), seeking stakeholder input on accelerating this process. Adjustments are expected to affect key areas such as risk adjustment methodologies and health equity initiatives, mandating careful review from healthcare payers and providers alike. Health plans, providers, and industry stakeholders are encouraged to evaluate the potential effects of these proposals on compliance, financial management, and operational strategies. Engagement in the public comment period, which ends on January 26, 2026, is crucial to influence the final rule's outcomes. This timeline allows stakeholders to prepare for integration of these changes into their Medicare Advantage and Part D program frameworks. Overall, CMS's proposed amendments signify a strategic shift in how quality metrics and bonuses are structured within MA and Part D, indicating a response to evolving healthcare delivery and policy landscapes. These changes emphasize greater fiscal impact stemming from quality performance incentives while adjusting measures to align with current regulatory priorities.