CMS Proposes Major 2027 Medicare Advantage and Part D Updates Following Inflation Reduction Act

On November 26, 2025, the Centers for Medicare & Medicaid Services (CMS) released its Proposed Rule for the Medicare Program for Contract Year 2027, targeting comprehensive updates to Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), and Medicare Cost Plan programs. This proposed rule notably implements statutory changes from the Inflation Reduction Act of 2022 (IRA) and regulatory feedback, while aligning with federal deregulatory objectives. The 465-page proposal addresses multiple key areas, including Requests for Information (RFIs) on the Hierarchical Condition Category (HCC) risk adjustment model, modernization of agent and broker oversight, and Enhanced integrated care policies for Chronic Condition Special Needs Plans (C-SNPs) and Institutional Special Needs Plans (I-SNPs). It also aims to improve care access and coordination for beneficiaries with mental health or substance use disorders. Significant IRA-related changes to the Medicare Part D benefit are codified, affecting deductible phases, coverage limits, coverage gap, out-of-pocket thresholds, specialty tier regulations, reinsurance payment methodologies, and the Manufacturer Discount Program. While these codifications finalize program guidance issued in previous years, CMS maintains prior frameworks for historical and reconciliation purposes. In Medicare Advantage Star Ratings, CMS proposes removing and adding measures, including introducing a new Depression Screening and Follow-Up (DSF) metric to address behavioral health gaps. The Health Equity Index (HEI) will not be implemented. Simulations suggest that most contracts will see negligible rating changes, though some will experience slight increases or decreases, impacting Quality Bonus Payments (QBPs). CMS is requesting input on refining QBPs to accelerate new measure implementation and reduce lag times between measurement and payment. The agency is considering delinking QBPs from MA bids via Innovation Center models. The rule reflects a pivot to deregulate parts of Medicare Advantage and Part D marketing rules established under previous administrations. Proposed rollbacks target reducing perceived burdens, modernizing marketing oversight, and streamlining agent and broker regulations while maintaining accurate beneficiary information. CMS proposes standardizing and strengthening documentation requirements for coverage determinations and point-of-sale claim adjudications, including maintaining original format records such as audio recordings. The rule introduces limited appeal rights for Prescription Drug Event (PDE) audit findings. With rapid enrollment growth in C-SNPs and I-SNPs, CMS seeks public input to evaluate impacts on state integration efforts and regulatory adjustments regarding Dual-Eligible Special Needs Plans (D-SNPs). The agency notes concerns over C-SNPs potentially circumventing integration requirements. The proposed rule supports federal deregulation efforts outlined in Executive Order 14192, aiming to remove redundant or low-value Medicare Advantage and Part D regulations. These changes chiefly affect diversity, equity, and inclusion (DEI) requirements and outdated provisions, with minimal expected health plan impact. Finally, CMS is exploring alternative risk adjustment methodologies beyond the HCC model in light of recent legal challenges and fraud concerns. The agency encourages Medicare Advantage organizations to comment on these proposals, highlighting potential implications for data confidentiality and program integrity. This rulemaking process presents significant operational, compliance, and strategic considerations for Medicare Advantage organizations, Part D plan sponsors, and other stakeholders in the Medicare insurance market.