CMS Proposes 2027 Medicare Advantage and Part D Regulatory Updates and Data Use Changes

The Centers for Medicare & Medicaid Services (CMS) has released its Proposed Contract Year 2027 Policy and Technical Changes for Medicare Advantage, Prescription Drug Benefit, and Medicare Cost Plan Programs. The proposal addresses a range of regulatory areas including Star Ratings, marketing and communications, risk adjustment, and implementation of the Inflation Reduction Act (IRA) provisions related to Medicare Part D. Notably, CMS aims to simplify the Star Ratings system by refocusing on clinical care, outcomes, and patient experience measures, removing 12 measures largely related to administrative processes, and opting not to continue Health Equity Index rewards. CMS proposes updates to the marketing and communication rules, including changes to third-party marketing organizations' definitions, translation requirements, and enrollment verification. The agency seeks feedback on modernizing oversight methods to reduce burdens while ensuring beneficiary awareness and targeting actions against non-compliant marketing entities. Regarding risk adjustment, CMS suggests broadening permissible uses and data sharing of risk adjustment information beyond current enumerated uses, allowing earlier data release with maintained beneficiary confidentiality. This signals a more flexible approach than previous constraints, though CMS does not address a recent court ruling that invalidated certain risk adjustment methodologies. About 25% of the proposed changes implement Parts of the IRA impacting Medicare Part D, including formalizing the phaseout of the Coverage Gap Discount Program, refining manufacturer discount programs, clarifying medical loss ratio rules, and adjusting TrOOP accrual rules. These changes aim to align regulatory structures with legislative mandates enacted in recent years. Additionally, CMS is examining ways to simplify reporting obligations for Medicare Advantage and Part D plan sponsors to reduce administrative burdens on both plans and the agency. This includes exploring automated data sharing and technological solutions to streamline data import and usage. The proposal features a broad Request for Information (RFI) inviting stakeholders to suggest improvements to Medicare Advantage regarding data transparency, beneficiary plan selection, program quality, competition, fraud reduction, and fiscal efficiency. CMS encourages industry feedback by the January 26 deadline to refine these important program aspects moving forward.