CMS Proposes 2027 Medicare Advantage and Part D Updates Including IRA Changes and Star Rating Revisions

On November 26, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the Proposed Rule for the Medicare Program addressing policy and technical changes for Contract Year (CY) 2027. This extensive 465-page proposal outlines updates primarily affecting Medicare Advantage (Part C), the Medicare Prescription Drug Benefit Program (Part D), and Medicare Cost Plans. Key driver reforms respond to statutory mandates, notably the Inflation Reduction Act of 2022 (IRA), CMS feedback, and deregulatory priorities. A significant focus is Part D redesign, firmly embedding IRA-driven revisions such as new deductible structures, coverage phases, out-of-pocket thresholds, and modifications to specialty tier regulations. CMS seeks to codify policies impacting the Manufacturer Discount Program (MDP) and adjustments in reinsurance payment methodologies, aligning program operations with the IRA’s phased changes through 2026. In Medicare Advantage Star Ratings, CMS proposes removing select measures with implementation staggered through 2028 and 2029, including appeals-related metrics and certain operational indicators. A new Depression Screening and Follow-Up measure aims to address behavioral health gaps starting in 2027. These adjustments reorient emphasis toward patient outcomes over administrative processes, potentially requiring health plans to realign operational priorities toward care quality. CMS intends to rescind some marketing and communications oversight rules introduced under previous administration policies, signaling a regulatory rollback that could reduce compliance burdens for Medicare Advantage organizations and Part D plan sponsors. This would impact agent/broker oversight and plan marketing activities beginning in CY 2027. To strengthen program integrity, CMS proposes standardizing documentation requirements for coverage decisions and Point-of-Sale adjudications, including mandates for maintaining original format records. Plans would gain limited appeal rights for Prescription Drug Event (PDE) audit determinations, while noncompliance could lead to contested penalties. CMS highlights growth in Chronic Condition and Institutional Special Needs Plans and requests information regarding enrollment trends and impact on state integration efforts. It suggests potential regulatory adjustments for Dual-Eligible Special Needs Plans to enhance program coherence. Aligning with Executive Order 14192 on deregulation, CMS proposes rollbacks of duplicative or low-value Medicare Advantage and Part D regulations, with limited expected impact on plan operations but signaling policy streamlining. Finally, CMS is exploring future risk adjustment model reforms, soliciting input on near-term tweaks and new methodologies responsive to technology advances and past data integrity challenges. This could signal a major shift from the Hierarchical Condition Category (HCC) framework. Overall, these proposals represent a blend of codification of prior instructions, deregulatory shifts, and strategic adjustments aimed at improving program efficiency, reducing compliance burdens, and enhancing patient care focus within Medicare Advantage and Part D. Stakeholders are encouraged to engage with CMS during the comment period to influence final rule outcomes.