Medicare Advantage Updates: CY 2027 Major Reforms Announced
The Centers for Medicare & Medicaid Services (CMS) recently announced significant updates to the Medicare Advantage (MA) program. On April 2, CMS introduced the Contract Year (CY) 2027 Medicare Advantage and Part D Final Rule, which includes modifications to the Star Ratings system, incorporates provisions from the Inflation Reduction Act (IRA) of 2022, and enacts deregulatory measures. Additionally, on April 6, the agency announced a projected 2.48% increase in Medicare Advantage payments for CY 2027.
The Final Rule features updates to the Part C and Part D Star Ratings, codifying IRA-driven changes to the Part D prescription drug benefit. This restructured benefit now consists of deductible, initial coverage, and catastrophic phases, eliminating the coverage gap. Starting January 1, 2025, the Coverage Gap Discount Program will be replaced by the Manufacturer Discount Program, mandating manufacturers to offer discounts in specific phases.
Additional reforms focus on supplemental benefits and the Special Supplemental Benefits for the Chronically Ill (SSBCI). The new regulations clarify that cannabis products not permitted under state or federal law are ineligible as SSBCI. Furthermore, CMS has chosen not to finalize a proposed ban on marketing the monetary value of supplemental benefits, allowing MA organizations to highlight these benefits' worth.
CMS has also refrained from advancing certain proposals from the CY 2027 proposed rule, including a special enrollment period tied to provider contract terminations. Feedback received during the comment period might influence future policy discussions, signaling CMS's responsiveness to stakeholder input.
The Rate Announcement also addresses modifications to the Part C and Part D risk adjustment models. CMS will persist with the 2024 CMS-HCC model for risk score calculations, excluding diagnoses from audio-only services unless linked to face-to-face visits. An outstanding exception permits inclusion of diagnoses from unlinked chart reviews for enrollees transitioning between MA organizations.
For Part D, updated risk adjustment models will be implemented, leveraging recent data to improve alignment with MA-PD and PDP market utilization patterns. These adjustments are intended to enhance predictive accuracy and appropriately reweight RxHCCs.
CMS's latest measures represent a continuous effort to streamline operations and align regulatory frameworks with legislative changes, thereby refining benefit structures to better serve stakeholders within the Medicare Advantage landscape.