CY 2027 Medicare Advantage Rule Delivers Wins but Weakens Plan Accountability

The Centers for Medicare & Medicaid Services issued the final rule for the Contract Year 2027 Medicare Advantage and Part D programs on April 2, 2026, with most provisions effective January 1, 2027. According to CMS officials, the rule aims to improve quality and access by streamlining enrollment, updating Star Ratings measures, and implementing Inflation Reduction Act reforms while removing certain administrative performance metrics.

This increase, finalized on April 2, 2026, and published in the Federal Register on April 6, represents a significant rise from the 0.09% increase estimated in the earlier Advance Notice, CMS officials said. The payment update reflects adjustments to coding differentials between MA and Original Medicare and aims to support a sustainable MA program while maintaining beneficiary choice and stewardship of taxpayer funds.

The final rule for Contract Year 2027 includes a 2.48% increase in Medicare Advantage (MA) payments, projected to add approximately $13 billion in revenue for plans compared to 2026, according to the Centers for Medicare & Medicaid Services (CMS).

CMS finalized several changes to the Star Ratings quality measurement system, removing 11 measures focused on administrative processes that showed consistently high performance and limited variation between plans. These deletions take effect starting with the 2027 measurement year and the 2029 Star Ratings, officials said. In their place, a new measure addressing behavioral health gaps—Part C Depression Screening and Follow-Up—will be added. CMS noted that these changes streamline the measure set to emphasize areas where beneficiaries can better distinguish plan performance. The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) summarized these simplifications in their April 21, 2026, analysis of the rule.

Part D reforms codify provisions of the Inflation Reduction Act (IRA) of 2022, including eliminating the coverage gap phase and establishing a reduced annual out-of-pocket threshold of $2,100 for 2026, with statutory adjustments for subsequent years. CMS finalized the removal of cost sharing for enrollees in the catastrophic coverage phase, which now consists of three phases: deductible, initial coverage, and catastrophic. The rule also incorporates the Manufacturer Discount Program, which replaced the Coverage Gap Discount Program as of January 1, 2025, aligning Part D benefits with statutory requirements, CMS said.

The rule updates risk adjustment policies by excluding diagnoses from unlinked chart review records, except for beneficiaries switching MA organizations, and excluding diagnoses coded from audio-only services identified by modifiers 93 and FQ. These changes are expected to reduce the risk adjustment diagnosis pool, producing net savings to the Medicare Trust Fund in 2027. CMS officials emphasized principles of simplicity, competition, and accurate payments reflecting health risk in their risk adjustment methodology. Plans heavily reliant on unlinked chart review records or audio-only coding may see greater impacts on risk scores and payments.

Several deregulatory provisions affecting marketing and enrollment take effect October 1, 2026. CMS eliminated the 48-hour Scope of Appointment waiting period and the 12-hour prohibition on educational-to-marketing events, rescinded the requirement for MA plans to send mid-year notices about unused supplemental benefits, and relaxed marketing and agent broker requirements. The Medicare Rights Center publicly criticized these relaxations on April 16, 2026. Additionally, the rule exempts account-based plans such as health reimbursement arrangements (HRAs), flexible spending accounts (FSAs), and health savings accounts (HSAs) from creditable coverage disclosure requirements.

Regarding supplemental benefits and equity, CMS removed the obligation for plans to issue mid-year communications on unused supplemental benefits but retained the supplemental benefits provision after initially proposing its removal. This retention was noted by commenters as important for dually eligible individuals. The agency also rescinded the requirement for MA quality improvement programs to include activities aimed at reducing health disparities and revised the “cultural considerations” provision to revert to pre-2023 language on equitable access. The Center for Medicare Advocacy opposed the rescission of mid-year notices in comments submitted on the November 28, 2025, proposed rule.

Most provisions of the rule will apply to coverage beginning January 1, 2027, while marketing and communications changes take effect October 1, 2026, according to CMS. The rule finalizes policy and technical changes to Medicare Advantage, Part D, and Medicare Cost Plan programs with the stated goal of improving quality and access to care. CMS officials highlighted the rule’s alignment with statutory requirements and efforts to balance beneficiary protections with program flexibility.