CMS Finalizes CY 2027 Medicare Advantage and Part D Rule: Key Implications for Plan Sponsors

On April 6, 2026, the Centers for Medicare & Medicaid Services (CMS) published its final rule governing the Medicare Advantage (Part C) and Prescription Drug Benefit (Part D) programs for Contract Year (CY) 2027. The final rule is effective June 1, 2026, with most provisions applicable to coverage beginning January 1, 2027, and marketing and communications changes taking effect October 1, 2026. Beyond payment, the rule pursues a broad deregulatory agenda aligned with Executive Order 14192, reversing marketing and enrollment safeguards introduced in 2023 and easing documentation and reporting obligations, while introducing new program integrity requirements.

Key Takeaways

• The rule finalizes the removal of several Star Ratings measures beginning with the 2027 measurement period, shifting relative weight toward survey-based and clinical outcome categories; plans must continue reporting on removed measures through CMS’s online plan comparison tools.
• The rule codifies the Inflation Reduction Act (IRA)-mandated restructured Part D benefit and Manufacturer Discount Program (MDP) framework, imposing civil money penalties for noncompliant manufacturers.
• The new rule eliminates or relaxes several marketing and enrollment safeguards, including the 48-hour Scope of Appointment (SOA) waiting period and the 12-hour educational-to-marketing event prohibition; most changes take effect October 1, 2026.
• The rule finalizes a number of proposals from the CY 2026 proposed rule relating to the use of debit cards that are used to provide supplemental benefits in MA.
• The rule introduces an appeals process for Part D program integrity Prescription Drug Event record review audits.

For comprehensive context on the Proposed Rule released in 2025, please see our previous client alert.

Final Rule Highlights for Medicare Health Plans

The provisions summarized below reflect key aspects of the CY 2027 final rule’s impact on Medicare health plan operations, spanning quality and Star Ratings, marketing and enrollment, program integrity, and supplemental benefits. Plans should review each area carefully to assess near-term compliance obligations and longer-term strategic implications as the 2027 contract year approaches.

Part D Redesign

The final rule codifies changes mandated by the IRA to the Part D benefit structure and establishes the regulatory framework for the MDP, which replaced the Coverage Gap Discount Program as of January 1, 2025. Plans should ensure their operational and billing systems reflect the fully codified three-phase benefit structure and the MDP’s invoicing and reconciliation requirements.

• Following the IRA’s elimination of the coverage gap, the Part D benefit is now structured across three phases (i.e., deductible, initial coverage, and catastrophic), and beneficiaries pay no cost sharing once they reach the catastrophic phase.
• The annual out-of-pocket threshold is set at $2,100 for CY 2026, with a statutory methodology governing future annual adjustments.
• Under the MDP, manufacturers are required to provide discounts of 10% on covered drugs dispensed during the initial coverage phase and 20% during the catastrophic phase; plans should note that noncompliant manufacturers face civil money penalties equal to the unpaid discount amount plus an additional 25%.

Risk Adjustment

Risk adjustment outcomes in the CY 2027 Final Rule center primarily on a revised framework governing CMS’s use and disclosure of MA risk adjustment data, which CMS finalized as proposed. CMS deferred questions about the underlying payment model and methodology to future rulemaking.

CMS addressed potential future model changes (e.g., the possible incorporation of MA encounter data, AI-based modeling approaches, and the exclusion of diagnoses not associated with specific services rendered) exclusively through a request for information in the CY 2027 proposed rule, but took no additional regulatory action in this final rule.

Star Ratings Program

The final rule significantly restructures the Star Ratings measure set, reducing the number of rated measures and shifting the relative weight of the remaining methodology toward survey-based and clinical outcome categories. Plans should expect these structural changes to inform their ratings strategies and quality improvement resource allocation.

• CMS finalized the removal of 11 measures from the Star Ratings calculations beginning with the 2027 measurement period but did not finalize a proposal to remove the Diabetes Care–Eye Exam measure in response to comments received on the proposal.
• A new quality measure addressing depression screening and clinical follow-up was added to the Star Ratings framework, applicable beginning with the 2027 measurement year and first reflected in the 2029 Star Ratings.
• Citing high performance across all enrollees and measures, CMS plans to maintain the longstanding reward factor methodology rather than implement the Health Equity Index reward that had been finalized under the Biden administration for the 2027 Star Ratings.
• CMS estimates the net impact of the Star Ratings changes on the Medicare Trust Fund at $18.56 billion from 2027 through 2036, representing approximately 0.21% of total Medicare payments to private health plans over that period. The agency stated that its analysis of the potential impact of the finalized changes showed that most contracts (63%) would have no change in their overall rating.

Marketing, Communications, and Agent/Broker Oversight

CMS finalized a comprehensive rollback of existing marketing and communications safeguards, substantially reducing the procedural constraints on how plans, agents, and brokers may engage with prospective beneficiaries during the enrollment decision-making process. Most changes are effective October 1, 2026, and will require plans to update their marketing and agent oversight workflows well in advance of the annual enrollment period.

• The 48-hour waiting period between SOA completion and personal marketing appointments is eliminated.
• The 12-hour prohibition between educational and marketing events held at the same location is eliminated, provided beneficiaries are notified of the transition and given a meaningful opportunity to leave before the marketing event begins.
• SOA form collection at educational events is now expressly permitted.
• The prohibition on the use of superlatives in marketing materials without supporting documentation is removed, though the general prohibition on misleading or materially inaccurate communications remains in effect.
• The required retention period for marketing and sales call recordings is reduced from 10 to six years.
• The Notice of Availability of language assistance and auxiliary aids and services requirements are rescinded.

Program Integrity

 The final rule modifies several documentation requirements from the proposed rule to provide greater operational flexibility and further introduces a new compliance obligation. Plans should carefully evaluate these changes alongside the rule’s broader deregulatory adjustments. 

• Part D coverage determination documentation requirements are finalized with practical flexibility: written transcripts or contemporaneous call notes satisfy record retention obligations in lieu of audio recordings; diagnosis documentation need not take the form of an ICD-10 code; and not all documentation elements are required for every determination.
• The final rule clarified that required documentation of communications is limited to communications by the plan with others and not communications between third parties that are not affiliated with the plan.
• A persistent outlier prescriber threshold for opioids is finalized at three consecutive CMS notifications, with exclusions for beneficiaries in hospice, palliative, or end-of-life care; long-term care facilities; being treated for cancer-related pain; or with sickle cell disease.
• A three-level appeals process for Part D program integrity Prescription Drug Event (PDE) record review audits is established with defined review timeframes at each level.

Supplemental Benefits and Special Needs Plans

CMS finalized a set of targeted changes to the rules governing supplemental benefits and SNP operations, adding transparency and guardrail requirements while deferring broader structural questions — including those related to Chronic Condition Special Needs Plan (C-SNP) and Dual Eligible Special Needs Plan (D-SNP) enrollment dynamics — to future rulemaking. Plans administering supplemental benefits through debit cards will face new operational requirements that should be assessed for systems and vendor contract implications.

• Plans offering Special Supplemental Benefits for the Chronically Ill (SSBCI) must make their eligibility criteria for those benefits publicly accessible.
• The final rule refines the existing prohibition on cannabis as an SSBCI benefit, narrowing its scope to products that violate governing state or federal law and thereby preserving access to certain lawful hemp-derived products as eligible benefits.
• Where plans administer supplemental benefits through debit cards, those cards must incorporate a real-time electronic verification mechanism confirming enrollee eligibility at the point of sale, and benefits may not be carried over across plan years.
• The proposed Special Enrollment Period (SEP) allowing beneficiaries to switch plans when an in-network provider leaves the network was not finalized; CMS indicated it will continue evaluating options in future rulemaking.
• The final rule finalizes the retention of the supplemental benefits provision, canceling its proposed removal after commenters highlighted limited awareness of the pathway, its potential as an alternative to the recently ended Value Based Insurance Design program, and its promise as a vehicle for developing innovative supplemental benefits for dually eligible individuals.

Reducing Regulatory Burden

The final rule eliminates or relaxes several requirements, including those specified below, applicable to MA plans as part of the administration’s express commitment to reducing regulatory burden under Executive Order 14192. While these changes reduce compliance obligations in the near term, plans should document their implementation of the revised requirements carefully given the potential for future policy reversals.

• Three health equity requirements were eliminated: utilization management committees are no longer required to include a member with health equity expertise; plans are no longer required to conduct annual health equity analyses of the use of prior authorizations on enrollees with one or more specified social risk factors, or publish those analyses publicly; and quality improvement programs are no longer required to implement activities specifically targeting health disparities among enrolled populations.
• An expansion of the provision relating to “cultural considerations” that had compelled MA organizations to ensure equitable access to MA services under CMS’s 2023 final rule has been revised, reverting to the provision as it existed prior to the 2023 rule.
• The obligation for plans to issue mid-year communications identifying supplemental benefits that enrollees have not yet used has been eliminated.
• Health reimbursement arrangements, flexible spending accounts, and health savings accounts are relieved of the creditable coverage disclosure obligations applicable to other plan types.
• Finalized removal of language that previously authorized the U.S. Department of Health and Human Services (HHS) secretary to impose enrollment sanctions on MA organizations offering a D-SNP that failed to meet at least one of the new Medicaid integration standards due to an expiration of statutory authority.

Final Thoughts and Next Steps

The CY 2027 final rule combines a materially improved payment rate with deregulatory adjustments and new program integrity requirements, while deferring several high-stakes issues — including risk adjustment model updates and the proposed provider termination SEP — to future rulemaking cycles. Near-term priorities for Medicare health plans include updating marketing and enrollment workflows ahead of October 1, 2026; recalibrating Star Ratings quality improvement strategies in light of the revised measure set; and monitoring CMS’s future rulemaking activity on topics the agency has expressly flagged for continued consideration. Organizations with specific questions or concerns should consider reaching out to any member of this alert’s author team or to their preferred Crowell & Moring lawyer.