CMS released its CY 2027 Medicare Advantage (MA) final rule and rate announcement, which increases overall MA payments by 2.48% for CY 2027, an increase from what was originally proposed. CMS also finalized several risk adjustment policies, including exclusion of diagnoses from audio-only services from the risk score calculation when there is no other line on the encounter data record, chart review record, or fee-for-service claim is risk-adjustment eligible. CMS also excluded diagnoses from unlinked chart review records, with a limited exception for certain beneficiaries who switch MA organizations from one year to the next. CMS estimates that these two risk adjustment changes will generate $6.84 billion in net savings to the Medicare program in CY 2027. Click here for an AHPA detailed summary of the final rule.  

Health Equity Index (HEI) Reward Eliminated 

• CMS didn’t implement the Excellent Health Outcomes for All (HEI) reward for 2027 Star Ratings and will instead continue the historical reward factor. This removes a targeted bonus incentive tied to care for vulnerable populations.  

11 Star Ratings Measures Removed 

• CMS removed 11 additional measures from the Star Ratings program as part of an effort to streamline the measure set and focus on areas with more meaningful performance variation, while also adopting a new Part C Depression Screening and Follow-Up measure beginning with the 2027 measurement year for the 2029 Star Ratings.  

Redesigned Part D Benefit Structure 

• CMS eliminated the coverage gap phase, continued the no enrollee cost-sharing in the catastrophic phase, and the updated annual out-of-pocket threshold, which codifies the $2,000 cap established in 2025 and allows it to increase annually based on the statutory formula.  

Changes to Supplemental Benefits 

• CMS finalized provisions impacting the Special Supplemental Benefits for the Chronically Ill, clarifying that plans must use objective criteria to determine eligibility and must separately determine that a specific benefit has a reasonable expectation of improving or maintaining an enrollee’s health or overall function.  

• CMS will require debit cards to be electronically linked to plan-covered items and services in real time at the point of sale and will limit them to the applicable plan year.  

• CMS didn’t ban MA plans from marketing the dollar value of supplemental benefits. 

Adopted Policies Aimed at Reducing Regulatory Burden 

• CMS rescinded the requirement that MA plans send mid-year notices on unused supplemental benefits and removed certain health equity-related requirements from MA quality improvement programs and utilization management committees.