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CMS finalized the Contract Year 2027 Medicare Advantage and Part D final rule on April 2, 2026. It takes effect June 1, 2026, and applies to coverage beginning January 1, 2027. For anyone working in medical billing or MA plan administration, the changes go well beyond a routine annual update.
Two threads run through the rule: CMS is tightening how plan quality gets measured, while simultaneously stripping out a batch of administrative requirements it considers outdated or duplicative.
Both directions matter for how billing teams configure claims logic and reporting for the coming contract year.
The Money Question: Star Ratings
The scale is not small. CMS’s own regulatory analysis puts the net impact of the Star Ratings changes at roughly $18.5 billion transferred to MA and Part D plan sponsors between 2027 and 2036, or about 0.21% of total Medicare payments to private plans over that period. Most of that comes from fewer measures and the decision to keep the historical reward factor, both of which make high ratings easier to hold.
Specifically the ones tied to administrative processes rather than actual care outcomes, or measures where plans were already performing so similarly that the score wasn’t distinguishing anything meaningful.
The bigger shift is on the reward side. CMS is scrapping the Excellent Health Outcomes for All reward (the successor to the old Health Equity Index reward) and reverting to the historical reward factor, which credits plans for strong performance across their whole enrolled population rather than a targeted subset.
For most contracts, the practical effect is limited. CMS’s analysis of the finalized changes found that 63% of contracts would see no change in their overall rating. The movement is concentrated in the contracts that were sitting close to a half-star boundary, so the question worth asking internally is not whether the measure set changed, but whether your contract was near a threshold before it did.
Codifying What Was Only Temporary
The Inflation Reduction Act reshaped Part D starting in 2022, but CMS had been implementing most of those changes through program instructions rather than permanent regulation, instructions that expire after 2026.
This rule locks the IRA changes into the regulatory text for good: no more coverage gap phase, a lower annual out-of-pocket threshold, zero cost sharing once someone hits the catastrophic phase, and formal incorporation of the Manufacturer Discount Program that took over from the old Coverage Gap Discount Program in January 2025.
Buried in the same section are technical updates that billing teams will actually feel day to day, recalculated True Out-of-Pocket cost methodology, adjusted specialty-tier rules, and changes to how reinsurance payments get calculated.
None of this is headline material, but it’s exactly the kind of detail that breaks claims adjudication if it’s not built into systems ahead of the 2027 plan year.
Supplemental Benefits: Tighter Rules, One Clarified Gray Area
CMS finalized two supplemental benefit policies that had been sitting in proposed form since the CY 2026 rule. Plans now have to publicly post their eligibility criteria for Special Supplemental Benefits for the Chronically Ill (SSBCI), and any debit card used to administer supplemental benefits has to be electronically linked to covered items with real-time verification at checkout, plus capped to a single plan year rather than carrying over.
Separately, CMS cleaned up language around cannabis products: they’re not allowable as SSBCI anywhere they remain illegal under state or federal law. That’s less a new policy than a clarification closing off inconsistent interpretations some plans had been applying.
Cutting Requirements CMS No Longer Wants to Enforce
In line with Executive Order 14192’s deregulation push, CMS pulled back several requirements that plans and their partners had been operating under for years:
- Account-based plans like HRAs, FSAs, and HSAs no longer need creditable coverage disclosures
- Mid-year notices about unused supplemental benefits are gone
- MA quality improvement programs no longer have to include health disparity reduction activities
- Utilization Management Committees are no longer required to have a health equity expert, run annual health equity analyses, or post them publicly
- The requirement for Limited Income Newly Eligible Transition call centers to stay open 8 a.m. to 8 p.m. everywhere has been waived
- Restrictions on when and how beneficiaries can talk to licensed agents and brokers are lifted
Fewer compliance tasks on paper, but organizations that built internal workflows around these old requirements will need to actually retire those processes rather than just note that they’re no longer mandatory.
What CMS Is Still Deciding?
The rule also closes out a set of requests for information CMS had floated in the proposed version, on the future direction of the MA program, marketing and agent/broker oversight, the growing enrollment of dually eligible individuals in chronic condition special needs plans, and nutrition policy within MA.
CMS isn’t responding to specific comments in this final rule, but the feedback collected is expected to shape future rulemaking, meaning some of what didn’t make it into 2027 could resurface as early as next year’s proposed rule.
The Practical Checklist
The rule was effective June 1, 2026, but nothing hits claims until the 2027 contract year begins on January 1.
For billing and RCM teams supporting Medicare Advantage plans, three things are worth prioritizing in that window: reviewing documentation tied to the new Depression Screening and Follow-Up measure, rebuilding out-of-pocket and catastrophic-phase cost calculations around the codified IRA provisions, and auditing supplemental benefit debit card processes for the new point-of-sale verification requirement.
