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December 4, 2025 – Last week, right before you enjoyed your Thanksgiving feast, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that lays out policy and technical changes to the Medicare Advantage (MA) and Part D programs for 2027 and beyond. As stated in a previous Regs & Eggs blog post, we expected this proposed rule to be released but were not sure about the specific timing. This rule is not explicitly required by law (although CMS has historically released it in November or December), and the government shutdown could have interrupted CMS’s work on the rule. Well, the government shutdown has ended, and CMS was able to get this rule across the finish line. To help me describe what MA and Part D proposals made it in and what got left out of the rule, I’m bringing in my colleague Lynn Nonnemaker.
Star Ratings system changes
CMS proposes two important changes to the Star Ratings system that, if finalized, would have implications for ratings and plan finances in years to come: the elimination of the Health Equity Index (HEI) and the elimination of 12 measures from the system.
HEI elimination: The HEI factor, also called the Excellent Health Outcomes for All (EHO4all) reward, was finalized in the April 2023 MA final rule and was set to replace the “historical reward factor” in the 2027 star ratings using data from measurement year 2025. CMS under the previous administration created the HEI reward to further incentivize MA plans to focus on improving care for enrollees who are dually eligible for Medicare and Medicaid benefits, receive a low-income subsidy, or are disabled. The historical reward factor, which began with the 2009 star ratings, incentivizes consistent high performance across star ratings measures. CMS now proposes to not implement the HEI reward and to continue the historical reward factor, in line with the January 2025 “Unleashing Prosperity Through Deregulation” executive order.
With this proposal, CMS aims to keep the Star Ratings methodology consistent as the agency explores additional ways to simplify star ratings. When the HEI was initially finalized, CMS projected it would reduce plan ratings and result in lower quality bonus payments (QBPs). Many plans that had historically benefited from the existing reward factor expressed opposition to the shift to HEI and will likely welcome the proposal. However, measurement for the HEI is already underway as of 2025, and the CMS proposal is a late shift in Stars policy. Some plans may object to the idea of making changes to ratings after measurement is in process and plans have committed resources. And, of course, some plans that stood to benefit from the move to the HEI won’t be happy.
Elimination of 12 measures in 2027: CMS proposes to eliminate 12 measures from the ratings system beginning with the 2027 measurement. Most of these measures focus on operational and administrative performance, such as operating foreign language and TTY call centers, Medicare Plan Finder drug price accuracy, and timeliness of appeals. CMS notes that performance on these issues may be better handled through compliance oversight. CMS proposes to remove other measures because performance on the measures is consistently high, making it difficult to differentiate between plans.
CMS projects that the proposed changes, taken together, would cause 5% of MA contracts to earn bonuses and 4% to lose bonuses. CMS also estimates that the changes would increase program spending by $13.8 billion through 2036, with the largest increases coming in 2027 and 2028 because of the HEI elimination.
Other policy proposals
Many of the rule’s other proposals would be less impactful but share a theme of reducing and streamlining regulatory requirements. For example, CMS proposes to rescind requirements that plans notify enrollees of supplemental benefits that remain unused by the middle of the year, eliminate requirements that utilization management committees conduct annual health equity analyses, reduce the required hours of operation of Part D customer call centers, and reduce the retention period for sales and marketing calls. This focus on reducing regulatory burdens is consistent with executive order 14192, which directs agencies to find ways to reduce unnecessary regulatory burdens.
Requests for information
One interesting aspect of the rule is that it includes several requests for information (RFIs) that offer insights into how CMS views important issues and that potentially signal future rulemaking. There are at least five RFIs worth noting:
Now that we’ve talked about what is in the rule, let’s spend a moment on what isn’t in it. First, there is no mention of GLP-1 coverage in the rule. While this omission isn’t exactly a surprise, there was some expectation that the administration would use this rule to take further action on the president’s announcement in early November 2025 that coverage of GLP-1s for use in weight loss would be coming to Medicare. Readers will recall that a proposed rule for MA and Part D released one year ago included a provision to allow such coverage for Medicare beneficiaries. The fact that this proposed rule did not address GLP-1s doesn’t preclude future action, but it means CMS is likely considering other pathways (e.g., a demonstration model through the CMS Innovation Center) for coverage. Of course, CMS can always undertake additional rulemaking if desired.
A second issue largely absent from the rule is prior authorization, aside from proposals to remove requirements that utilization management committees include a member with health equity expertise and conduct and post the results of analysis on the health equity impact of prior authorization. Recent rulemaking cycles in the MA program have made prior authorization a focus and have placed additional boundaries and restrictions on plans’ use of prior authorization, increased reporting requirements around the use and outcomes of prior authorization decisions, required plans to be more transparent about the services subject to prior authorization, and pushed plans to make prior authorization processes faster and easier for both patients and providers. Even so, some stakeholders have continued to push CMS (and Congress) for more restrictions on the use of prior authorization. However, a June 2025 agreement between CMS and plan representatives to reduce the number of services subject to prior authorization, increase the speed for making prior authorization decisions, and improve transparency around its use seems to have convinced CMS that additional rulemaking on this issue is unnecessary, at least for now.
Comments on the proposed rule are due to CMS by January 26, 2026, and the rule may be finalized in April 2026, in time for MA plans to take the final policies into account when submitting their 2027 bids (due the first Monday in June). MA plans and other stakeholders certainly have a lot to chew on in their responses (especially in terms of all the RFIs in the rule), as their input could help inform policies not just for 2027 but for years to come! Until next week, this is Jeffrey (and Lynn) saying, enjoy reading regs with your eggs.
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