WASHINGTON, D.C. — The federal government is quietly preparing one of the most sweeping overhauls of Medicare policy in years, advancing a slate of proposed and final rules that could reshape how seniors get health plans, pay for drugs, receive home health care, and access critical medical equipment for the rest of the decade.
In a series of actions unveiled just before Thanksgiving, the Centers for Medicare & Medicaid Services laid out a dense but far-reaching agenda: a 2027 Medicare Advantage and Part D rule that rewrites quality ratings and enrollment protections, codifies major drug benefit changes from the Inflation Reduction Act, and narrows equity-focused requirements; a new round of drug price negotiations projected to save $12 billion on 15 widely used medicines; an updated national bidding system for durable medical equipment; and a 2026 home health payment rule that tightens rates while expanding fraud protections and quality reporting changes.
Taken together, the moves amount to a recalibration of how the Medicare program balances cost control, market competition, and benefit design for more than 65 million Americans, even as the Trump Administration insists it is strengthening quality and access while “making Medicare work for taxpayers and beneficiaries.”
Officials describe the flurry of rules as technocratic and data-driven. But behind the jargon are concrete consequences: which Medicare Advantage plans thrive or exit, how quickly seniors can switch coverage when their doctor leaves a network, what they pay for insulin or cancer drugs at the pharmacy counter, whether a home health agency stays solvent, and which companies win lucrative national contracts to supply glucose monitors, ostomy products, and braces.
The coming months of public comment and lobbying will determine how far CMS goes — and how much of this sprawling agenda survives intact by the time the 2027 plan year begins.
A new blueprint for Medicare Advantage and Part D
At the heart of CMS’s package is the Contract Year 2027 Medicare Advantage and Part D proposed rule, a dense regulation that reaches into nearly every corner of the private-plan side of Medicare. Around half of all beneficiaries are now enrolled in private Medicare Advantage plans, making CMS’s choices highly consequential for seniors and for the insurers who market to them.
In the proposal, CMS says its goal is to “improve quality and access to care” while “maximizing the value of the MA program for beneficiaries and taxpayers.” That aspirational language translates into a few concrete levers: the Star Ratings system used to score plans and award bonus payments, the rules that govern how and when seniors can switch plans, and a trio of Requests for Information that hint at deeper structural changes still to come.
The Star Ratings system — which now scores Medicare Advantage–Prescription Drug (MA-PD) contracts on up to 43 separate measures across clinical outcomes, patient experience, processes, and access — has become the lifeblood of the MA business. High-rated plans earn bonus payments and rebated dollars they can redirect into richer benefits and lower premiums; lower-rated plans can struggle to compete.
For 2027, CMS is proposing a notable shift in emphasis. Instead of layering on new social risk rewards, the agency wants to hit pause on a high-profile initiative known as the Excellent Health Outcomes for All reward, previously branded as the Health Equity Index. That reward would have provided an extra boost for plans that performed well specifically for enrollees with certain social risk factors. CMS now says it will not implement that reward for the 2027 Star Ratings, and will instead stick with the longstanding reward factor that recognizes consistently high performance across all measures.
At the same time, the agency proposes to streamline the measure set. Twelve measures focused largely on administrative processes and areas where almost all plans already perform at similarly high levels would be removed for the 2027 measurement year. In their place, CMS wants to add a new Part C Depression Screening and Follow-Up measure, aimed at addressing persistent gaps in behavioral health care, with results rolling into Star Ratings beginning in 2029.
In plain terms, CMS is saying that the rating system has grown too crowded with measures that either create paperwork without driving meaningful quality differences, or that beneficiaries cannot use to tell plans apart. By pruning those measures and focusing more heavily on clinical outcomes and patient experience where performance still varies, the agency argues that it can both reduce administrative burden on plans and sharpen incentives around what matters most for beneficiaries.
For insurers, these changes carry obvious stakes. A more targeted set of measures intensifies pressure to perform well on fewer, more visible metrics, and the decision to abandon a new equity index will be closely watched by consumer organizations and health equity advocates who had hoped to see more explicit rewards for closing gaps.
Special enrollment protections and clearer rules
Beyond ratings, the proposed rule takes aim at one of the most frustrating scenarios for Medicare Advantage enrollees: when a trusted doctor or specialist abruptly leaves their plan’s network mid-year.
Under current rules, beneficiaries can sometimes use a special enrollment period to switch plans if a network change is deemed “significant” by the Medicare Advantage organization and CMS. That threshold has been difficult to navigate and, in practice, can leave patients stuck between losing their doctor or losing their plan.
CMS now proposes to remove the “significant” standard and create a more straightforward special enrollment period tied to provider terminations. If finalized, the change would allow enrollees to switch plans when one or more of their providers leave the network, without first requiring a bureaucratic determination that the network change meets a particular bar.
In tandem, CMS wants to codify its longstanding practice that certain special enrollment periods require prior agency approval. Officials say locking that policy into regulation will bring transparency and predictability for plans and consumer advocates, reducing the sense that enrollment flexibilities can shift informally without public notice.
Risk adjustment, special needs plans, and well-being: three RFIs with big implications
Perhaps the most revealing part of the 2027 proposal is not what CMS is ready to regulate today, but what it is asking about for tomorrow. Three separate Requests for Information signal that the agency is thinking about major changes to risk adjustment, special needs plans, and even how Medicare Advantage might incorporate concepts like well-being and nutrition into benefit design.
The first RFI zeroes in on risk adjustment — the complex statistical system used to adjust payments to plans based on the health status of their enrollees. CMS acknowledges criticism that the current model may disadvantage smaller, newer, or less well-resourced plans that cannot invest heavily in coding infrastructure, while rewarding those that pour resources into coding practices that drive up risk scores and payments without necessarily improving care.
To address that tension, the agency says it is exploring “modernization opportunities,” including a next-generation risk adjustment model that could tap artificial intelligence, alternative data sources, and a tighter linkage between quality measurement and payment. Officials also appear interested in reducing the current two-year lag between performance measurement and the payments tied to that performance, suggesting a desire for a more real-time feedback loop.
The second RFI turns to the growth of chronic condition special needs plans, known as C-SNPs. These plans target beneficiaries with specific chronic conditions and have grown rapidly in enrollment. CMS is particularly concerned that many dually eligible individuals — those who qualify for both Medicare and Medicaid — may be enrolling in C-SNPs instead of dual-eligible special needs plans (D-SNPs) that are designed to integrate benefits across the two programs.
To better align plan types with beneficiary needs, CMS is considering requiring C-SNPs and institutional special needs plans with high concentrations of dually eligible members to enter into State Medicaid Agency contracts, similar to existing rules for D-SNPs. Such a move could pull state Medicaid agencies more deeply into the oversight of these plans and push toward greater integration of services, but it could also raise operational and regulatory burden for plans that have thrived in the C-SNP space.
The third RFI may be the most forward-looking. CMS is asking for public input on how to incorporate well-being and nutrition more directly into Medicare Advantage policy. The agency explicitly mentions concepts like emotional well-being, social connection, purpose, and fulfillment, alongside tools to improve nutrition and preventive care.
In practice, that could translate into new flexibility or incentives for plans to invest in nontraditional benefits: medically tailored meals, social isolation interventions, community-based programs, and other services that do not fit neatly into traditional medical categories but may improve health and satisfaction. How aggressively CMS ultimately moves in that direction will depend heavily on the feedback it receives from plans, providers, and beneficiary advocates.
Codifying the Inflation Reduction Act’s drug benefit overhaul
Overlaying the Medicare Advantage and Part D rule is another major theme: making permanent the temporary implementation authority CMS has used to transform the drug benefit under the Inflation Reduction Act of 2022.
Until now, CMS has relied on time-limited program instructions to carry out sweeping changes to Part D: eliminating the coverage gap phase, lowering the annual out-of-pocket threshold, ending cost sharing in the catastrophic phase, and replacing the older Coverage Gap Discount Program with the new Manufacturer Discount Program that took effect in 2025.
With that instruction authority expiring, CMS is proposing to embed these changes in regulation for 2027 and beyond. That includes codifying new rules on how True Out-of-Pocket (TrOOP) costs are calculated, adjusting specialty-tier thresholds, revising reinsurance payment methodologies, and implementing a “Selected Drug Subsidy” structure to support the new negotiation and pricing framework.
Agency officials characterize this as locking in the most significant redesign of the Part D benefit since its launch. For beneficiaries, the promise is lower and more predictable out-of-pocket costs at the pharmacy counter. For plans and manufacturers, the shift cements a new set of financial responsibilities and risk-sharing that will govern the Part D market for years.
Narrowing supplemental benefits and tightening cannabis rules
On the benefit design side, CMS proposes a targeted but symbolically charged change to Special Supplemental Benefits for the Chronically Ill. These benefits allow Medicare Advantage plans to offer certain nontraditional services or items to chronically ill enrollees under flexible rules.
CMS wants to clarify that cannabis products that are illegal under federal or state law — including under the Federal Food, Drug, and Cosmetic Act — cannot be offered as such supplemental benefits. The agency frames this as a technical clarification to better align Medicare policy with federal law, while still allowing plans to offer legal products that may help chronically ill beneficiaries.
Regulatory relief — and retrenchment on equity requirements
Under the banner of reducing burden in line with a recent executive order on regulatory cost-cutting, CMS proposes a series of steps that would roll back or eliminate certain requirements, including a number tied to health equity.
Among the changes: exempting account-based plans like health reimbursement arrangements, flexible spending accounts, and health savings accounts from creditable coverage disclosure rules; ending the requirement for Medicare Advantage plans to send mid-year notices about unused supplemental benefits; and waiving the obligation for the Limited Income Newly Eligible Transition program to maintain toll-free call centers open from 8 a.m. to 8 p.m. in all regions.
More controversially, CMS proposes to remove the requirement that Medicare Advantage quality improvement programs include activities designed to reduce health disparities, and to eliminate health equity requirements for utilization management committees. Those requirements had called for a health equity expert on the committee, annual health equity analyses, and public posting of those analyses.
The agency also issues a separate request for information on broader ideas to streamline regulations and cut administrative burden across Medicare, inviting the public to submit suggestions through a regulatory relief portal.
Critics are likely to seize on the equity rollbacks as evidence of a philosophical shift away from formal equity mandates and toward a narrower focus on core clinical and financial metrics. Supporters may frame the changes as a necessary pruning of overlapping requirements that, in their view, added paperwork without improving care.
Drug negotiations deliver savings — and fuel political claims
Alongside the structural Medicare Advantage and Part D changes, CMS announced headline-grabbing numbers from its second cycle of Medicare drug price negotiations under the Inflation Reduction Act.
According to the agency, negotiations over maximum fair prices for 15 additional drugs — many of them widely used to treat cancer, diabetes, asthma, and other serious conditions — are projected to produce a net savings of 44 percent, or $12 billion, compared with last year’s Medicare spending on those drugs. When combined with the 10 medicines already negotiated for 2026, a total of 25 drugs will be subject to negotiated prices by January 1, 2027.
Between January and December 2024, around 5.3 million Part D enrollees used the 15 drugs in the second negotiation cycle. Those medicines accounted for roughly $42.5 billion in gross covered drug costs under Part D, about 15 percent of total spending in that period.
Health and Human Services Secretary Robert F. Kennedy Jr. cast the savings as proof that aggressive negotiation is paying off for seniors.
“President Trump directed us to stop at nothing to lower health care costs for the American people,” he said, adding that the administration would use “every tool at our disposal to deliver affordable health care to seniors.”
CMS Administrator Mehmet Oz said the new round of negotiations produced “substantially better outcomes for taxpayers and seniors” than prior efforts, contrasting them with what he described as “modest or even counterproductive ‘deals’ we saw before.”
Deputy Administrator and Medicare Director Chris Klomp pointed to the Inflation Reduction Act and the administration’s Most Favored Nation policy as examples of “serious, fair, and disciplined negotiation,” and praised agency staff who “execute exceptionally well to bring affordability to the country in everything we do.”
The negotiation program remains politically charged, with drugmakers and some lawmakers arguing that it could dampen innovation, while advocates for seniors point to the out-of-pocket savings and macro-level budget relief. For now, CMS is leaning into the message that the program is delivering tangible financial results while preserving access to necessary medicines.
Overhauling home health payments and tightening oversight
While Medicare Advantage and drug pricing dominated the headlines, CMS also finalized a separate rule that will reshape payments and oversight for home health agencies in 2026.
Under the Home Health Prospective Payment System final rule, CMS estimates that overall Medicare payments to home health agencies will fall by about 1.3 percent, or $220 million, in 2026 compared with 2025. That net reduction reflects a 2.4 percent rate increase offset by multiple downward adjustments: a permanent payment reduction of roughly 1.0 percent linked to behavioral assumptions under the Patient-Driven Groupings Model; a larger temporary adjustment of 3.0 percent designed to recoup overpayments attributed to differences between expected and actual provider behavior; and a small reduction tied to updated outlier policies.
CMS says the cuts are required by law, which obligates the agency to compare its original behavior assumptions under the PDGM — implemented in 2020 — with how agencies actually changed coding and utilization patterns once the new system took effect. Officials emphasize that the adjustments are being phased in to avoid sudden shocks that could jeopardize access in vulnerable markets.
The rule also recalibrates case-mix weights, functional impairment levels, and comorbidity subgroups using more recent data, and revises thresholds for low-utilization payment adjustments. Taken together, these technical changes aim to ensure that home health payments more accurately reflect the mix and intensity of patients agencies are treating.
Beyond payment levels, CMS is updating key policies around face-to-face encounters and quality reporting. The agency is aligning its regulations with the CARES Act to explicitly permit nurse practitioners, clinical nurse specialists, and physician assistants to perform face-to-face encounters and order home health services, and clarifying that physicians who are not the certifying practitioner may conduct those encounters as well.
On the Home Health Quality Reporting Program side, CMS will remove a COVID-19 vaccination measure and several assessment items related to living situation, food, and utilities beginning with the 2026 program year, and it will adjust reconsideration policies to allow extensions in limited circumstances such as natural disasters or cyberattacks. A revised patient experience survey will roll out starting with the April 2026 sample month, and CMS is laying groundwork for future digital quality measurement and broader interoperability through health IT standards.
Value-based purchasing and fraud prevention
The rule also touches the expanded Home Health Value-Based Purchasing Model, which ties a portion of agencies’ payments to performance on a set of quality measures. Because of changes to the patient experience survey, CMS is removing three existing survey-based measures and adding four new measures, including three clinical measures related to bathing and dressing and a claims-based measure focused on Medicare spending per beneficiary.
To keep the measure set nimble, the agency is also codifying a new factor that allows for removal of measures when it is no longer feasible to implement the specifications.
On the program integrity front, CMS is tightening provider enrollment standards in an effort to reduce fraud and improper payments. Among the changes: expanding the grounds for retroactive revocation of Medicare enrollment, which allows CMS to claw back payments when a provider is found to have been noncompliant for a period of time; deactivating billing privileges for physicians and practitioners who have not ordered or certified services for 12 months; and reaffirming the agency’s authority to revoke enrollment when beneficiaries say they did not receive services billed in their name.
Durable medical equipment suppliers will face stricter accreditation oversight. Instead of triennial reaccreditation, suppliers will be resurveyed and reaccredited annually, and accrediting organizations themselves will come under more intensive CMS review, with higher expectations around data reporting, operations monitoring, and corrective actions.
For certain durable medical equipment subject to prior authorization, CMS is finalizing a new exemption pathway modeled on a hospital outpatient program. Suppliers with a 90 percent approval rate will be granted an exemption from prior authorization; CMS will periodically test whether they remain compliant through post-payment review, and revoke the exemption if approval rates fall below the threshold.
A new chapter for competitive bidding and remote delivery
Finally, CMS is preparing the next round of the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program, with changes that will alter how suppliers bid, how prices are set, and how beneficiaries get critical equipment.
Beginning in 2028, a nationwide “remote item delivery” competitive bidding structure will phase in for several categories that are commonly furnished via mail or shipping, including class II continuous glucose monitors, insulin pumps, urological supplies, ostomy supplies, hydrophilic urinary catheters, and off-the-shelf braces.
Under the new approach, contract suppliers in each product category will be responsible for furnishing items to Medicare beneficiaries anywhere in the country, whether by shipment or through local pickup at a storefront or pharmacy owned by the contract supplier or its subcontractor. This nationwide framework replaces the more geographically segmented model used in earlier bidding rounds.
Payment amounts — known as single payment amounts — will now be set using the 75th percentile of winning bids rather than the maximum winning bid, with inflation updates in the second and third years of a contract tied to the Consumer Price Index. Caps ensure that updated payment rates cannot exceed the unadjusted or adjusted fee schedule amounts by more than specified percentages.
To promote transparency, the new Connexion portal will serve as the consolidated bidding system, eliminating the need for suppliers to navigate multiple IT systems. The portal will collect “country of origin” information for products, and Medicare’s supplier directory will list both products and their manufacturing origin, giving beneficiaries more information about the equipment they receive.
CMS is also introducing clearer limits on bid amounts for key items, such as class II glucose monitors and off-the-shelf braces, relative to existing fee schedule amounts. Financial documentation requirements will be focused more heavily on business credit reports, with personal credit reports used when needed for newer entities without an established business score.
Tribal providers, including Indian Health Service and tribally operated suppliers, will be exempted from competitive bidding requirements when serving American Indian and Alaska Native beneficiaries in competitive bidding areas, allowing them to continue providing covered items without submitting bids.
A new termination clause will give CMS the authority to cancel competitive bidding contracts or competitions in whole or in part during public health emergencies or when the agency identifies access problems that it believes can be alleviated by restructuring or ending certain contracts.
CMS argues that these changes will protect the Medicare Trust Funds by better aligning payments with competitive market prices, while maintaining beneficiary protections such as non-discrimination clauses, brand availability requirements, and complaint mechanisms. Officials point to years of claims data that, in their view, show no adverse impact on beneficiary health outcomes such as hospitalizations or emergency department visits in areas where competitive bidding has been in effect.
What comes next
All of the proposed changes to Medicare Advantage, Part D, and related programs are now subject to a public comment period that will run for 60 days after the proposed rules are formally published in the Federal Register. Insurers, drugmakers, device manufacturers, patient advocates, provider groups, and policy experts are expected to flood CMS with feedback, data, and competing arguments over how far the agency should go in reshaping the program.
For beneficiaries, the details may be easy to miss amid the technical language. But the stakes are immediate and personal: how quickly they can change plans when their doctor leaves a network, whether a depression screening leads to timely follow-up, how large their copay is at the pharmacy counter, whether a home health nurse can keep visiting, and what kind of equipment arrives at their door when they need a glucose monitor, ostomy product, or supportive brace.
CMS officials emphasize that the overarching goal is to strengthen quality, access, and competition while keeping Medicare financially sustainable.
“The Trump Administration is committed to ensuring Medicare beneficiaries have access to high-quality affordable care options,” CMS Administrator Mehmet Oz said in announcing the Medicare Advantage and Part D proposal, framing the rule as part of a broader effort to “enhance Star Ratings to reward meaningful improvements in quality and innovation, while making it easier for beneficiaries to compare and choose coverage that best meets their needs.”
Whether seniors and their advocates agree will depend on how the final rules balance cost savings with protections — and how those decisions play out in real-world care over the years ahead.
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