On April 2, 2026, CMS released its final rule governing Medicare Advantage (Part C) and Part D prescription drug plans for Contract Year 2027. The rule takes effect June 1, 2026, with most provisions applying to coverage beginning January 1, 2027. The headline change is a significant restructuring of the Star Ratings system -- the 1-to-5 star scoring used by millions of beneficiaries to compare plans.
What Are Star Ratings and Why Do They Matter?
Medicare Advantage Star Ratings measure plan quality across dozens of metrics -- from how quickly members can get appointments to how well plans manage chronic conditions. Stars matter for two reasons: they help consumers pick better-quality plans on Medicare.gov, and they determine whether a plan earns Quality Bonus Payments from CMS. Plans with 4 or more stars receive extra funding, which can be used to offer richer benefits or lower premiums.
11 Measures Removed From the Ratings
The 2027 final rule eliminates 11 Star Ratings measures, concentrating the scoring more heavily on clinical outcomes and patient experience rather than administrative process metrics. Among the measures cut are several related to call center performance. CMS stated that removed measures covered areas where beneficiaries could not meaningfully distinguish between plans. Plans must continue reporting data on removed measures through CMS's online comparison tools, so the information remains available even if it no longer affects star scores.
Health Equity Index Replaced by Reward Factor
One significant reversal: CMS is not implementing the Excellent Health Outcomes for All (health equity) reward that had been developed to incentivize better performance for underserved enrollees. Instead, the agency is restoring the historical reward factor, which encourages consistently high performance across all quality measures for all enrollees. The Alliance of Community Health Plans said it strongly supported this decision, noting the reward factor better serves rural communities.
$19 Billion in Estimated Added Costs Through 2036
The rule estimates the star ratings changes will add approximately $19 billion in Medicare program costs between 2028 and 2036. This reflects that the changes create fewer hurdles for plans to qualify for bonus payments -- meaning more plans will receive bonuses, increasing government expenditure. For context, Medicare Advantage is expected to cost taxpayers more than $750 billion in 2028 alone, so the impact is roughly 2.5% over that window.
Marketing Rules Relaxed
The 2027 rule also rolls back several marketing safeguards that were introduced in 2023. Marketing and communications changes take effect October 1, 2026, ahead of the Medicare open enrollment period. Consumer advocates have raised concerns that loosened marketing rules could lead to renewed aggressive sales tactics from MA plans and their agents.
No New Special Enrollment for Provider Terminations
A proposed Special Enrollment Period that would have allowed MA enrollees to switch plans when their preferred doctor or hospital left the plan's network was not finalized. CMS gave no explanation for this decision. This means if your doctor drops out of your Medicare Advantage plan mid-year, your options to switch plans remain limited to specific qualifying circumstances.
What Beneficiaries Should Do
Most of these changes affect 2027 coverage. During Medicare open enrollment this fall (October 15 - December 7, 2026):
- Check star ratings on Medicare.gov -- the rating system will have fewer measures but remain the most reliable comparison tool.
- Verify your doctors are still in-network before re-enrolling, since there is still no mid-year escape hatch if a provider leaves.
- Review supplemental benefits carefully -- the rule finalizes updates to how MA debit cards for supplemental benefits work.
- Be cautious of aggressive sales calls -- even with some marketing rules relaxed, high-pressure tactics that misrepresent plan costs remain prohibited.
See how Medicare costs fit into your overall retirement picture with our Health Insurance Calculator.
How Star Ratings Affect What You Pay
The connection between star ratings and plan premiums is indirect but real. Plans with 4 or more stars receive Quality Bonus Payments from CMS — additional per-member-per-month funding that plans can use to reduce premiums, add supplemental benefits, or lower cost-sharing. Plans with fewer than 4 stars don't receive this bonus funding, which limits their ability to offer competitive benefits without raising costs.
In markets where multiple high-star plans compete, this bonus funding can drive meaningful benefit competition: lower premiums, added dental and vision benefits, OTC allowances, and fitness memberships. In markets dominated by lower-star plans, beneficiaries may face higher costs and fewer extras.
The 2027 rule's reduction of 11 measures from the ratings — combined with the restoration of the reward factor — generally makes it easier for more plans to achieve 4-star status. More plans receiving bonus payments means more plans with resources to offer competitive benefits. Whether this leads to better outcomes for beneficiaries or primarily benefits insurers' bottom lines depends on how competitive any given local market is.
What the Marketing Rule Relaxation Means in Practice
Consumer advocates' concerns about loosened marketing rules are grounded in recent history. Between 2021 and 2023, Medicare Advantage enrollment saw a surge of complaints about aggressive and misleading sales tactics — agents enrolling beneficiaries in plans without their knowledge, third-party marketing organizations using celebrity endorsements to imply government affiliation, and TV advertisements making claims about benefits that were not universally available.
CMS responded in 2022–2023 with tighter marketing regulations that restricted certain advertising formats and required more disclosure. The 2027 rule rolls back some of these restrictions, effective October 1, 2026 — just before the Medicare open enrollment period begins.
What this means for beneficiaries: the volume and aggressiveness of Medicare Advantage marketing during the fall 2026 enrollment period may increase. Practical protective steps:
- Be cautious of unsolicited calls and mailers, particularly those that imply government affiliation or guarantee specific benefits
- Never give your Medicare ID number to anyone who initiates contact with you
- Verify plan details directly on Medicare.gov rather than relying on marketing materials
- Use your State Health Insurance Assistance Program (SHIP) for free, unbiased counseling — counselors are not paid commissions and have no incentive to steer you toward any particular plan
Comparing Medicare Advantage Plans in 2027: A Framework
With fewer star rating measures and potentially more plans achieving higher ratings, the star rating itself becomes a somewhat less differentiating factor than it has been. Beneficiaries choosing 2027 plans should evaluate several dimensions beyond stars:
- Provider network: Is your primary care physician, cardiologist, oncologist, or other specialist in-network? Verify directly with the provider — directory accuracy remains a known issue.
- Drug formulary: Are your current prescriptions on the plan's formulary at a tier that results in manageable cost-sharing? Drug costs can vary dramatically between plans for identical medications.
- Out-of-pocket maximum: The ACA requires MA plans to cap annual out-of-pocket costs. The cap varies by plan ($4,000–$8,850 for in-network costs in 2026). Lower caps provide better catastrophic protection.
- Supplemental benefits: Dental, vision, hearing, fitness, and transportation benefits vary significantly between plans. Identify which benefits you'll actually use before treating them as decisive factors.
- Prior authorization requirements: Plans with broad prior authorization requirements for specialist visits and procedures create administrative burden and potential treatment delays. Check CMS's prior authorization transparency data.
The Medicare Plan Finder on Medicare.gov remains the most reliable comparison tool, updated annually for open enrollment. Use our Health Insurance Calculator to model how Medicare costs fit into your overall retirement healthcare budget.