The Centers for Medicare & Medicaid Services (CMS) is preparing to release the proposed Contract Year 2027 Policy and Technical Changes to Medicare Advantage, Medicare Prescription Drug Benefit, Medicare Cost Plan, and Programs of All-Inclusive Care for the Elderly Programs. Rather than incremental tweaks, this rulemaking cycle offers CMS officials the first full opportunity to advance the Trump Administration’s policy priorities. With sweeping reforms on the horizon, Medicare Advantage (MA) plans that begin aligning their operations now will be positioned to thrive in the new environment.
These reforms arrive at a pivotal juncture for MA. Enrollment, which has climbed steadily over the past decade, is projected to decline from 34.9 million in 2025 to 34 million in 2026 as financial and regulatory pressures prompt some issuers to narrow or exit select markets. Although CMS anticipates stable average premiums and benefits next year, beneficiaries in areas with reduced competition may face fewer plan choices and marginally higher cost sharing. These market shifts are likely to influence the 2027 contract year rule.
In this article, Health Management Associates, Inc. (HMA), Medicare experts delve into the key policy areas CMS is poised to address—prior authorization reforms, coding and risk adjustment oversight, Star Ratings realignment, and expanded program integrity efforts.
Prior Authorization and Utilization Management Reforms
CMS, across multiple administrations, has viewed prior authorization (PA) as both a cost-control lever and a potential barrier to care. In the contract year 2027 policy and technical rule, CMS officials will have their first unencumbered chance to cement electronic PA standards, enforce strict turnaround timelines, and limit plan’s use of internal coverage criteria. By mandating consistent rules across the MA landscape, CMS seeks to minimize provider frustration without sacrificing utilization management.
Risk Adjustment and Coding Oversight
MA coding practices leading to elevated MA risk scores have been the subject of bipartisan concern and heightened scrutiny as these have been found to inappropriately increase federal government payments to plans. In response, the 2027 rulemaking cycle provides an opportunity for CMS officials to develop more far-reaching reforms to the MA risk adjustment model and potentially explore more transformative models that move away from reliance on Medicare fee-for-service (FFS) data. Encounter-based risk adjustment or an “inferred” CMS-driven scoring approach could narrow payment gaps and deter upcoding.
Next Phase of Star Ratings
Star Ratings will likely see the most pronounced reset under CMS’s proposed changes. Moving away from purely process measures, CMS intends to elevate health outcomes—such as fewer hospital admissions and improved functional status—and sharpen its focus on “exceptional care for all enrollees” through the Excellent Health Outcomes for All (EHO4all) reward. This framework, announced under the calendar year 2026 rate notice, revised the Health Equity Index reward. In the 2027 proposed rule, CMS could call for retiring outdated measures in favor of streamlined reporting via health IT and patient-reported outcomes. CMS has also indicated it would consider other factors for this reward program.
Oversight and Program Integrity
This rulemaking cycle affords CMS officials an opportunity to expand the agency’s oversight toolkit. Advanced analytics and AI-driven audit selection will underpin fraud, waste, and abuse detection at greater scale. Potential areas of focus include enhancing efforts to promote accuracy in MA plan payments, addressing concerns with MA coding practices, and harnessing new technology to assist CMS in its oversight and auditing functions.
Charting the Path Forward
The contract year 2027 proposed rule represents the Trump administration’s first full-cycle effort to align Medicare Advantage with its priorities. By initiating PA automation, rigorous coding compliance, outcome-driven quality enhancements, and next-generation audit preparedness now, MA plans can turn regulatory challenges into competitive advantage. Stakeholders should monitor the Office of Management and Budget’s review timetable, submit focused comments during the rulemaking window, and leverage specialized modeling support to quantify impacts. The program’s future is outcome-centered and accountability-driven. Plans that embrace this vision today will lead the market tomorrow.
Preparing for the 2027 Contract Year for Medicare Part C and D
In addition to advancing the Trump Administration’s healthcare policy priorities, market shifts are likely to influence provisions included in the 2027 contract year proposed rule.
HMA experts advise that issuers and other interested healthcare organizations consider the following potential proposals as well as the changes to help organizations prepare:
- CMS might propose to tighten standards around minimum plan offerings per county, bolster network adequacy requirements, and enhance provider directory. transparency to safeguard beneficiary access as the program evolves.
- Plans that accelerate PA digitization, embed real-time clinical decision support, and train providers on uniform criteria today will smooth their path when CMS announces the contract year 2027 final rule.
- To stay ahead, plans should launch internal coding audits, fortify provider documentation support, and pilot encounter-level data collection now.
- MA organizations must recalibrate quality programs toward these high-impact metrics, invest in digital platforms for real-time patient feedback, and forge care-management strategies that demonstrably lower acute events.
Connect with Us
HMA is closely monitoring the federal review timetable for this proposed rule. Our Medicare experts are working with healthcare organizations to prepare to submit targeted comments during the comment window, including applying specialized modeling support to quantify impacts.
The future of MA is outcome‐centered and accountability‐driven; plans that embrace this vision today will lead the market tomorrow. For details about the MA and Part D regulatory and market landscapes and approaches to position your organization for success, contact our featured experts below.
