Contract Year 2027 Medicare Advantage and Part D Regulatory Restructuring
Department of Health and Human Services
The Centers for Medicare & Medicaid Services, operating under the Department of Health and Human Services, issued a final rule codifying outstanding provisions of the Inflation Reduction Act of 2022 to permanently restructure Medicare Part D by eliminating the coverage gap phase and establishing a reduced annual out-of-pocket threshold.
The rule implements the new Manufacturer Discount Program and updates the calculation methodology for True Out-Of-Pocket (TrOOP) costs and reinsurance payments.
The agency also finalized updates to the Star Ratings quality measurement system, adding new reporting metrics including a standardized depression screening measure.
At the operational level, this rule eliminates out-of-pocket cost-sharing for enrollees once they reach the catastrophic phase of their prescription drug coverage.
Health plan sponsors are now required to publicly post their internal eligibility criteria for Special Supplemental Benefits for the Chronically Ill (SSBCI) to enforce administrative transparency.
Furthermore, the rule strictly prohibits health plans from offering cannabis as an allowable supplemental benefit if the product remains illegal under state or federal law.
Jurisdictionally, these compliance standards apply exclusively to Medicare Advantage (Part C) organizations, Medicare Prescription Drug Benefit (Part D) sponsors, and Medicare Cost Plan operators.
The overarching benefit redesigns and comprehensive Star Ratings updates strictly govern the 2027 contract year. Select technical consolidations and the supplemental benefit transparency mandates are scoped to take effect earlier for the 2026 contract year.
