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On December 11, 2025, the Medicaid and CHIP Payment and Access Commission (MACPAC) met for their December meeting. The Commissioners examined strategies for implementing the community engagement requirements which were signed into law under the One Big Beautiful Bill Act.

CONSIDERATIONS FOR IMPLEMENTING COMMUNITY ENGAGEMENT REQUIREMENTS: FINDINGS FROM STAKEHOLDER INTERVIEWS

MACPAC staff began by reviewing the community engagement requirements and current clarifications before sharing their findings from stakeholder interviews. The interviews were conducted between June and August of 2025 and included stakeholders such as CMS officials, state Medicaid directors, representatives of national advocacy organizations, and think tank staff.

One of the largest concerns raised by interview participants was how states will access community engagement data. For example, while free data sources are available, they are often not updated in a timely manner or provide aggregated data, making it difficult for state Medicaid agencies to comply with verification requirements. Paid data sources can be timelier but are also expensive. For example, it was reported that North Carolina’s contract with Equifax for its data set doubled from 2022 to 2025. Stakeholders have requested that Centers for Medicare and Medicaid Services (CMS) provide guidance on free data sources or enter into agreements to reduce costs for paid data sources.

Another major concern raised by stakeholders is the cost of IT infrastructure changes. These infrastructure changes are needed to adequately meet reporting requirements but can cause administrative budgets to balloon. For instance, Georgia recently saw 90% of administrative spending go towards IT infrastructure upgrades.

During Commissioner discussion, there continued to be concerns raised about the cost and requirements of implementing new IT structures. One Commissioner verified that state funds were still being matched at a rate of 10 to 90 for IT upgrades. There was also concern about how to best report verification data, especially for populations that may not have access to technology or digital tools. One suggestion was to look for ways to track and manage data that does not put the impetus on the individual to prove their exemption status or continued eligibility.

The opportunities for managed care organizations were also discussed, with multiple Commissioners highlighting how they have previously been critical to successful engagement with their members. Commissioners discussed continuing to explore how other similar partners could increase engagement, especially in maintaining timely data and finding a framework for effective monitoring.

One Commissioner emphasized the importance of understanding and comparing infrastructure and policy decisions across states to gain a clearer picture of how each state is managing the rollout. The Commissioner noted that this would become more important if some states see enrollment numbers drop drastically, and that it is important to pause and intervene to prevent large population segments from losing their health care coverage.

The Chair concluded the session by suggesting that the Commission should reexamine some rules and regulations regarding managed care plans and their role in helping individuals remain eligible.

EXPERT PANEL ON IMPLEMENTING COMMUNITY ENGAGEMENT REQUIREMENTS

MACPAC invited Lindsay Browning, Deputy Executive Director of Programs, National Association of Medicaid Directors, and Caprice Knapp, Principal Deputy, Center for Medicaid and CHIP Services, to answer questions from MACPAC staff and Commissioners.

The panel opened with questions from MACPAC staff. The first topic focused on what Ms. Browning and Ms. Knapp were hearing from states, as well as the deeper policy questions states have been grappling with. Ms. Knapp answered that CMS is seeing a lot of alignment with the responses MACPAC staff have reported from stakeholders, with the greatest emphasis on timelines and IT infrastructure. Deeper policy questions have related to how best to convert the data states can access into acceptable formats and how to partner with the respective Departments of Education. She emphasized that questions can be sent to medicaidreforms@cms.hhs.gov. Ms. Browning also noted alignment with interviews conducted by MACPAC staff, in which states emphasized concerns about member engagement. She also said she has been receiving policy questions about differential impacts of the community work requirements between states and how states can best show a clear paper trail for future audits.

When asked about which areas state agencies are seeking additional federal guidance, Ms. Browning emphasized the need for states to receive early signals from CMS about future guidance. More clarity on where CMS will be specific or flexible with implementation requirements, what the minimum product looks like for IT solutions, and data reporting expectations were also of interest. Ms. Knapp did not provide a clear answer on what additional guidance states could expect from CMS before June 2026. She did highlight the monthly informational calls and all state calls that CMS intends to continue as good sources of information and early signaling.

Ms. Browning was also asked about what lessons from the recent unwinding of the Public Health Emergency (PHE) could be applied to the rollout of the community engagement requirements, Ms. Browning made it clear that while there are similarities, the new community engagement requirements are not an established body of policy that can be examined; instead, decisions are being made now and in the future. That said, she feels that the increased automation of eligibility policies and the advancement of community engagement structures in the unwinding were helpful. Ms. Knapp emphasized the importance of outreach and vendor and managed care plan engagement for being successful.

Answers to questions about monitoring implementation and data collection emphasized minimizing the burden on states by clarifying what needs to be reported and creating a list of a reasonable number of measures. Building on existing systems and adopting a collaborative approach with CMS were listed as strategies for long-term implementation success.

The floor was then opened for Commissioners to ask questions directly, starting with what states are seeing as initial priorities. Ms. Knapp shared that, in her experience, states are seeking guidance on the minimum viable product for data reporting and clarification on qualifying events and medical fragility exemptions. Ms. Browning reported that states are most concerned with verifying employment, income, and education, with discussions about expanding to the volunteering category to take place later.

A couple of Commissioners raised concerns about how CMS will evaluate whether states are prepared to roll out the new requirements. Ms. Knapp assured questioners that both IT and policy readiness review parameters are in place. CMS is also working with states that are choosing to start implementation early, allowing them to avoid disenrolling individuals through a hold-harmless period. CMS can also step in and put a state on pause if there are unexpected events, such as large numbers of disenrollments.

When asked how MACPAC can be helpful to states and CMS during the lead-up to January 2027, Ms. Browning emphasized recommendations on outcome measurement, specifically identifying a small set of meaningful measures to best monitor and track eligibility requirements. Other recommendations about member outreach were also suggested.

The cost of IT infrastructure procurement was also discussed, with Commissioners wondering how states can keep costs down. Ms. Knapp emphasized that Administrator Oz was meeting with vendors to figure out solutions to high procurement costs, especially for systems that multiple states would be interested in. Ms. Browning raised the need for continued evaluation of data source costs, specifically for states finding high-value data from lower-cost sources.

On December 10, 2025, the Senate Committee on Homeland Security Subcommittee on Investigations held a hearing on principles to fix healthcare. Democratic Senators focused on the need to extend the enhanced Advance Premium Tax Credits (APTCs) while Republicans were firm that the Affordable Care Act (ACA) needs a complete overhaul.

OPENING STATEMENTS

• Chairman Ron Johnson (R-WI)

WITNESS TESTIMONY

• Mr. Christopher Briggs, Obamacare Enrollee – Testimony
• Mr. Nick Stehle, Obamacare Enrollee – Testimony
• Mr. Joel White, President, Council for Affordable Health Coverage – Testimony
• Mr. Tarren Bragdon, President and Chief Executive Officer, Foundation for Government Accountability – Testimony
• Mr. Dan Jacobs, Small Business Owner and ACA Marketplace Enrollee – Testimony
• Mr. Aaron Lehman, Farmer and ACA Marketplace Enrollee – Testimony

MEMBER DISCUSSION

Sen. Rick Scott (R-FL) stated he understands how important it is for people to have access to health care they can afford, which is why he has introduced S.3264, a bill that would establish HSA-style accounts through which individuals could purchase health care. Mr. White was in support of the bill, indicating that it will help the small business market. Mr. Bragdon was also in support of the bill, stating, “putting money in patients’ pockets is transformative.”

Sen. Bernie Moreno (R-OH) stated that only a small percentage of Americans are affected by the expiration of APTCs, and therefore, said more work needs to be done to reduce costs for all Americans. Some ideas he shared were increased transparency in health care costs, the use of association health plans, and reforms of certain practices by pharmacy benefit managers (PBMs).

Sen. Elissa Slotkin (D-MI) shared that while the ACA is not perfect, it did provide affordable coverage for people with pre-existing conditions. She also said she is not willing to take away enhanced ATPCs while Congress considers other policies to improve the affordability of health care.

Ranking Member Richard Blumenthal (D-CT) asked Mr. Lehman to share his recent experience shopping for a health care plan. Mr. Lehman indicated that seeing the rise in premiums resulted in intense sticker shock, which has made him and other farmers he represents nervous about how they will afford coverage. Ranking Member Blumenthal asked Mr. Jacobs how not extending APTCs would affect his business. Mr. Jacobs expressed concern about how the rise in premiums will lead to less consumer spending, especially in the service industry, and he is expecting many small businesses to close as a result. Ranking Member Blumenthal indicated that he would like to tackle additional health care challenges, but APTC extension is on a tight timeline that needs to be addressed immediately.

Chairman Johnson was strongly opposed to extending APTCs, repeating that now the subsidies are returning to the rates that were originally set in the ACA. He is in support of returning to the high-risk pool model for individuals with pre-existing conditions, feeling that it provides a good option to receive health insurance. Chairman Johnson asked Mr. White about the rise in insurance company’s stock prices and how to drive down health care costs. Mr. White shared that the increase in the stock price was directly correlated with the increase in the premium price. Mr. White indicated that the only way to decrease costs was to bring consumerism back to health care. Mr. Bragdon also supported the statement, saying that without consumerism, there is no incentive to reduce costs.

Chairman Johnson asked Mr. Lehman and Mr. Jacobs what percentage of their income an individual pays for health insurance before a subsidy should begin to apply. Mr. Lehman did not have an exact figure in mind, and Mr. Jacobs responded that he “is not a policy maker” and is “a bad person to ask” because he “would rather pay more so people who make less can have better health care.”

On December 4 and 5, 2025, the Medicare Payment Advisory Commission (MedPAC) met to discuss recommendations for the March 2026 Report to Congress. Many of the sessions during this two-day meeting focused on evaluating payment rates for physicians, inpatient services, outpatient services, home health services, and services provided in institutions such as skilled nursing facilities (SNFs). There was also discussion about the quality of care Medicare beneficiaries receive across different settings, including hospitals, outpatient settings, other facilities, and at home.

PHYSICIAN AND OTHER HEALTH PROFESSIONAL SERVICES RATES

MedPAC staff offered a comprehensive view of current spending and service use under the Medicare

Physician Fee Schedule (PFS), followed by a discussion of access-to-care and quality-of-care metrics. There was a change in the provider mix, with more advanced practice nurses (APRNs) and physician associates (PAs) providing care. MedPAC staff found that Medicare Economic Index (MEI) growth outpaced PFS updates, and suggested that increasing compensation rates is not necessary to maintain wide access to care. The Chair’s draft recommendation is for Congress to increase payment rates by 0.5% more than current law, resulting in a 1.25% increase for advanced alternative payment model (A-APM) clinicians and a 0.75% increase for other clinicians.

The Commissioners expressed widespread support for the Chair’s recommendation. One Commissioner was unsupportive, indicating that, due to inflation, the proposed increase in payment would result in a net decrease of 2.2%. A few other Commissioners acknowledged this point but felt that increasing the rate more would lead to ballooning costs. There was sentiment that the reimbursement policy needs an overhaul, as the current system is squeezing providers and not benefiting either providers or patients.

Some Commissioners suggested that staff begin taking a closer look at the effects of concierge care and at how to quantify its use. There was also strong support for crafting new survey questions to measure quality of care, as the Merit-based Incentive Payment System (MIPS) is flawed. One Commissioner also noted that comparison data between private insurance options and Medicare is helpful, but if the comparison group is worsening, that does not automatically mean Medicare access and quality are improving.

HOSPITAL INPATIENT AND OUTPATIENT SERVICE RATES

MedPAC staff found hospital supply and availability were relatively steady for fiscal year 2024 (FY24), with Medicare inpatient stays and outpatient services increasing in 2024. Hospital margins increased slightly but remained low. Relatively efficient hospitals’ margins also increased from -2% to -1% in 2024. MedPAC staff also said that the Medicare Safety-Net Index (MSNI) remained a better predictor of hospitals’ all-payer operating margins than other metrics. The Chair’s draft recommendation for 2027 payments is to update the 2026 Medicare base payment rates by the amount specified in current law, and to implement MSNI as described in the March 2023 report, adding $1 billion to the MSNI pool.

There was general support for the recommendations, with many Commissioners specifically mentioning strong support for the MSNI contribution. Two Commissioners expressed reservations about supporting the recommendation because they wanted separate Inpatient Prospective Payment System (IPPS) and Outpatient Prospective Payment System (OPPS) measures and recommendations.

The Commissioners were very interested in the efficient hospital model and in how it has been previously validated. There was also general interest in how the model is used; however, the Chair pushed for the committee to remain on the topic of recommendations and suggested revisiting the conversation at a later date. A few Commissioners asked how $1 billion was determined as the amount to contribute. The staff and the Chair clarified that it was about 0.5% of a rate increase and that additional information on the expected effects of the contribution would be provided.

POST ACUTE CARE: TRENDS AND KEY ISSUES

This presentation was suggested to evaluate, holistically, post-acute care facilities’ use and payment. The differences in eligibility requirements, benefits, and cost-sharing requirements make it difficult to conduct a one-to-one comparison of quality outcomes, but preliminary results indicate possible inefficient care. There are plans for future work to evaluate the new case-mix systems, monitor the TEAM alternative payment model, compare Medicare Advantage and fee-for-service (FFS) use of post-acute care, and examine Medicare Advantage’s impact on the financial performance of SNFs and inpatient rehabilitation facilities (IRFs).

The largest discussion thread was the desire for more data to support future recommendations. Measures such as patient experiences and outcomes, as well as how providers select facilities, were among the suggestions. There was discussion on the 3-midnight rule and the inclusion of observation status for post-acute care facilities. MedPAC previously recommended that observation be included, but there have been no further changes. Another large topic of commentary was understanding geographic locations of each type of post-acute care facility and how location may influence patient placement.

While the presentation stated that there are no guidelines for patient placement, one Commissioner responded that the rehabilitative specialties do have guidelines, along with their clinical judgement, for evaluating patients. This led to the suggestion that these guidelines be collected and examined to understand how they are used, and that the reports be reformatted as needed.

SKILLED NURSING FACILITIES RATES

The MedPAC presentation on SNFs suggested that SNF access has remained stable for Medicare beneficiaries, as the number of SNFs decreased while occupancy rates increased. Quality measures were also noted as being stable, but there are gaps in quality data since patient experience data is not uniformly collected. Margins for freestanding SNFs were high in 2024, averaging 24.4%. The Chair’s draft recommendation for 2027 rates is to reduce 2026 Medicare base payment rates for SNFs by 4%. The expected implications are a decrease in spending relative to the current law, but no adverse effect on access to care.

The design of nursing home star ratings was evaluated, and an alternative approach was proposed that would equally weight each domain. The idea is that it would increase the weight of the staffing rating. It was also suggested that the change in approach could provide a more complete picture of quality and compliance for SNFs.

There was broad support for the recommendation, with some saying that it is a conservative reduction in payment due to the high margins SNFs experience. There was commentary on ways to more accurately reflect SNF star ratings by changing domain weights, with some Commissioners suggesting a higher staffing weighting and others arguing that the other domains are equally necessary. It was also suggested that CMS overhaul the measures used to evaluate quality and compliance. More long-term thinking about paying for outcomes and care was raised as an avenue for the commission to explore.

HOME HEALTH CARE SERVICES RATES

MedPAC staff provided an overview of home health care services and spending, showing that access to care has remained adequate. They also highlighted that the overall use of home health services has declined by 1%, but Los Angeles, California, has seen rapid growth in the area. This has led to a usage rate of about twice the national average and has been accompanied by a rapid rise in costs. While some tools have been used to address program concerns, use remains high. Quality of care has also remained stable, and home health margins have remained high, averaging 21.2%. The Chair’s draft recommendation for 2027 is for Congress to reduce the 2026 Medicare base payment rate for home health services by 7%. The expected implications would be to decrease spending with no adverse effect on access to care.

A few Commissioners asked MedPAC staff whether what was being seen in California represented the start of a larger trend and requested a closer look at the differences in California’s usage rates. There was interest in whether the higher home health usage was offset by lower usage of other post-acute care settings, such as SNFs and IRFs. One Commissioner, who practices in Los Angeles County, offered some commentary he believed could explain the differences. In his opinion, low property tax rates encourage older populations to age in place and choose home health services over other types of care. Another possibility is the availability of remote home monitoring equipment, which makes it easier for patients and providers to feel comfortable with home health programs. The Commissioner encouraged MedPAC staff to examine discharge-to-home rates in Los Angeles County compared to the rest of the country to understand if the high usage of home health services results in lower emergency department readmission rates.

Other discussion topics revealed that Medicare FFS is the preferred payer for home health services, above both Medicare Advantage and private health insurance. A better understanding of the payer mix is a topic that multiple Commissioners expressed interest in revising. Other data points that future work could examine include utilization rates, especially comparisons between rural and urban communities, as well as utilization by living status.

Overall, there was broad support for the Chair’s draft recommendation. The only hesitation was why a 7% rate cut was chosen over similar rates, especially when compared with other draft recommendations. The Chair explained that the Commission is trying to preserve access and quality while signaling the feeling that rates need to be lowered. Some long-term planning to examine whether a single large rate cut or a series of smaller rate cuts over a longer period was preferred was suggested.

On December 3, 2025, the Senate HELP Committee held a hearing on health care affordability. The main topic of the day was what to do about the enhanced advance premium tax credits (APTCs), which expire at the end of the year. Democratic senators, and a few Republican senators, argued that the APTCs need to be extended. Most Republican senators countered that the enhanced APTC funding should be provided directly to patients through tax-free accounts. Senators from both parties also brought up other policy proposals to address health care costs. These included proposals to create a Medicare-for-all system, reform certain pharmacy benefit manager (PBM) practices, and strengthen price transparency requirements.

Opening Statements

• Chairman Bill Cassidy (R-LA)

Witness Testimony

• Joel White, President, Council for Affordable Health Coverage – Testimony
• Marcie Strouse, Owner and Partner, Capitol Benefits Group – Testimony
• Claudia M. Fegan, MD, National Coordinator, Physicians for a National Health Program – Testimony

Member Discussion

Enhanced APTCs

All Democrats in attendance, as well as Sens. Susan Collins (R-ME), Lisa Murkowski (R-AK), and Jon Husted (R-OH), agreed that the enhanced APTCs should be extended for at least a year, with Democratic senators proposing an extension of up to 3 years. There were also differences of opinion on whether it would be a clean extension or involve unspecified reforms. Dr. Fegan agreed there should be an extension of the enhanced APTCs and stated multiple times that an increase in cost, even minimal, is associated with patients waiting longer to seek care, which in turn leads to more preventable deaths. Chairman Cassidy (R-LA) countered that the enhanced APTCs go directly to insurance companies and not individuals.

Chairman Cassidy and Sen. Roger Marshall (R-KS) were the strongest supporters of funding health savings accounts (HSAs). They argued that this solution directly addresses high deductible and out-of-pocket costs, which Mrs. Strouse supported. However, Sens. Patty Murray (D-WA) and Andy Kim (D-NJ) raised concerns that this solution would still require individuals to purchase insurance, which may be unaffordable for them. Mr. White’s counter was to allow premium costs to be paid with HSAs. Chairman Cassidy also rebutted arguments against directing enhanced APTC dollars to HSAs, noting that funded HSAs would accompany Bronze and Copper ACA plans, which have lower premiums and high deductibles that would be offset by the HSAs.

Other Proposals

Ranking Member Bernie Sanders (I-VT) was vocal about his support for a Medicare-for-all approach and the need to designate health care access as a human right. He argued that a Medicare-for-all proposal would reduce administrative costs, therefore saving money. He suggested the committee should hold a hearing with health officials from countries with universal health coverage and lower per-person costs.

Sen. Tim Kaine (D-VT) suggested that the committee consider previous efforts that had strong bipartisan support, such as PBM reform. Sen. Kaine argued that this could reduce consolidation for health care providers, which the panel was in favor of, though Mrs. Strouse did feel that it could not be a “one size fits all” approach to reform.

There was also a lot of discussion about increasing price transparency and allowing for price shopping. Sen. Husted indicated he would be introducing a bill in the coming days that would allow for greater competition through plan price transparency. Sen. Marshall highlighted S.2355, the Patients Deserve Price Tags Act, which would allow patients to know the cost of care before they receive it.

Sen. Josh Hawley (R-MO) suggested that health care spending, such as premiums and out-of-pocket expenses, could be tax-deductible. There seemed to be some interest from the panel, as well as the other senators in the room, as to what this could look like in practice.

On November 25, 2025, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would revise the Medicare Advantage (MA) Program, the Medicare Prescription Drug Benefit Program (Part D), and the Medicare Cost Plan Program for Contract Year 2027 (PY27). The CMS press release can be found here. A CMS fact sheet can be found here.  The 60-day comment period under the Administrative Procedure Act (APA) for the PY27 MA/Part D Proposed Rule ends on January 26, 2026.

MA & PART D: UPDATES TO STAR RATINGS

The MA and Part D Star Ratings program evaluates plan performance on a 1-to-5-star scale across up to 43 measures for MA-PD contracts, 33 for MA-only, and 12 for Part D, covering categories like outcomes, intermediate outcomes, process, patient experience, and access. Ratings are based on CMS administrative data, enrollee surveys, and plan-submitted information. These ratings influence quality bonus payments (QBPs) for MA plans (up to 5-10% added to benchmarks for 4+ star plans), beneficiary rebates (50–70%), marketing rules, and the way consumers are presented plan options in the Medicare Plan Finder.

In keeping with the Trump administration’s effort to deemphasize equity programs, the CY27 proposed rule would eliminate the Biden-era Excellent Health Outcomes for All reward (formerly the Health Equity Index or HEI). This reward – finalized in the 2023 final rule for implementation in CY27 – was intended to incentivize high measure-level performance among enrollees with specific social risk factors (SRFs), such as dual eligibility for Medicare and Medicaid, receipt of the low-income subsidy (LIS), or disability. For CY27, the Biden-era reward would have given plans an HEI score ranging from -1 to 1 based on a subset of measures, and those plans with positive HEI scores would have received a bonus added to their overall Star Rating (0.4 for the top third, 0.267 for the middle third, and 0.133 for the bottom third). As proposed, the CY27 rule would eliminate this construct while retaining the historical reward factor (which similarly rewards plans but emphasizes improvement efforts in clinical care, outcomes, and patient experience across the entire patient population).

Continuing the administration’s deregulation theme, the CY27 proposed rule would also remove 12 measures starting from the 2027 measurement year. Removals would take effect for the 2028- or 2029-Star Ratings, depending on the measure. The measures slated for removal under the CY27 proposed rule include:

• Plan Makes Timely Decisions about Appeals (Part C, 2029)
• Reviewing Appeals Decisions (Part C, 2029)
• SNP Care Management (Part C, 2029)
• Call Center – Foreign Language Interpreter and TTY Availability (Part C, 2028)
• Call Center – Foreign Language Interpreter and TTY Availability (Part D, 2028)
• Complaints about the Health/Drug Plan (Parts C and D, 2029)
• Medicare Plan Finder Price Accuracy (Part D, 2029)
• Diabetes Care – Eye Exam (Part C, 2029)
• Statin Therapy for Patients with Cardiovascular Disease (Part C, 2028)
• Members Choosing to Leave the Plan (Parts C and D, 2029) \
• Customer Service (Part C, 2029) • Rating of Health Care Quality (Part C, 2029)

If finalized, these changes would, in the aggregate, have the practical effect of increasing QBPs to plans. Simulations using 2025 data show 62% of contracts with unchanged ratings, 13% gaining 0.5 stars, 25% losing 0.5 stars, 5% gaining QBP eligibility, and 4% losing it. CMS estimates these shifts in Star Rating status would result in a $13.18 billion net increase in Medicare Trust Fund spending over the 2027–2036 window (0.15% of MA payments). CMS projects that much of that increase (~$7.3 billion) would occur in the CYs 28 and 29.

MA: OPERATIONAL REFORMS

Per President Trump’s executive order (EO) #14192 (“Unleashing Prosperity through Deregulation”), the CY27 proposed rule includes several proposed reforms intended to reduce the regulatory burden on plans and, therefore, the marginal operational costs passed on to beneficiaries by those plans. Proposed changes include:

• Exempting account-based plans from creditable coverage disclosures: Currently, group health plans, including account-based arrangements such as Health Reimbursement Arrangements (HRAs), Flexible Spending Accounts (FSAs), and Health Savings Accounts (HSAs), must disclose their creditable prescription drug coverage status to CMS and Medicare-eligible individuals. CMS proposes amending this section to exclude these plans, as they do not directly offer drug coverage but only reimburse expenses. In practice, this would eliminate redundant paperwork for about 7,049 entities (mostly HR managers), saving approximately 585 hours and $90,266 annually.
• Rescinding mid-year notices for unused supplemental benefits: MA organizations must mail individualized mid-year notices by July 31 detailing unused supplemental benefits from the Evidence of Coverage. The proposal would rescind this requirement entirely. Practically, this reduces administrative burdens, yielding annual savings of $1.36 million in printing/mailing, plus $499,091 in one-time costs for system updates.
• Eliminating health disparities activities in MA quality improvement programs: Under § 422.152(a) (5), MA organizations must incorporate activities to reduce health disparities into their Quality Improvement (QI) programs. CMS proposes removing this requirement.
• Eliminating health equity requirements for MA Utilization Management (UM) Committees: Current rules at § 422.137(c)(5) require a health equity expert on UM Committees, and §§ 422.137(d)(6)– (7) mandates annual health equity analyses of prior authorizations. The proposal would rescind these provisions. In practice, this streamlines committee operations by saving about 6,040 hours and $814,000 annually in data aggregation and posting, enabling focus on core UM functions, but potentially reducing targeted equity reviews for vulnerable populations.
• Waiving the LI NET call center hours requirement: The Limited Income Newly Eligible Transition (LI NET) program currently requires toll-free call centers to be open from 8 a.m. to 8 p.m. in all regions. CMS proposes amending this requirement to limit hours to 8 a.m.–7 p.m. ET, Monday–Friday. This adjustment accounts for low call volumes and 24/7 pharmacy support, saving $800,000–$1 million annually in operational costs.

MA: SPECIAL ENROLLMENT PERIOD REFORMS

The MA program currently includes a Special Enrollment Period (SEP) for enrollees affected by a “significant” provider network change, such as terminations of providers or facilities, where significance is determined, case by case, by CMS and the MA organization based on factors like the scale of the termination. Affected enrollees – those assigned to, receiving care from, or who received care within the past three months from the terminated provider – can switch MA plans or disenroll to Original Medicare, but only if notified of eligibility. MA organizations must send termination notices, but these do not always include detailed SEP information, and separate notifications may be required for eligibility. CMS guidance (but not rules) requires that certain other SEPs, such as those for CMS sanctions, contract violations, or exceptional circumstances, receive CMS approval.

In the CY27 proposed rule, CMS proposes to modify the SEP for provider terminations by renaming it from “Significant Change in Provider Network” and eliminating the “significant” determination requirement, making eligibility automatic for affected enrollees upon any no-cause provider or facility termination. The SEP would begin in the month of eligibility notification and last for two additional calendar months, usable once per network change, with MA organizations assessing eligibility via beneficiary attestations rather than solely through 1-800-MEDICARE. Termination notices would be enhanced to include mandatory details on SEP eligibility, start/end dates, Annual Enrollment Period (AEP), MA Open Enrollment Period (MA-OEP), Medigap guaranteed issue rights, and impacts on employer/union coverage.

Separately, CMS proposes codifying the requirement for prior CMS approval of certain SEPs at §§ 422.66(g), 423.32(k), and 423.36(g), mandating that MA organizations obtain approval via CMS-operated mechanisms (e.g., 1-800-MEDICARE, Online Enrollment Center, or notices) before transmitting elections for specified SEPs like contract violations or sanctions.

MA: REQUESTS FOR INFORMATION (RFIS)

CMS includes several RFIs in the CY27 Proposed Rule to gather public input on enhancing the Medicare Advantage program, including:

• Dually Eligible Individual Enrollment Growth in C-SNPs and I-SNPs: CMS seeks comments on the significant growth in dually eligible individuals enrolling in chronic condition special needs plans (C-SNPs) and institutional special needs plans (I-SNPs) rather than dual eligible special needs plans (D-SNPs). Comments are sought on policy solutions such as requiring State Medicaid Agency Contracts for plans with high dually eligible concentrations (e.g., 60%+), enhancing care coordination requirements, applying D-SNP look-alike limitations, and strategies to encourage C-SNPs focused on mental health or substance use disorders.
• Future Directions in Medicare Advantage Risk Adjustment: CMS solicits input on modernizing the MA program through risk adjustment, including leveraging AI and alternative data sources for nextgeneration models, to promote data transparency, quality improvement, competition, taxpayer savings, and fraud reduction, potentially via programmatic changes or Innovation Center models.
• Future Directions in Medicare Advantage Star Ratings: CMS requests feedback on simplifying and streamlining the Star Ratings program, including reducing timelines from measure development to implementation and shortening the lag between measurement years and payment application to better incentivize quality improvements.
• Quality Bonus Payments in Medicare Advantage: CMS seeks information to refine the QBP structure and its impact on rebates, including options to shorten new-measure implementation timelines, delink bonuses from MA bids through an Innovation Center model, and broader strategies to encourage cost containment alongside enhanced care quality.
• Well-Being and Nutrition: CMS solicits input on tools and policies to improve overall health, happiness, and life satisfaction in MA, including emotional well-being, social connections, self-care, and nutrition strategies like promoting healthy eating, preventive care, and incentives for MA organizations to support long-term beneficiary nutritional habits.
• Marketing and Communications Oversight: CMS seeks comments on modernizing agent/broker regulations and marketing requirements, including redefining the Third-Party Marketing Organizations (TPMO) definition to segment by size, scope, or role; modifying the 5% translation threshold for materials; removing the requirement for CMS approval of Medicare card images in ads; revising testimonial standards for authenticity, substantiation, and disclosures; eliminating outbound enrollment verification and certain mailing statements; reducing call recording retention periods; and broader strategies for accountability, data-driven monitoring using AI, and preventing misleading practices.
• Other Medicare Advantage Program Areas: CMS solicits input on deregulation and simplification across various MA aspects, such as updating medical loss ratio calculations and reporting; streamlining network adequacy reviews, exceptions (including a new “pattern of care” exception), and access standards; enhancing oversight of supplemental benefits design and marketing; revising SNP Model of Care requirements; automating data sharing; and identifying burdensome reporting elements.

PART D: IMPLEMENTING CERTAIN PROVISIONS OF THE INFLATION REDUCTION ACT (IRA) OF 2022

The IRA significantly redesigned the Medicare Part D benefit to lower beneficiary costs, including eliminating the coverage gap phase, reducing the annual out-of-pocket (OOP) threshold starting at $2,000 (with annual indexing based on per capita Part D costs or CPI-U), and removing enrollee cost sharing in the catastrophic phase (setting it to $0 after the OOP threshold is met). It also terminated the Coverage Gap Discount Program (CGDP) and replaced it with the Manufacturer Discount Program (MDP), which requires manufacturers to provide discounts on applicable drugs (brand-name drugs under New Drug Application or Biologics License Application, excluding selected drugs under negotiation) in the initial coverage and catastrophic phases. The IRA granted CMS temporary authority to implement these changes through sub-regulatory program instructions and guidance through 2026. As part of the CY27 rule, CMS proposes to formally codify these reforms through rulemaking. A summary is below.

• CMS proposes to codify the termination of the CGDP for 2027. The CGDP (under which manufacturers provided 70% discounts on applicable drugs for non-LIS beneficiaries in the coverage gap) technically terminated on January 1, 2025, but continues to handle discounts and reconciliations for drugs dispensed before that date. If finalized, these changes would permanently sunset the program, ensuring that no new agreements or discounts apply after 2024.
• CMS proposes establishing a new Subpart AA to codify the MDP for 2027 and beyond, requiring manufacturers to enter agreements covering all labeler codes for applicable drugs, provide 10% discounts in the initial coverage phase and 20% in the catastrophic phase (calculated on negotiated price including dispensing fees, taxes, and units), with phase-ins for specified manufacturers (based on 2021 Part D spending ≥1% or 2.5% for LIS/non-LIS) and small manufacturers (one drug ≥80% of expenditures). Proposed additions include detailed rules on aggregation, acquisitions, terminations, audits, disputes, and civil penalties.
• CMS proposes codifying OOP changes for 2027 and beyond by revising § 423.100 to limit “coverage gap” definitions to 2006–2024, amending § 423.104(d)(4) for pre-2025 applicability, eliminating the initial coverage limit post-2024 (§ 423.104(d)(3)(iii)), setting the reduced OOP threshold at $2,000 for 2025 and indexing it annually (§ 423.104(d)(5)(iii)(G)–(H)), and confirming $0 cost sharing in the catastrophic phase (§ 423.104(d)(5)(i)).