Medicare 2027 Shake-Up: New Rules for Advantage, Drugs, and Plans
Published Date: 11/28/2025
Proposed Rule
Summary
Starting in 2027, Medicare Advantage, Prescription Drug, and Cost Plan programs will see updates to improve how plans are rated, marketed, and how drugs are covered. These changes affect millions of Medicare users and the companies that run these plans, aiming to make enrollment easier and benefits clearer. Comments on these updates are open until January 26, 2026, so stakeholders can weigh in before the new rules take effect.
Analyzed Economic Effects
6 provisions identified: 3 benefits, 0 costs, 3 mixed.
Part D redesign: $2,000 OOP and three phases
Medicare Part D is being changed to a three-phase benefit: deductible, initial coverage (25% coinsurance), and catastrophic with $0 cost sharing. The annual out-of-pocket (OOP) threshold was set at $2,000 for 2025 and was $2,100 for 2026; for 2026 and later years the OOP threshold will increase each year by the annual percentage increase and be rounded to the nearest $50.
No deductible for vaccines and capped insulin cost
The Part D deductible does not apply to ACIP-recommended adult vaccines and covered insulin products. For 2023–2025, the one-month cost-sharing amount for covered insulin products was $35; for 2026 and subsequent years the applicable cost-sharing amount for a one-month supply of covered insulin is the lesser of (1) $35, (2) 25% of the maximum fair price (MFP) for the insulin, or (3) 25% of the negotiated price.
Manufacturer Discount Program replaces Coverage Gap
The rule would codify the Manufacturer Discount Program, which replaced the Coverage Gap Discount Program and began on January 1, 2025. Under the Manufacturer Discount Program, manufacturers that enter agreements are required to provide discounts on applicable drugs in both the initial and catastrophic coverage phases. The Coverage Gap Discount Program agreements are proposed to be terminated effective January 1, 2025.
Marketing and agent rules changing Oct 1, 2026
CMS proposes revisions to marketing and communications rules applicable to contract year 2027 marketing beginning October 1, 2026. Proposed changes include modifying the definition and oversight of third-party marketing organizations (TPMOs), changing the 5 percent translation requirement, removing approval requirement for Medicare Card images, eliminating Outbound Enrollment Verification, modifying testimonial requirements, and removing certain mailing statement requirements. CMS seeks comments on enforcement and on using data or AI for oversight.
Changes to TrOOP, reinsurance, and Selected Drug rules
The proposed rule would codify updates to what payments count as True Out-Of-Pocket (TrOOP), establish how costs for drugs not subject to the Part D deductible count toward eligibility for manufacturer discounts under the Manufacturer Discount Program, and update the methodology for CMS reinsurance payments to Part D sponsors and implement the Selected Drug Subsidy.
Simplifying Star Ratings; no Health Equity reward
CMS proposes changes to simplify and refocus the Star Ratings measure set, proposes not to implement the Health Equity Index (also called Excellent Health Outcomes for All) reward, and would continue to include the historical reward factor in the Star Ratings methodology. CMS is soliciting comments on further simplification of Star Ratings.
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Key Dates
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