What CMS’s Proposed Rule Means for Star Ratings and What Plans Should Do Next

CMS released their Proposed Rule, and it signals meaningful change for the Medicare Advantage Star Ratings program. From methodology updates to measure removals and enrollment flexibility, the proposal reflects CMS’s continued effort to refine how plan performance is evaluated and how quality bonus payments are awarded. 

For health plans, these changes bring both opportunity and uncertainty. Understanding what’s changing, when it takes effect, and how it could impact your quality strategy is essential not just for compliance, but for long-term performance and financial stability. 

Financial impact: What’s at stake for CMS Star Ratings and bonus payments 

CMS estimates the proposed Star Ratings updates would have a net impact of approximately $13.18 billion on the Medicare Trust Fund. While CMS projects the majority of plans would see little to no change, the distribution tells a more nuanced story: 

• About 13% of plans could see an increase in their star ratings 
• Roughly 25% may experience a decline 
• At least one contract could drop by a full star 

These shifts underscore the growing importance of precision in performance forecasting and year-round visibility into measure-level results. Small changes in methodology or cut points can translate into meaningful financial impact. 

It’s important to note, CMS ran this analysis on RY2025 data (although they had RY2026 data available at the time) so health plans may encounter impacts different than projected. 

Methodology updates: What’s in and what’s out

One of the most notable changes in the CMS Proposed Rule is the removal of the Excellent Health Outcomes for All (EHO4All) reward, with the legacy reward factor returning for 2027 ratings year, which is based on 2025 dates of services. For plans that have spent the last two or more years adjusting to equity-focused incentives, this signals another recalibration of CMS’s Star Ratings strategy. 

Another key change is to the “hold harmless” provision. Currently, for health plans rated 4 stars and above, if the ratings from the quality improvement measures would have a negative impact on health plans rated 4 stars and above, CMS won’t take those measures into account when calculating those plans’ overall rating. The CMS Proposed Rule will increase that limitation to be applicable to only 5-star plans, which will have a negative impact and make it harder for health plans to reach and maintain 4+ star ratings. 

Measure changes and what they signal for the future 

The CMS Proposed Rule removes 12 administrative and process-oriented measures from the Star Ratings program over the next several years. These include call center availability measures, appeals-related measures, and certain long-standing clinical measures, such as the Statin Therapy for Patients with Cardiovascular Disease and Diabetes Care – Eye Exam measures. 

The intent is clear: place greater emphasis on measures that drive outcomes and eliminate those without meaningful variation between plans. But for health plans, this means reassessing which measures truly drive performance and how to rebalance improvement efforts accordingly. 

CMS is also seeking public input on: 

• Refinements to risk adjustment and quality bonus payment structures 
• Managing the rapid growth of Special Needs Plans (C-SNPs and D-SNPs), including potential Medicaid agency contract requirements 
• Expanding benefits tied to nutrition and overall well-being 

Together, these proposals suggest continued evolution toward more integrated, outcomes-focused care models — while raising the bar for data accuracy and operational readiness. 

Enrollment flexibility and member retention considerations

Another significant proposal is the creation of a new Special Enrollment Period (SEP) tied to provider network changes. Under this approach, beneficiaries could change plans if one or more of their providers leave the network, without requiring CMS to determine whether the change is “significant.” 

While designed to protect beneficiaries, this change could increase member churn, making it more difficult for plans to recoup investments made in quality improvement or risk adjustment for individual members. It reinforces the need for proactive member engagement and retention strategies, alongside CMS Star Ratings performance management. 

Why this matters now 

CMS releases Star Ratings once a year, but the decisions behind those results are shaped months, and years, in advance. The CY2027 CMS Proposed Rule offers an early look at how the program may continue to evolve, giving plans a critical opportunity to adjust strategy, provide feedback, and prepare. 

Public comments on the CMS Proposed Rule are open for 60 days, through January 26, 2026. Engaging in that process can help ensure your organization isn’t caught off guard by future changes. 

Stay proactive, not reactive 

As CMS continues to refine the Star Ratings program, one thing remains clear: health plans need reliable insight, timely analysis, and year-round visibility to avoid flying blind. 

At Inovalon, we help plans make sense of evolving regulations, understand performance trends as they emerge, and stay confident in where they stand, long before CMS Star Ratings are released. 

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