CMS 2027 Proposed Rule: What Changed and How to Prepare
Written by
Jenice James
Senior Product Manager, Inovalon
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CMS recently released its Contract Year (CY) 2027 Proposed Rule – a 465-page set of proposed updates that could reshape both Medicare Advantage Star Ratings performance and the economics tied to quality bonus payments.
CMS is continuing to refine what it considers meaningful performance, while also introducing new dynamics that can affect forecasting, operations, and member retention. For Star Ratings leaders, this is the window to translate policy into a practical plan by understanding what’s changing, determining where your plan is most exposed, and adjusting early.
Below is a practical guide to the proposed changes, why they matter, and how to prepare now.
What are the possible changes with the CMS Proposed Rule?
One of the most consequential shifts is CMS’s proposal to remove the Excellent Health Outcomes for All (EHO4all) reward, formerly called the Health Equity Index (HEI), and to retain the legacy reward factor (r-Factor). For plans that invested heavily in HEI/EHO4All readiness, this is more than a policy tweak as it changes planning assumptions and may force reallocation of resources.
The CMS Proposed Rule also suggests revising the hold harmless policy. Today, if a plan has at least 4 stars and certain quality improvement measures would otherwise reduce its overall Star Rating, CMS does not factor that negative impact into the overall rating calculation – effectively holding the plan harmless. Under the CMS Proposed Rule, that protection would apply only to 5-star plans. This raises the difficulty for organizations trying to reach and maintain 4 stars, because there are fewer safeguards when a measure underperforms.
On the measure set side, CMS is moving toward potentially removing 12 administrative and process measures, concentrating the program further around clinical outcomes, member experience, and pharmacy performance.
Finally, CMS is proposing changes that can affect retention dynamics, including shifting Special Enrollment Period (SEP) language and rules toward provider terminations, which can allow beneficiaries more flexibility when providers leave the network. That’s a consumer protection win, but it also introduces new exposure for plans that invest in a member’s quality and risk adjustment performance only to lose that member due to provider movement.
Why the Star Ratings proposed changes matter
As administrative measures phase out and more weight concentrates in a smaller set of high-impact measures, even modest execution gaps can translate into outsized ratings and revenue consequences.
There’s also an important source of uncertainty: CMS’s impact analysis was run using 2025 Star Ratings data, and the CMS Proposed Rule notes that real-world plan impacts may differ from those projections. The practical takeaway is that broad, sector-level expectations aren’t enough – your contract mix, member profile, and measure-level performance distribution will ultimately determine the outcome.
And on the health equity front, investments that improve outcomes for socially at-risk members can still lift overall performance, because improvements flow into the broader measure results and overall Star Ratings performance.
Tips for navigating Star Ratings changes
Preparation starts with scenario planning that reflects the new changes. Model Stars Ratings performance under an environment where fewer administrative measures buffer performance, and where pharmacy, CAHPS, and HOS measures carry increasing influence. This will require tighter measurement-to-action cycles and a willingness to rebalance investments earlier in the year.
Operationally, treat the proposed hold harmless tightening as a cue to build stability-first execution, especially for plans near the 4-star line.
On retention, start planning as if provider movement can trigger member movement: build a cross-functional response that connects network updates, member outreach, and continuity-of-care messaging. The goal is to keep provider disruption from becoming a Star Ratings and revenue disruption.
At Inovalon, we help plans make sense of evolving CMS Star Ratings regulations, understand performance trends as they emerge, and stay confident in where they stand. Today, we perform quality analytics for 70% of Medicare Advantage enrollees in 4+ Star Plans, continuing to outperform the 3.98 national average.
Frequently Asked Questions (FAQ)
What’s the biggest Star Ratings change in the CY2027 Proposed Rule?
The proposal to remove EHO4All/HEI and retain the legacy r-Factor is one of the biggest changes in the proposed rules because it affects how plans have been building their forward-looking Star Ratings strategies.
Does the CMS Proposed Rule make it harder to stay at or above 4 stars?
Yes. Tightening hold harmless so it applies only to 5-star plans increases downside exposure for plans operating near the 4-star threshold.
Is CMS reducing reliance on administrative/process measures?
CMS is pursuing the removal of 12 measures characterized as administrative/process measures, shifting the measure set toward areas that better differentiate plans and focus on clinical care, outcomes, and patients’ experience of care.
Should plans pause health equity investments if EHO4All/HEI is removed?
No. Improvements made for socially at-risk members can still improve overall measure performance and, in turn, overall Star Ratings performance.
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