As Medicare Advantage (MA) organizations prepare for 2027, the latest CMS final rule and rate announcement are reshaping both revenue expectations and operational strategy. In a recent webinar hosted by RISE Health, Medicare Advantage experts Melissa Smith and Ana Handshuh outlined what health plans need to know about rates, Star Ratings redesign, flex card oversight and supplemental benefits for the chronically ill (SSBCI).

Their message was clear: CMS is raising expectations not only around compliance, but around how plans organize, coordinate and deliver care. Referencing comments from CMS official Chris Klomp, Smith said the agency is signaling that Medicare Advantage organizations must rethink care delivery rather than continue operating under a traditional cost-containment mindset. “We are not just inviting people to be along for the ride and think about costs,” she said. “This is not business as usual.”

A Rate “Increase” Under Pressure

The finalized 2.48% rate increase for 2027 appears favorable compared with CMS’s initial proposal, but the speakers warned that mounting operational pressures will significantly dilute the financial impact for many plans. CMS initially proposed a near-flat 0.09% increase before finalizing the higher figure.

Smith said the final announcement demonstrated continued federal support for Medicare Advantage, but Handshuh emphasized that many plans still view the increase as insufficient given rising medical costs, Part D redesign pressures and growing operational complexity.

“We still hear from a lot of our health plan clients that that's not enough to sustain the operations and benefits that their members have come to expect,” Handshuh said. Even though the final rate was considerably better than the original proposal, she cautioned that “the rate increase really doesn't represent a true increase, even though it looks like an increase on paper.”

As a result, many organizations are expected to revisit benefit design, formularies and supplemental offerings as they prepare 2027 bids.

Proposals Pulled Back

Some of the most controversial proposals discussed during rulemaking ultimately were not finalized. Among the provisions CMS chose not to implement:

·       A new risk adjustment model for coverage year 2027

·       A special enrollment period triggered by the loss of a single provider

·       Several additional sales and marketing restrictions

·       A framework for default Medicare enrollment into Medicare Advantage plans

Handshuh described the proposed provider-related special enrollment period as “a really big worry for many, many plans” because of the operational instability it could have created.

Smith attributed many of the reversals to the public comment process, emphasizing the importance of stakeholder engagement during rulemaking. “Most of what they didn't finalize was because of the political process at work,” she said. “It’s a concrete reminder of how vital it is to put your voice on the record.”

The 2027 final rule also cements what Smith described as “a complete Stars redesign,” narrowing the measure set while placing greater emphasis on clinical quality, patient outcomes, and member experience.

Administrative Measures Removed

Handshuh noted that CMS retired several topped-out administrative and appeals measures because they no longer meaningfully differentiated plan performance.

“Many, many plans were doing very well on these measures,” she said, noting that CMS cited limited variability across plans as justification for retiring them. The result, she explained, is a much greater focus on HEDIS measures, health outcomes survey measures, cost measures and CAHPS performance.

Depression Screening and Follow-Up

One of the most consequential additions is a new mental health-focused measure centered on depression screening and documented follow-up care.

Smith described the measure as “extremely rigorous,” warning that it will require significant operational coordination and data collection. CMS expects approximately 10% to 15% of MA members to screen positive for depression and then receive documented follow-up interventions.

MTM Measure Expansion

The Medication Therapy Management (MTM) Comprehensive Medication Review (CMR) measure has also been substantially re-specified. “It’s not your father’s old MTM measure,” Handshuh said.

She explained that the denominator has been greatly expanded, placing significantly more members into the measure population. Plans will need to think strategically about how MTM programs can support broader clinical quality performance, particularly for members appearing in multiple HEDIS measures.

Reward Factor Returns

At the same time, CMS is removing the Health Equity Index construct and reinstating the Reward Factor in an effort to soften the immediate impact of the redesigned Stars methodology. Smith said the change is intended to help “smooth out” rating declines many plans may otherwise experience.

Still, CMS has acknowledged that some contracts are expected to fall below four stars. Handshuh noted that lower quality bonus payments will likely redistribute dollars away from plans that previously benefited from higher ratings.

“Where do you guys think that money's coming from?” she asked. “It's coming from the highly rated plans that are going to lose their Star rating.”

For many organizations, the redesign means recalculating long-term Stars performance strategies while reinvesting in clinical programs, mental health access, MTM operations and member experience initiatives.

Flex Cards Under the Microscope

Flex cards and debit cards have become increasingly popular tools for administering OTC, grocery, utility and fitness benefits. Under the final rule, CMS is moving these programs into a much more tightly regulated environment.

Smith said CMS is attempting to curb what the agency views as overly casual benefit administration practices. “CMS is seeing far too frequent instances where plans are doing things casually with their debit cards,” she said.

The new expectations include:

·       Detailed member disclosures explaining covered items, restrictions and alternative access methods

·       Reimbursement pathways when members pay out of pocket for eligible benefits

·       More robust encounter and reporting data tied to flex card transactions

·       Greater operational oversight of vendors administering the benefits

Handshuh stressed that reimbursement obligations extend beyond simple technical failures. Plans may need to reimburse members “in any circumstance that the member is unable to use the card,” she said, including situations where members encounter non-technical barriers or have difficulty understanding how to use the benefit.

PPO plans face additional compliance considerations because members must retain freedom of choice regarding where they obtain covered products or services. Smith noted that debit cards can only serve as one access mechanism within PPO structures.

On the reporting side, Handshuh said CMS has made its position clear: if vendors cannot provide adequate data and reporting capabilities, “a flex card may not be the way to administer that benefit.”

SSBCI Regrounded

The final rule also significantly tightens expectations around Special Supplemental Benefits for the Chronically Ill (SSBCI). Handshuh explained that plans must now make two distinct determinations for each enrollee and each supplemental benefit offered.

First, plans must confirm that the member qualifies as a chronically ill enrollee under CMS criteria. That determination requires establishing that the individual:

·       Has a qualifying chronic condition that is life-threatening or functionally limiting

·       Faces a high risk of hospitalization or adverse health outcomes

·       Requires intensive care coordination

Second, plans must demonstrate that a specific SSBCI offering has a reasonable expectation of improving or maintaining that individual’s health. Importantly, those determinations must occur benefit-by-benefit, even when plans package multiple services together through a broader supplemental “wallet.”

Handshuh emphasized that simply having a chronic condition is not enough to justify benefit eligibility. “Do you have diabetes? Then you get the food card — that does not fly,” she said. CMS has also clarified that social risk factors alone cannot determine eligibility.

Smith acknowledged the operational burden these requirements will create. “It will be laborious,” she said. “There’s no way around it.”

Plans will need publicly available eligibility criteria integrated into front-end workflows such as health risk assessments and care management operations. Speakers also predicted that SSBCI administration will become a major compliance audit focus once the standards take effect.

Shared Learning, Shared Risk

Across rates, Stars, flex cards and SSBCI oversight, both speakers emphasized that successful adaptation will require cross-functional coordination throughout MA organizations. “It takes a village to do Stars work,” Smith said. “It’s not a one-person situation.”

For Medicare Advantage executives, the 2027 final rule is better understood not as a routine technical update, but as a coordinated push by CMS to align quality performance, operational oversight and care delivery around a narrower and more demanding set of expectations.