Medicare Shake‑Up 2027: CMS Plans To Axe New Health Equity Reward — Are You Losing Out?

Medicare is bracing for one of its most consequential overhauls in years after the Centres for Medicare & Medicaid Services (CMS) unveiled a 2027 proposal to scrap the long-planned Health Equity Reward, a key incentive designed to improve care for low-income, disabled, and socially vulnerable beneficiaries in the US.

The announcement on 25 November 2025 has triggered alarm among patient advocates and health policy experts, who warn that the move could widen access and outcome gaps across Medicare Advantage plans.

While CMS argues the revamped Star Ratings will simplify quality measurement, critics say the changes risk leaving millions without the protections they were promised.

What The Proposed Rule Would Change

The 'Contract Year 2027 MA and Part D Proposed Rule,' unveiled Tuesday, aims broadly to 'improve quality and access to care' for MA and Part D enrollees. But its implementation involves a substantial reshaping of how plans are rated and rewarded, including a streamlined 'Star Ratings' system, removal of administrative‑heavy measures, and a shift in incentive priorities.

Under the new proposal, CMS would not implement the planned 'Excellent Health Outcomes for All' (EHO4All) reward, previously known as the Health Equity Index (HEI), which was designed to encourage plans to deliver better outcomes for beneficiaries with social risk factors, such as dual‑eligibility (Medicare and Medicaid), low income or disability.

Instead, CMS proposes to continue a historical 'reward factor' that recognises plans for overall stable performance, but critics argue this fails to address disparities. The agency says the refocused Star Ratings will emphasise clinical care, patient experience and outcomes.

Why the Health Equity Reward Mattered

When approved under its earlier name (HEI), the Health Equity Index was part of a broader push to make Medicare Advantage more accountable to vulnerable populations.

Plans that scored well under HEI would receive bonus payments, creating a financial incentive to improve services, for example, by better managing chronic conditions, ensuring follow‑up care, reducing gaps in behavioural or mental‑health services, or improving access in underserved communities.

Supporters argued that the reward was vital to reducing disparities in care, a challenge they see growing in a system increasingly dominated by private plans. Many low‑income or disabled beneficiaries, who often face higher barriers to care, stood to benefit from plans prioritising equity-driven measures.

With the proposed rule scrapping the reward, however, there are fears that these beneficiaries may lose a key driver of enhanced care, especially if plans shift their focus back to metrics that favour healthier, less costly enrollee populations.

What Else Is Changing And What Remains

The rule does more than remove health‑equity incentives. CMS plans to eliminate 12 quality measures that primarily addressed administrative and process‑related indicators, such as customer service, appeals handling, and non‑clinical plan support functions, claiming many showed slight variation between plans and did not meaningfully distinguish quality from a patient standpoint.

To balance this, CMS has proposed adding a new 'Depression Screening and Follow‑Up' measure, set to begin with the 2029 Star Ratings. This reflects a growing recognition of mental health among Medicare beneficiaries.

The proposed rule also includes other changes: more flexible special-enrollment options (for example, allowing beneficiaries to change plans if their provider leaves a network mid‑year) and calls for public comment on further reforms, including risk‑adjustment models, benefit design, and program oversight.

Who Wins And Who Might Lose Out

In principle, CMS argues the streamlined Star Ratings system will better reflect core health outcomes and patient experience, making plan comparison more straightforward and more meaningful for beneficiaries. Supporters among insurers and industry groups say the changes reduce administrative burden and cut back on what they see as redundant or cosmetic metrics.

However, critics argue that removing the health‑equity reward could disproportionately harm low‑income, disabled, or socially vulnerable beneficiaries, those whom the reward was explicitly meant to support. Without financial incentives for plans to address social risk factors, there is concern that efforts to close care gaps may slow or disappear altogether.

There is particular worry that, as plans lobby to maintain profitability, they may deprioritise costly but necessary services for high‑need patients, undermining the promise of 'equal access' under Medicare Advantage.

What Beneficiaries Should Know And Do

If you are enrolled in or considering a Medicare Advantage or Part D plan, now is a good time to pay close attention:

• Review plan materials carefully once the final rule is published, especially around coverage of services for mental health, chronic disease management, or other needs often associated with social risk factors.
• Compare Star Ratings under the new system, but also look beyond ratings: check actual benefits, coverage, network size, and support services.
• For those relying on Medicare for complex care or living with disabilities or low income, consider whether traditional Medicare (rather than Advantage) might better meet your needs if equity‑focused benefits decline.

A Shift In Medicare's Priorities

The 2027 CMS proposed rule represents a pivot away from incentivising equity- and social-risk-aware care toward a leaner, outcome- and experience-focused rating system. While reducing administrative overhead and simplifying plan comparisons may benefit many, removing the health‑equity reward raises real concerns for Medicare's most vulnerable beneficiaries.

As the public comment period unfolds and insurers begin planning for 2027, the fallout from this shake‑up could reveal whether Medicare Advantage remains a viable option for all or becomes skewed toward the healthy and affluent, leaving others behind.