The October 2026 Star Ratings release presents both an opportunity and a challenge for health plans as they navigate uncertain Health Equity Index (HEI) changes. With evolving CMS equity-focused metrics, shifting data collection requirements, and potential weighting adjustments, health plans must take immediate action to optimize their Star Ratings before potential regulatory shifts in 2027.

Health equity has been a foundational pillar of the CMS Strategic Plan, aligning with the Biden-Harris Administration's commitment to advancing racial equity. However, with a new administration in place, questions arise regarding the long-term future of the HEI reward system set to fully replace the previous reward factor in 2027 Star Ratings (October 2026 release). While policy shifts could reduce or eliminate the HEI reward, proactive health plans can still leverage this framework to maximize Star Ratings before potential changes take effect.

Regulatory Context and the Future of HEI

With the recent administration change, there is growing speculation about potential shifts in CMS’s approach to health equity initiatives. Historically, the HEI has been seen as an extension of the Biden-era executive orders focused on racial equity and support for underserved populations. The future of these policies remains uncertain, with indications that new leadership may reprioritize regulatory objectives and modify the scope of HEI-related incentives. Health plans must prepare for multiple scenarios, including reductions in HEI weighting or a complete rollback of health equity incentives.

Implications for Health Plans

1. Uncertainty in HEI Metrics and Weighting

• Shifting performance thresholds could redefine Star Ratings, affecting contracts serving socially at-risk populations.
• Changes in social risk factor stratification may redistribute scores and disproportionately impact some health plans.
• Regulatory ambiguity surrounding HEI adjustments could impact Quality Bonus Payments (QBPs) and financial projections.

2. Strategic Use of the Health Equity Index to Maximize Star Ratings

The Health Equity Index provides a unique opportunity for health plans to enhance Star Ratings, particularly for those serving enrollees with social risk factors (SRFs). While its long-term stability is uncertain, the current framework presents a crucial advantage for plans that act now to solidify their performance scores before potential regulatory changes. The Health Equity Index offers health plans a unique opportunity to enhance Star Ratings, especially for those serving enrollees with social risk factors (SRFs). While its long-term stability is uncertain, the current framework provides a strategic advantage for plans that act now.

According to CMS’s November 2024 Part C and D Star Ratings Health Equity Index Reward analysis¹, the agency conducted a data simulation applying the HEI methodology to past performance data, demonstrating its potential impact:

• 80% of Medicare Advantage (MA) and 1,876 cost contracts met at least one HEI enrollment threshold.
• 92% of Prescription Drug Plans (PDPs) met at least one HEI enrollment threshold.
• 32% of MA-PD contracts qualified for a hypothetical HEI reward, with an average HEI reward of 0.107.

While the HEI reward constitutes a relatively small portion of the overall Star Ratings calculation, it directly benefits plans serving larger populations of SRF enrollees, allowing them to offset potential rating declines in other performance areas. Given the uncertainty surrounding future policy shifts, early adoption of HEI improvement strategies could provide a meaningful competitive edge. Plans that take early action to optimize HEI performance can maximize their Star Ratings and financial positioning—regardless of future policy shifts.

Key Strategies to Optimize HEI Impact

• Improve Data Collection & Reporting: Align race, ethnicity, and language (REL) data with CMS’s evolving HEI methodology.
• Expand Social Risk Factor Interventions: Strengthen community partnerships, targeted member engagement, and culturally competent care initiatives.
• Leverage Predictive Analytics: Use AI-driven insights to model Star Ratings performance under various HEI policy scenarios.

Health plans that integrate HEI-focused initiatives into their broader quality improvement strategies will be positioned to secure immediate Star Ratings gains while also establishing a sustainable framework for future compliance, regardless of regulatory changes.

3. Financial and Contracting Impact

• Changes in HEI weighting could influence QBP distribution and create financial risks for underperforming plans.
• Plans with large dual-eligible or socially vulnerable populations may experience greater volatility in Star Ratings outcomes.
• Competitive positioning will depend on investment in health equity initiatives, member engagement, and digital transformation.

Conclusion

The October 2026 Star Ratings cycle represents a critical turning point for health plans. With uncertainty surrounding HEI’s long-term viability, first movers who invest in health equity strategies now will be best positioned for sustained success and financial stability. Proactive planning, enhanced member engagement, and advanced analytics will be essential to maintaining high Star Ratings performance in an evolving regulatory landscape.

Take Action Now: Next Steps

• Conduct internal impact assessments modeling potential HEI adjustments.
• Establish a cross-functional HEI strategy team to align compliance, quality, and analytics teams.
• Engage with CMS and industry roundtables to stay ahead of regulatory changes.
• Invest in data analytics and predictive modeling to maximize Star Ratings before potential policy shifts.

For a deeper strategic assessment, contact:
Mallory Van Horn or Craig R. Savage