The Health Equity Index and Your 2027 Star Ratings

What was the Health Equity Index reward?

The HEI reward grew out of a long-running concern: the previous reward factor gave bonus stars to contracts with consistently high, low-variation performance, but it did nothing to reward -- and arguably disadvantaged -- plans that served harder-to-reach populations well. The Health Equity Index was CMS's answer. Rather than reward uniformity, it would reward contracts that achieved strong outcomes specifically among enrollees with social risk factors, defined as those receiving a low-income subsidy, dually eligible for Medicaid, or entitled to Medicare on the basis of disability.

Mechanically, the HEI reward was designed to replace the reward factor starting with the 2027 Star Ratings, and it would draw on pooled data from two measurement years, 2024 and 2025. Like the reward factor, it could add up to 0.4 stars to a contract's overall rating -- a swing large enough to move a contract across the 4-star quality-bonus threshold and change its rebate dollars materially. For plans with heavy dual and LIS enrollment, the HEI looked like an opportunity; for plans with few such members, it looked like a risk, because contracts below a minimum social-risk enrollment threshold could not earn the reward at all. The reward was originally established in the CY2024 final rule (CMS-4201-F), which also finalized removing the existing reward factor.

The design mattered because it tied a real financial lever -- the quality bonus -- to performance among the populations that health plans have historically served least well. Even now that the reward itself is on hold, that linkage is the reason equity-focused network work retains its value. The measures that would have driven the HEI are the same measures driving your Stars today, and they are measured, in part, among your most vulnerable members. This is the same logic behind Star Ratings and your network.

How was the HEI reward calculated?

Understanding the mechanics matters, because it tells you what data the program was built on and why that data still shapes your quality picture. Under the HEI methodology, CMS would take a defined subset of Star measures and stratify each one by social risk factor status. For each measure, contracts would be ranked and grouped into thirds. A contract in the top third of performance for that measure among its social-risk enrollees earned plus one point; the middle third earned zero; the bottom third earned minus one point.

Those per-measure points were then weighted by each measure's Star weight, summed, and divided by the total measure weights to produce a single HEI score ranging from minus one to plus one. A positive score meant a contract was, on balance, outperforming for its socially vulnerable members. Only contracts that scored above zero and met a minimum enrollment threshold of social-risk members could earn the reward, which prevented plans with negligible dual or LIS enrollment from claiming an equity bonus they had not earned.

The reward itself was tiered by how many socially vulnerable members a contract served. A contract whose social-risk enrollment met or exceeded one-half of the median penetration across all plans could earn up to a 0.2 reward; a contract that met or exceeded the full median penetration could earn up to the full 0.4. The message in the math was deliberate: to be rewarded, you had to both enroll a meaningful share of vulnerable members and perform well for them. That is fundamentally a network and care-model challenge, not a coding exercise.

What changed in the 2027 final rule?

In the Contract Year 2027 final rule -- issued April 2, 2026 and published in the Federal Register on April 6, 2026, with policies effective June 1, 2026 and applicable to coverage beginning January 1, 2027 -- CMS finalized its proposal not to implement the HEI reward. Along the way the reward had been renamed the Excellent Health Outcomes for All (EHO4all) reward, but the substance is what matters: CMS will not put it into effect for the 2027 Star Ratings and will instead continue the historical reward factor that the HEI was scheduled to replace.

CMS framed the decision as a return to rewarding consistently high performance across all enrollees and all measures, rather than a distinct equity-stratified bonus. The same rule streamlined the measure set, removing 11 measures across Part C and Part D, with most removals taking effect for the 2029 Star Ratings and two beginning with 2028. Taken together, the changes signal a Stars program that is being simplified and refocused rather than expanded, and a CMS that is stepping back from equity-specific reward mechanics for now.

The honest read for planners is twofold. First, do not build a 2027 revenue forecast around an HEI bonus -- it is not coming, and the historical reward factor governs instead. Second, do not conclude that equity work was wasted. Policy direction has whipsawed on this topic before, stratified reporting of quality by social risk continues, and the operational capabilities the HEI pushed plans to build are the same capabilities that lift the measures the reward factor still rewards. Volatility in the rules is exactly why we treat quality infrastructure as durable rather than rule-specific, as in adequacy as a living target.

Why does equity-focused network design still matter?

Strip away the reward mechanics and the underlying fact is unchanged: your Star Ratings are computed, in part, from how well you serve dual, LIS, and disabled members, because those members are in your denominators. Controlling High Blood Pressure, medication adherence, breast cancer screening, follow-up after hospitalization, and the member-experience CAHPS measures do not exclude socially vulnerable enrollees. If your network delivers worse access to those members, their worse outcomes drag your overall measure rates down under the reward factor just as surely as they would have under the HEI.

The reward factor, in fact, penalizes inconsistency in a way that makes equity gaps costly. It rewards contracts that perform consistently well; a plan with a large, underserved subpopulation performing poorly is by definition inconsistent, and that inconsistency shows up in the cut points that determine each measure's star. So the network investments that would have raised an HEI score -- better access for underserved members, tighter follow-up, social-needs screening that connects to real services -- still raise the measure rates that feed the reward factor. The lever changed; the fulcrum did not.

There is also a strategic horizon beyond 2027. CMS has reversed itself on health-equity policy once and could revisit it again, and health plans serving dual and LIS populations answer to more than the Stars program -- state Medicaid agencies, the D-SNP integration requirements, and their own medical-loss ratios all reward better outcomes for these members. Building the network to serve them well is a no-regret move under every plausible version of the rules, which is why we tie it to HEDIS and network design rather than to any single reward.

How do you design network access for underserved populations?

Access is the first-order equity lever, and it is a network design decision. Dual, LIS, and disabled enrollees are disproportionately concentrated in specific geographies and disproportionately dependent on providers who accept Medicaid alongside Medicare, on safety-net clinics, and on transportation to reach care. A network that is technically adequate under CMS time-and-distance standards can still be functionally inaccessible to these members if the contracted providers have closed panels, long wait times, or locations the members cannot reach. Adequacy on the map is not access in practice.

That is why essential community providers matter here. Federally qualified health centers, rural health clinics, and other safety-net providers are where many low-income Medicare beneficiaries actually receive care, and contracting them is both an access strategy and an equity strategy. Plans that under-contract these providers create the exact gaps that suppress quality measures for vulnerable members. We treat this as core network design, not charity, and cover the mechanics in essential community providers and the geography-specific challenges in the rural provider playbook.

Access also means the specialties where equity gaps are widest. Behavioral health is the clearest example: dual and disabled enrollees have high behavioral health need and face the thinnest networks, so a plan serious about equity-driven quality has to solve behavioral health access specifically, not treat it as an afterthought. The same is true for the wait-time reality behind a directory -- an appointment a member cannot get for ten weeks is not access. We work through these in behavioral health adequacy and how CMS measures time and distance.

Where does screening for social needs fit in?

The second equity lever is connecting clinical care to social needs, and it depends on the network as much as access does. Screening enrollees for food insecurity, housing instability, and transportation barriers is now embedded in quality frameworks, and screening only creates value if a positive screen leads to a real referral to a real service. That referral loop runs through your network -- primary care practices that screen, community organizations that provide services, and the data infrastructure that closes the loop and proves the connection happened.

This is where the supplemental-benefit network and the medical network converge for dual and vulnerable populations. The SSBCI and supplemental services that address social drivers of health are only useful if primary care can identify need and route members to them. A plan that screens diligently but has no accessible services to refer to has built a measurement exercise, not a care model. Designing the network so screening connects to delivery is the difference, and it overlaps directly with the supplemental benefit network strategy these same plans are building.

Practically, that means contracting primary care partners who will screen and act, building relationships with community-based organizations that can accept referrals and report back, and instrumenting the data so the plan can see which members were screened, referred, and served. Those are network and provider-data capabilities, and they are exactly what the HEI would have rewarded and what the reward factor rewards indirectly, through better outcomes. They are also the capabilities that survive a rule reversal untouched, because the member's need does not depend on the reward mechanic.

What about D-SNPs, where equity is the whole model?

Nowhere does equity-focused network design matter more than in Dual Eligible Special Needs Plans, whose entire membership is the socially vulnerable population the HEI targeted. For a D-SNP, there is no separate equity strategy -- serving dual members well is the product. That is why the integration and network requirements that govern D-SNPs already push toward coordinated access, care management, and connection to Medicaid services, and why a D-SNP that performs poorly for its members is a D-SNP failing at its core purpose, reward factor or not.

The reward-factor continuation actually sharpens the D-SNP challenge in one respect. Because the reward factor prizes consistent high performance rather than equity-stratified performance, a D-SNP cannot lean on an equity bonus to offset weaker overall numbers -- it has to post strong measure rates for a population that is genuinely harder to serve. That raises the bar on network quality, care coordination, and access, and it makes the integration work described in D-SNP network requirements and D-SNP integration a Stars strategy, not just a compliance obligation.

For plans expanding into the dual market or standing up new special-needs plans, the takeaway is that equity-driven network design is table stakes regardless of which reward is in effect. The related network models for chronic and institutional populations follow the same logic -- build access and coordination around the population's real needs -- which is why the network work here transfers directly to the C-SNP and I-SNP designs many plans are pursuing in parallel.

What should you do now?

The HEI reward is on hold, but you are still the person accountable for Star Ratings among the members the HEI was built to protect, and the network is your primary lever. The move is not to unwind two years of equity-focused work -- it is to redirect it toward the measures the reward factor still rewards, and toward the durable goal of serving dual, LIS, and disabled members well under whatever rule comes next. Treat the policy volatility as a reason to invest in network fundamentals that pay off regardless.

That is the kind of build-or-repair judgment KSM exists to provide: knowing which investments survive a rule change and which were bets on a specific mechanic. If you are re-planning your Stars strategy around the reward-factor continuation, or worried your network is quietly suppressing quality for your most vulnerable members, talk to our team about a network diagnostic, or start with our services. The steps below are how we would sequence the work.

• Remove any HEI bonus from your 2027 revenue and Stars forecast; plan around the continued reward factor
• Keep the stratified analytics you built -- knowing your measure performance by dual, LIS, and disability status is still decisive
• Audit real access for vulnerable members, not just map adequacy: panel status, wait times, and transportation reality
• Contract essential community providers and safety-net clinics where your low-income members actually receive care
• Solve behavioral health access specifically, where equity gaps and quality drag are largest
• Build social-needs screening that connects to real, referable services through your network and supplemental benefits
• Instrument the referral loop so you can prove screening led to delivery, member by member
• Treat D-SNP, C-SNP, and I-SNP network design as a Stars strategy for populations the reward factor makes harder to serve