Modular Multilevel Converter (MMC) is considered a promising topology in medium and high voltage class STATCOM for its scalability, modularity, low THD, etc. However, the output THD of MMC-STATCOM increases due to the reduction of sub-module number in medium voltage class. To solve this problem, an improved Nearest-Level-Modulation aiming to create more output voltage level is introduced in this paper. Neither does it require increasing the sub-module number nor affects the circulating current compared with the earlier publications. The stability and controller of the proposed modulation is also analyzed and presented. Rigorous MATLAB-Simulink Simulation is carried out to verify the feasibility of the proposed modulation.