CMS Releases CY 2026 Final Rule Updating Medicare Advantage and Part D Programs

On April 4, 2025, the Centers for Medicare & Medicaid Services (CMS) released the CY 2026 final rule for the Medicare Advantage (MA) program, Medicare Part D, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly. The final rule finalized several proposals from its proposed rule, but key proposals, such as coverage for anti-obesity medications, advanced AI guardrails, and certain health equity initiatives, were not finalized.

Notably, CMS indicated ongoing reviews of some current regulations for consistency with federal executive orders aimed at deregulation. Despite these reviews, the final rule solidified several important changes and continuing policies in the MA and Part D programs.

CMS expanded the definition of "covered insulin products" to include combination insulin products and combinations with non-insulin drugs under Part D, codifying previous guidance. Additionally, cost sharing for covered insulin products and adult vaccines recommended by the Advisory Committee on Immunization Practices will be eliminated.

The final rule also codifies the Medicare Prescription Payment Plan requirements, first introduced under the Inflation Reduction Act, allowing Medicare Part D and MA-PD plan enrollees to pay capped monthly installments on out-of-pocket drug costs rather than upfront full payments. This aims to alleviate financial burdens, especially for beneficiaries facing high early-year drug expenses. CMS finalized operational and outreach provisions while maintaining stability to allow plans to adjust.

Timely submission requirements for Prescription Drug Event (PDE) records by Part D sponsors were formalized, with strict new deadlines to support payment accuracy and program integrity for drug discount and negotiation programs. The 7-day submission window for PDE claims was adopted without change.

CMS also finalized requirements for Part D sponsors to ensure contracting pharmacies enroll in the Medicare Transaction Facilitator Data Module (MTF DM) that supports the administration of the Medicare Drug Price Negotiation Program. Enrollment is expected to begin in June 2025.

Clarifications on MA organization determinations now require transparent, timely decisions while beneficiaries receive inpatient care, reducing surprise denials and standardizing prior authorization processes. Protections were introduced to restrict retroactive denial of approved care starting in 2026.

The rule imposes new restrictions on Special Supplemental Benefits for the Chronically Ill (SSBCI), specifying non-allowable benefits such as non-healthy food. Although CMS excluded cash rebates and gambling or firearms-related items from the non-allowable list, it signaled continued policy development in this area.

For dual-eligible Special Needs Plans (D-SNPs), CMS finalized enhanced requirements to update Integrated Care Plans when enrollees' health status changes or during healthcare transitions, aiming to improve care coordination for dually eligible populations.

Technical updates to risk adjustment data definitions were incorporated, ensuring terminology aligns with current ICD standards, and mandating submission of risk data by PACE and Section 1876 cost plans similar to MA plans.

Regarding Medical Loss Ratio (MLR) reporting, CMS only adopted a single proposed change to exclude Medicare Prescription Payment Plan unsettled balances from the MLR numerator, while other proposed changes to improve MLR meaningfulness and alignment with commercial and Medicaid programs were not finalized.