We are in a busy season for regulations, as discussed in last week’s Regs & Eggs blog post. One Centers for Medicare & Medicaid Services (CMS) rule now under review at the Office of Management and Budget (OMB) will be of particular interest to Medicare Advantage (MA) and Medicare Part D stakeholders: a second final rule making policy and technical changes to the MA and Part D programs for 2026 and future years. To help me dive into this rule and other potential regulatory changes, I’m bringing in my colleague Lynn Nonnemaker.
Late in 2024, the Biden administration issued a proposed rule for MA and Part D for contract year 2026 and beyond that introduced a range of proposals across program areas, including:
- Implementation of Part D changes required under the Inflation Reduction Act.
- Coverage of anti-obesity medications under Part D.
- Administration and eligibility of supplemental benefits.
- Cost-sharing for behavioral health services.
- Utilization management policies.
- Updates to the Star Ratings System.
- Policies affecting individuals dually eligible for Medicare and Medicaid benefits.
The proposed rule’s timing meant that any final rulemaking would need to be done by the incoming Trump administration. And sure enough, in early April 2025, CMS released a final rule that addressed some (but not all) of the provisions in the proposed rule.
In that first final rule, CMS finalized requirements tied to new rules for Part D that will take effect in 2026 as specified in the Inflation Reduction Act. CMS also announced that the agency would not require coverage of anti-obesity medications under Part D. Prompt final action on this provision, which had huge implications for plan costs, was important so plans could develop bids for the 2026 plan year in advance of the June 2, 2025, bid deadline. Many other proposals went unaddressed in the April final rule, perhaps because incoming CMS leaders had limited time to develop policy positions or strategies on the issues in question.
In July 2025, CMS sent a second final rule to OMB for review (typically the last step before a rule is published). While we don’t know exactly what this rule will address, we expect it will touch on some or all of the proposed rule’s remaining provisions:
- Network pharmacy protections. Part D sponsors would be required to provide pharmacies with a list of the sponsor’s Part D plans in which the pharmacy will participate, and to ensure pharmacies are permitted to terminate Part D contracts with cause.
- Medicare therapy management. Dementia would be added to the list of chronic conditions for which a Part D plan sponsor must make medication therapy management available.
- Supplemental benefits. The proposed policies include new limits on plans’ use of debit cards to deliver supplemental benefits, prohibitions on marketing debit card limit amounts, and clarifications on the eligibility requirements for special supplemental benefits for the chronically ill.
- Access to care. Provider directories would be required to include information on community-based and in-home services. The proposed rule also would require that in-network cost sharing for behavioral health services be no greater than in original Medicare, and would revise network adequacy requirements to limit exceptions and allow non-county geographic units to be included in certain circumstances.
- Marketing. The proposed policies would expand the types of communications considered marketing and therefore subject to CMS review. Brokers would be required to discuss information about Medigap enrollment rights and availability of additional programs based on limited financial means to prospective MA enrollees.
- Provider directory information. Plans would be required to submit data on network providers to CMS for inclusion in Medicare Plan Finder, and would be required to update the information promptly and attest to its accuracy.
- Medical loss ratio (MLR) standards. The proposed policies would revise the way MLR calculations account for provider incentives, bonus arrangements, and quality improvement activities; require more information about provider arrangements in MLR reporting; and establish rules for audits and appeals of MLR data.
- Utilization management. The proposed policies would define “internal coverage criteria,” revise rules for when plans may use such criteria, and require plans to publish information on the use of internal coverage criteria on the plan website.
- Star Ratings. The proposed policies would make changes to the way the Health Equity Index is calculated in certain circumstances, refine improvement measure score calculations, and clarify the way Star Ratings are determined when two or more contracts consolidate.
The provisions getting the most attention are those related to utilization management (such as prior authorization), which has been in the spotlight for several years. Providers have expressed concerns about MA plans’ use of prior authorization and related utilization management tools, which they say add time and cost to care and often result in patients being denied access to needed services. Government reports have identified circumstances in which MA plans may be using prior authorization inappropriately, resulting in enrollees being denied access to Medicare covered services. CMS took steps in prior rulemaking to limit MA plans’ use of prior authorization, but some stakeholders have continued to push for more reforms. In the April 2025 final rule, CMS finalized provisions that limit plans’ ability to reopen prior authorization decisions for inpatient care and require plans to notify enrollees and their providers about prior authorization decisions.
Unfinalized proposals would refine the circumstances in which a plan may apply additional coverage criteria when the criteria developed under original Medicare need more language to interpret their meaning. Another outstanding proposal would require plans to publish a list of all Medicare covered items and services for which the plan uses internal coverage criteria to determine medical necessity, along with the name of any third-party vendors that developed the coverage criteria.
CMS appears to be taking action on one proposal without finalized rulemaking. In an August 25, 2025, memo to MA plans, CMS announced that it is partnering with a technology company to incorporate provider directory information on Medicare Plan Finder for 2026 MA offerings, which will become available on October 1, 2025. This policy is a major step for CMS and MA generally. Advocates have long urged the agency to do more to ensure that individuals can see whether their providers are in-network as they compare and select plans. While this action gets ahead of the final rule, it does not address proposals to ensure that provider directory information is updated on a timely basis or that the information is accurate. Thus, it seems likely that CMS will address these issues in the coming final rule.
Stakeholders are also watching to see whether CMS finalizes the MLR provisions, which could have financial implications for MA plans. During the first Trump administration, CMS moved to simplify and reduce MLR reporting. This time around, CMS could decide not to finalize the proposed MLR changes in order to maintain flexibility in how plans account for and report data on provider incentives.
This final rule isn’t the only item on the MA calendar for the coming months. MA plan offerings for 2026 will become public on October 1, 2025, and plans will begin marketing for the upcoming year. After two years of slower enrollment growth and some pullback in benefit offerings, and in light of ongoing concerns about higher utilization and spending, it will be interesting to see how plans approach 2026. October will also see the unveiling of updated Star Ratings, which will help inform enrollment decisions.
At some point this fall we also expect to see a new proposed rule for MA and Part D for 2027 and beyond. That rule will be the first full opportunity for the current CMS leadership to lay out its policy priorities and put its stamp on the MA and Part D programs.
All in all, it promises to be a busy few months ahead for MA and Part D.
Until next week, this is Jeffrey (and Lynn) saying, enjoy reading regs with your eggs.
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