Medicare Advantage and Part D Final Rule 2026

As explained previously, the Trump Administration is not keen on too many regs and too much paperwork. What has attracted the most attention is what isn’t included from the earlier proposal in the rule. CMS did not finalize a proposal to expand coverage of anti-obesity medications in Medicare Part D and Medicaid, as is consistent with one of the multiple Executive Orders. CMS also stated its decision not to finalize provisions that would have expanded requirements to analyze the impact of utilization management policies on health equity and apply guardrails around plans’ use of artificial intelligence (AI). CMS signaled possible future rule-making around AI.

Since many provisions from the proposed rule were not in the final rule, the Trump Administration may want to modify these rules to meet its objectives. There is plenty of time until January, but the MA plans must get their bids out on the first Monday in June, so we could see changes sooner. There are two parts to these rules, if you remember. They are:

• Policy Changes and
• Rate setting

 

Policy Changes

In terms of what’s actually in the rule, CMS finalized the following policies:

• The Inflation Reduction Act (IRA) and other Medicare prescription drug updates, CMS finalizes the following:
• Codifies a section of the IRA that requires Part D plans to cover adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) with $0 cost sharing. Watch this one.
• Codifies an IRA requirement that plans limit the Part D cost-sharing amount for a one-month supply of each covered insulin product to $35 or 25% of the negotiated amount, whichever is cheaper.
• Finalizes rules around the Medicare Prescription Payment Plan, which allows Part D enrollees to pay their out-of-pocket prescription drug costs in monthly amounts over the course of the plan year. The final rules include a requirement that plans automatically re-enroll participants who remain in the same plan next year. I've heard this is not being used much.
• Finalizes prescription drug event (PDE) submission timeframes, including a requirement that PDEs for drugs included in Medicare drug price negotiation be submitted within seven days.
• Finalizes a policy that Part D sponsors’ network participation agreements with contracting pharmacies must require the pharmacy to be enrolled in the Medicare Drug Price Negotiation Program’s Medicare Transaction Facilitator Data Module.
• Not part of these regulations, but an Executive Order was issued this week that could change the negotiations. This  Executive Order expedited the approval of biosimilars and eliminated the Inflation Reduction Act (IRA) “pill penalty” that reduces the incentive to invest in certain non-biologic drugs that are critical in the treatment of cancer and other serious diseases. This could be good for all concerned.
• CMS codified that Dual Eligible Special Needs Plans (D-SNPs) must:
• Have integrated member ID cards that serve as the ID cards for both the Medicare and Medicaid plans in which an enrollee is enrolled.
• Conduct an integrated health risk assessment for Medicare and Medicaid, rather than separate assessments for each program.
• CMS codified a provision clarifying MA organization determinations to enhance enrollee protections in inpatient settings. The provision will restrict plans’ ability to reopen and modify a previously approved inpatient hospital decision on the basis of information gathered after the approval. MA plans can only reopen an approved admission for an obvious error or fraud.
• CMS finalized policies to close MA appeals loopholes that “adversely affect providers and enrollees.”
• CMS established guardrails for special supplemental benefits for the chronically ill by codifying a list of non-allowable examples (e.g., non-healthy food, alcohol, tobacco, life insurance).

 

Rate Changes

CMS states that payments from the government to MA plans are expected to increase on average by 5.06% from 2025 to 2026. This is an increase of 2.8% since the CY 2026 Advance Notice, which CMS notes is "largely attributable to an increase in the effective growth rate" which increased from 5.93% in the Advance Notice to 9.04% reported in the rate announcement. Whatever.

Now that the MA and Part D payment methodologies have been announced, plans can expedite their 2026 bids. The final payment policies determine how plans approach bidding. Plans must submit their 2026 bids by June 2, 2025.

Other provisions in the rate-setting portion of Regulations include:

• Change the effective growth rate and benchmark rate for MA payments
• Implement changes related to the IRA Part D benefit redesign for 2026
• Complete the three-year phase-in of the 2024 CMS-Hierarchical Condition Category (CMS-HCC) risk adjustment model
• begin to transition to the 2024 CMS-HCC risk adjustment model for Program of All-Inclusive Care for the Elderly (PACE) Organizations
• Continue the Part D risk adjustment model with plans for 2026 IRA-related changes
• Continue the end-stage renal disease (ESRD) risk adjustment model
• continue the frailty adjustment for Fully Integrated Dually Eligible (FIDE) Special Needs Plans (SNPs) and changes to adjustments for PACE, and;
• Continue the adjustments to fee-for-service (FFS) per capita costs in Puerto Rico

For more information, see the Fact Sheets for Policy Changes and for Rate Setting.