(April 18, 2025) – The Centers for Medicare & Medicaid Services recently released its calendar year 2026 Medicare Advantage and Part D final rule. While the rule finalizes many proposed provisions, it defers others, including those related to artificial intelligence in prior authorization and coverage of anti-obesity medications, for future rulemaking. A summary of changes includes:
Prior Authorization and Internal Coverage Criteria Reforms
- A major change in the final rule is the prohibition on MA organizations retroactively denying inpatient hospital admissions that were previously authorized unless there is clear evidence of fraud or error. This change addresses a longstanding concern about post-service denials undermining patient access and provider confidence.
- CMS expanded and clarified the rights of enrollees and providers within the appeals process. Enrollees' rights to appeal now explicitly extend to adverse decisions made during ongoing care, not just before service delivery.
- MA plans must notify providers when coverage requests are submitted on behalf of beneficiaries, and enrollees can now appeal payment denials issued to contracted providers.
Inflation Reduction Act implementation
- The rule implements several IRA-related provisions affecting Medicare drug coverage. CMS reaffirmed zero cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices, effective for plan years beginning in 2023.
- Beginning in 2026, Medicare beneficiaries' monthly insulin costs will be capped at the lesser of $35, 25 percent of the negotiated price, or 25 percent of the maximum fair price.
- CMS finalized policies supporting the Medicare Drug Price Negotiation Program, which allows the federal government to negotiate prices for select high-cost prescription drugs. Part D sponsors must comply with reporting requirements and ensure their network pharmacies participate in the Medicare Transaction Facilitator Data Module to support the pricing drug infrastructure.
Part D prescription payment and drug price transparency requirements
Under the finalized Medicare Prescription Payment Plan, CMS will implement several reporting changes and price transparency reforms:
- CMS finalized the Medicare Prescription Payment Plan, allowing beneficiaries to pay out-of-pocket drug costs monthly. Enrollment will auto-renew annually unless beneficiaries opt out.
- Part D sponsors must now:
- Submit initial Prescription Drug Event records within 30 days of claim receipt.
- Submit corrections or deletions within 90 days of identifying an issue.
- For drugs subject to negotiation, submit PDE records within seven calendar days.
- Sponsors must verify network pharmacy data accuracy to support negotiated drug pricing and smooth claims processing.
Deferred proposals: GLP-1s, AI and Marketing Reforms
- CMS chose not to finalize coverage of GLP-1 receptor agonists such as Ozempic and Wegovy, citing payer concerns and the projected $35 billion cost over 10 years. The agency will consider future rulemaking on this issue.
- Proposals regulating AI in prior authorization were deferred. CMS noted the need for further stakeholder engagement and analysis before establishing standards.
- Marketing reforms, including redefining marketing materials and tightening provider directory accuracy requirements, were postponed for future consideration.
If you have any questions, please contact Shannan Flach at sflach@kha-net.org.
--Shannon Flach