On April 4, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the Medicare Advantage & Part D Final Rule for the 2026 contract year (CY) concerning the Medicare Advantage (MA) program, the Medicare Prescription Drug Benefit Program (Part D), the Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (the Final Rule). While CMS finalized several aspects of its Proposed Rule, key proposals related to anti-obesity medication (AOM) coverage, enhanced artificial intelligence (AI) safeguards, and various health equity initiatives in MA and Part D were not finalized.
Here’s a summary of the key provisions in the Final Rule:
MA and Part D Proposals Not Finalized
The most notable aspects of the Final Rule are the proposals CMS chose not to finalize:
- Anti-Obesity Medication (AOM) Coverage:
The Centers for Medicare & Medicaid Services (CMS) has chosen not to reinterpret the existing definition of a covered Part D drug within the Medicare Advantage & Part D Final Rule to include anti-obesity medications (AOMs) for weight management under Medicare and Medicaid. This decision means that the proposed expansion of coverage, estimated to cost $40 billion over the next ten years, will not be implemented. Consequently, AOMs will continue to be covered by these programs solely when prescribed for other medically accepted indications, such as the management of type 2 diabetes or cardiovascular risk. - Annual Health Equity Analyses:
CMS did not finalize the requirement for MA plans to conduct annual health equity analyses of utilization management policies. This remains under review, aligned with Executive Order 14192. - AI Guardrails in Medicare Advantage:
Proposals requiring plans to ensure equitable access when using AI for decision-making, disclose AI use, and comply with nondiscrimination standards were not finalized. CMS indicated future rulemaking in this area remains possible. - Behavioral Health Parity:
Although CMS recognized concerns about access to behavioral health care, particularly in dual-eligible SNPs, it did not finalize stricter parity or network adequacy standards for behavioral health services. - Prior Authorization (PA) and AI Use:
CMS finalized PA rules for inpatient admissions but did not finalize proposals imposing new AI-related guardrails in PA processes. - Agent and Broker Oversight:
Proposals to broaden the definition of marketing materials and strengthen agent/broker disclosure requirements were not finalized. - Pharmacy Contract Transparency:
CMS did not finalize a provision allowing pharmacies to terminate Part D contracts without cause, avoiding potential conflicts with the Part D statute’s noninterference clause. - Formulary Requirements for Generics and Biosimilars:
CMS opted not to finalize new formulary access checks for generics and biosimilars but may revisit this area. - Debit Cards for Supplemental Benefits:
Proposed debit card use standards to enhance transparency were not finalized. - Community-Based and In-Home Services Provider Directories:
Expanded directory requirements for supplemental benefits providers were not finalized. - Medication Therapy Management (MTM) Expansion:
CMS deferred proposals to expand the list of chronic diseases eligible for MTM enrollment.
Additionally, in light of the Medicare Advantage & Part D Final Rule, CMS stated several policies are under review by the Trump Administration to ensure compliance with Executive Order 14192, including the Health Equity Index reward, culturally and linguistically appropriate services requirements, and quality improvement initiatives tied to social determinants of health (SDOH).
Finalized MA and Part D Proposals
Despite the numerous non-finalized items, CMS finalized several significant policies:
1. Covered Insulin Products and Vaccines
CMS codified expansions in the definition of “covered insulin products” and eliminated cost-sharing for Part D-covered insulin products and ACIP-recommended adult vaccines.
2. Medicare Prescription Payment Plan
CMS finalized regulations implementing the Medicare Prescription Payment Plan starting in 2026, allowing beneficiaries to spread out-of-pocket drug costs into capped monthly payments. Key features include:
- Automatic Renewal beginning in 2026.
- 3-Day Processing for opt-out requests.
- Standardized Communications requirements for plans.
- Exemption for the LI NET program.
3. Timely Submission of Prescription Drug Event (PDE) Records
CMS codified deadlines for submitting PDE records, ensuring prompt reporting critical for payment accuracy and oversight.
4. Medicare Transaction Facilitator Data Module (MTF DM)
Part D network pharmacies must enroll in the MTF DM to support the Medicare Drug Price Negotiation Program. Functions include MFP refund reconciliation and dispute resolution mechanisms.
5. Clarifying MA Organization Determinations
CMS expanded the definition of “organization determinations” to include inpatient decisions during or after services are rendered, ensuring beneficiaries maintain full appeal rights and preventing retroactive denials unless fraud or good cause is established.
6. Restrictions on SSBCI Benefits
CMS finalized a list of non-allowable Special Supplemental Benefits for the Chronically Ill (SSBCI), including:
- Cosmetic procedures
- Funeral expenses
- Tobacco, alcohol, and cannabis products
- Non-healthy food
- Life insurance products
7. Enhancements for Dually Eligible Enrollees
For certain dual-eligible Special Needs Plans (D-SNPs), CMS finalized:
- Integrated ID Cards for Medicare and Medicaid.
- Single, Integrated Health Risk Assessments (HRAs) by 2027.
- Standardized Outreach Requirements for HRAs and Individualized Care Plans (ICPs).
CMS’s final rule, which includes the Medicare Advantage & Part D Final Rule, reflects a measured approach—advancing certain beneficiary protections and payment reforms while deferring more controversial proposals for further evaluation. Future rulemaking is likely, especially regarding AI regulation, health equity, and behavioral health parity.
Medicare Advantage and Part D Final Rule: Key Implications for Revenue Cycle Management (RCM) Companies
The Medicare Advantage and Part D Final Rule, finalized by CMS, has significant implications for Revenue Cycle Management (RCM) services companies. This rule includes key changes that impact the billing, coding, and reimbursement processes for Medicare Advantage and Part D plans.
RCM companies need to stay abreast of the regulatory updates to ensure compliance with new policies. One of the major changes in the final rule is the increased transparency in plan formularies and coverage determinations, which can affect how medications and services are billed. RCM companies must adapt their processes to reflect these changes in formularies, ensuring that claims are submitted correctly based on the updated benefit structures.
Additionally, the rule strengthens protections for beneficiaries by improving how certain medications are covered and expanding access to prescription drugs, which can lead to adjustments in coding practices. RCM teams need to track these changes to accurately capture and report services provided to Medicare Advantage members.
Another important aspect is the changes in payment models for Part C and Part D plans. RCM companies must ensure that their billing practices align with the new risk adjustment methodologies, as these directly impact reimbursement rates. Proper documentation of medical conditions and services rendered is crucial for accurate risk adjustment coding and maximizing reimbursement.
In summary, RCM services companies must actively incorporate the Medicare Advantage and Part D Final Rule into their workflows, focusing on accurate coding, compliance with formulary updates, and understanding new payment models to ensure smooth billing and reimbursement processes.