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March 13, 2025 – Last week, the contract year (CY) 2026 Medicare Advantage (MA) and Part D final reg entered the clearance process at the Office of Management and Budget (OMB). As mentioned in a previous Regs & Eggs blog post, OMB’s review is the final stage before a reg is released and published in the Federal Register. However, it doesn’t mean that the reg will be released imminently, as some regs remain at this stage for weeks or even months. This particular reg likely will be released in late March or early April 2025.
The fact that the CY 2026 MA and Part D reg is at OMB for review is news in itself. The Centers for Medicare & Medicaid Services (CMS) under the Biden administration released the CY 2026 MA and Part D proposed reg in November 2024, with no guarantee that the Trump administration would finalize the reg. Now that the final reg is in OMB clearance, the operative question is what policies will ultimately be finalized. To help me answer this question, I’m bringing in my colleague Lynn Nonnemaker.
CMS cannot finalize policies that were not, in some way, shape, or form, included in the proposed reg. While CMS can definitely modify, finalize, or not finalize certain policies it proposed, it cannot create a brand-new policy in the final reg out of thin air. For any given provision in the proposed reg, CMS has three options:
Given that the Trump administration wants to forge its own path for the MA program, it might adopt only a bare-bones set of policies out of the 713-page proposed reg and stay silent on other provisions for now. This would leave open an opportunity to finalize those provisions in some way later. Another factor in play is President Trump’s recent executive order calling on agencies to reduce the number of regulations and ensure they do not lead to higher costs. It isn’t clear how CMS might incorporate that order into the final reg.
With that context in mind, let’s walk through the major proposals in the proposed reg and assess whether they could be modified, finalized as proposed, or not finalized at all.
The most significant proposal in the CY 2026 MA and Part D proposed reg was to permit coverage of anti-obesity medications (including the class of drugs known as GLP-1s, such as Wegovy and Zepbound) when such drugs are indicated to reduce excess body weight and maintain weight reduction long-term for individuals with obesity. Citing “prevailing medical consensus,” CMS proposed a reinterpretation of the statute to allow coverage of these medications under Medicare’s Part D drug benefit and to prohibit them from being excluded from Medicaid coverage. CMS estimated that this proposal, if finalized, would increase Medicare spending by $25 billion over 10 years and Medicaid spending by $14.8 billion over 10 years ($11 million for the federal government and $3.8 billion for states).
It is unclear if this major proposal will be finalized. US Department of Health and Human Services Secretary Robert F. Kennedy Jr. has expressed reservations about GLP-1s in the past. Stakeholder input on the proposal was mixed. While many commenters urged CMS to finalize the provision, many others, including MA and Part D plans and the National Association of Medicaid Directors, argued against it, citing concerns about costs and the precedent to reinterpret long-standing statutory readings.
If CMS were to finalize the proposal, one key question regards timing. The proposed reg did not specify when the policy change for Part D would take effect, stating only that it would make sense for the policy to begin with a coverage year. Commenters urged CMS to delay Part D coverage until the risk model can be updated to reflect expected costs and plans can incorporate expected costs into bids, which they said would be difficult to do by January 1, 2026. A more likely timeline for Part D coverage would be 2027 or later. For Medicaid, CMS indicated a final policy would take effect 60 days after issuance of the reg.
CMS proposed to build on the CY 2024 MA and Part D final reg to define “internal coverage criteria” to clarify when MA plans can apply utilization management. CMS also proposed to ensure plans’ internal coverage policies are transparent and readily available to the public, and that plans are making enrollees aware of appeal rights. CMS proposed to address after-the-fact overturns that can impact payment, including for rural hospitals.
These proposals continue CMS’s recent efforts to ensure plans provide their enrollees access to all Medicare covered services and are transparent with providers and patients about prior authorization rules. Providers and patient groups offered support for these provisions in comments to the agency, while plans and payer groups urged CMS to evaluate the impact of recent changes to prior authorization rules before adding to the regulatory burden. It is hard to predict where CMS will go in the final reg.
The proposed reg includes provisions related to implementation of the Inflation Reduction Act (IRA), and CMS needs to take action on these to meet statutory requirements. While Congress gave CMS authority to implement some provisions without formal rulemaking, that authority was time limited. The proposed reg would codify requirements around costing sharing for vaccines and cost sharing limits on insulin in Parts B and D – IRA provisions that are already in effect. CMS is very likely to finalize those proposals without modification.
Another IRA policy that requires rulemaking is the Medicare Prescription Payment Plan, which went into effect in January 2025 and allows Part D enrollees to pay their cost sharing over the course of the year rather than all at once. CMS proposed to codify 2025 program requirements for future years and proposed an automatic election renewal process that would extend a Part D enrollee’s participation in the program for the next calendar year unless the enrollee opts out.
Beneficiary advocates expressed support for the automatic election renewal and existing components of the program. Part D plans, however, recommended that CMS hold off on codifying new requirements to allow for adjustments to the program as enrollees, plans, and pharmacies gain experience. CMS is likely to finalize at least some of the program rules but might limit what it puts in regulation to give itself flexibility to modify the program going forward.
CMS proposed various changes to Star Ratings measures and methods. One proposal CMS is likely to finalize would modify the breast cancer screening measure to align with updates made by the measure developer. Other proposals included removing guardrails that limit how much performance thresholds can move from year to year and making modifications to the Health Equity Index, a new measure set to take effect in 2027. Given strong pushback from plan stakeholders on both provisions, CMS may leave them out of the final reg to give the administration more time to decide on a path forward.
CMS proposed tightening rules around use of debit cards to deliver supplemental benefits and the criteria plans use to determine supplemental benefits eligibility for chronically ill enrollees. The proposals stem from the prior administration’s efforts to ensure supplemental benefits get used and deliver value to enrollees. Plans expressed serious concerns about the proposals, suggesting that they would make it harder for enrollees to access needed benefits. These provisions seem unlikely to make the cut for inclusion in the final reg.
CMS proposed to require MA plans to ensure services are provided equitably, irrespective of delivery method or origin. If an MA plan uses artificial intelligence, CMS would require that it comply with regulations, provide equitable access to services, and not discriminate on the basis of health status. It is hard to gauge how the new administration may approach artificial intelligence use in healthcare; it seems likely that CMS will remain silent on this provision to allow more time for policy development.
CMS proposed to require MA plans to make provider directory data available to CMS and attest to its accuracy in order to populate the Medicare Plan Finder, which beneficiaries use to compare and select plans. Plans would also have to update Medicare Plan Finder data within 30 days of being notified of a change in provider information. While beneficiary advocates expressed support for these proposals, plans noted that existing rules already require them to make updated provider directory information available on plan websites and to third-party sites. The new administration may see these proposals as adding to the regulatory burden for plans and choose not to finalize them.
CMS proposed that in-network cost-sharing for behavioral healthcare should be no greater than cost-sharing in traditional Medicare, part of the last administration’s efforts to put access to mental and behavioral health services on par with medical services. Given concerns Secretary Kennedy has expressed about existing ways of addressing behavioral health, this provision seems unlikely to be finalized.
CMS proposed to broaden the definition of “marketing” to increase the number and type of advertisements that must be submitted to CMS. CMS also proposed to increase the number of topics that agents and brokers must cover before an individual’s enrollment. Topics include potential eligibility for the low-income subsidy and Medicare Savings Programs, and the potential impact of MA enrollment on future Medigap guaranteed issue rights. As with prior authorization, these proposals built on previous CMS actions to address concerns about misleading marketing materials and the role of brokers. CMS may decide to hold off on finalizing these provisions while the agency assesses the impact of recent regulations in this space.
CMS proposed that dual-eligible special needs plans must have a single integrated member identification card for an enrollee’s Medicare and Medicaid plans and must conduct an integrated health risk assessment for Medicare and Medicaid rather than separate assessments for each program. Many stakeholders expressed support for these proposals, which might suggest they are likely to be finalized. At the same time, these proposals are not viewed as “must dos” and could be left off the list if CMS chooses to publish a limited final reg.
As we wait to see what final policies CMS will enact, we’ll be watching for an equally important MA-related document that CMS will issue soon: the CY 2026 MA and Part D Final Notice. This notice will include final payment rates for MA and Part D plans that will inform their bids for CY 2026. It should be released no later than April 7, 2025, before bids are due on June 2, 2025.
There is a lot happening in the MA space, and Lynn will be releasing more +Insights in the days and weeks to come!
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Until next week, this is Jeffrey (and Lynn) saying, enjoy reading regs with your eggs.
