Health Law Daily Wrap Up, AGENCY NEWS—CMS finalizes 2026 Medicare rule enhancing coverage stability and beneficiary protections, (Apr 7, 2025)

By WK Editorial Staff

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule for Contract Year 2026 that introduces significant updates to Medicare Advantage and Part D programs, aimed at improving prescription drug coverage, enhancing beneficiary protections, and streamlining services for dual eligible enrollees.

The Centers for Medicare & Medicaid Services (CMS) recently issued a final rule that introduces significant updates and enhancements to the Medicare Advantage (MA), Medicare Prescription Drug Benefit (Part D), Medicare Cost Plan, and Programs of All-Inclusive Care for the Elderly (PACE) for Contract Year 2026. This rule, which aims to modernize these programs, includes changes that will affect prescription drug coverage, the Medicare Prescription Payment Plan, dual eligible special needs plans (D-SNPs), and other areas.

A pivotal aspect of the final rule is its commitment to ensuring stability and clarity in health coverage decisions. Notably, CMS has decided to restrict MA plans from reopening and modifying previously approved inpatient hospital decisions unless there is evidence of obvious error or fraud. This move is designed to protect approved patient admissions from being retrospectively denied based on new information, thereby safeguarding both patient care continuity and provider operations.

Further tightening the integrity of the MA system, CMS is also closing loopholes in the MA appeals process. This includes clarifying that all adverse plan decisions are subject to appeal, regardless of when the decision is made during the service delivery process. Additionally, CMS has codified the requirement for plans to notify both the provider and the enrollee of coverage decisions, ensuring all parties are adequately informed.

Another significant enhancement is the introduction of non-allowable Special Supplemental Benefits for the Chronically Ill (SSBCI). These benefits, which are tailored to individuals with chronic conditions, are now clearly defined to exclude items such as non-healthy food and alcohol, which do not contribute to health maintenance or improvement.

In terms of risk adjustment, CMS has made technical updates to ensure the Hierarchical Condition Categories remain relevant and reflective of current medical classification systems. This includes generalizing references to the International Classification of Diseases (ICD) and updating terminology to align with ICD standards.

For enrollees eligible for both Medicare and Medicaid, CMS is introducing measures to streamline their experience. By 2027, certain D-SNPs must provide integrated member ID cards and conduct integrated health risk assessments for Medicare and Medicaid, rather than managing them as separate entities. This integration aims to reduce administrative burdens and improve the coordination of care for dually eligible enrollees.

The rule also codifies several provisions from the Inflation Reduction Act of 2022, including those related to vaccine and insulin cost-sharing. Starting in plan years from January 1, 2023, there will be no cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices and covered under Part D. Similarly, the cost-sharing amount for a one-month supply of covered insulin products will not exceed $35 or 25% of the maximum fair price, whichever is lesser, ensuring more predictable and affordable access to essential diabetes management medications.

Moreover, CMS is implementing the Medicare Prescription Payment Plan, allowing Part D enrollees to spread their out-of-pocket prescription costs across monthly payments, rather than paying in full at the point of service. This is expected to alleviate financial pressure on beneficiaries and enhance medication adherence.

The final rule also addresses the timely submission of Prescription Drug Event records and includes requirements for network pharmacies participating in the Medicare Drug Price Negotiation Program to ensure beneficiaries continue to have access to negotiated drug prices.

In summary, the CY 2026 final rule by CMS introduces a suite of measures aimed at enhancing the efficiency, transparency, and fairness of Medicare Advantage and Part D programs. By codifying existing guidance, closing loopholes, and integrating services for dual enrollees, CMS is taking significant steps to improve the healthcare experience for Medicare beneficiaries, ensuring they receive the care and medications they need with improved predictability and reduced financial burden.

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