In April 2025, CMS issued both the final rule updating key Medicare Advantage (MA) policies and the Capitated Rate Announcement for contract year (CY) 2026 for Medicare Parts C and D. Both documents are extensive and address many aspects of the MA program from both a policy and rate-setting perspective. As MA organizations (MAOs) finalize their bids for CY 2026, they should review both documents carefully. Providers should pay particular attention to the final rule to understand changes in coverage and appeal rights for certain services.
2026 Medicare Advantage Final Rule – Key Takeaways
In the MA final rule, CMS finalized provisions related to MA plan coverage determinations and appeals rights, insulin cost sharing, vaccine cost sharing, and MA plan risk adjustment. These items were finalized mostly as proposed in November 2024.
However, given that the proposed rule was issued by the prior administration, the final rule contained more changes than usual. The provisions proposed by CMS but not finalized include policies related to MA plans’ use of internal coverage criteria, cost sharing for behavioral health services, use of artificial intelligence in claims processing, increased requirements for MA plans’ provider directories, Part D coverage of anti-obesity drugs, and an annual health equity analysis of MA plans’ utilization management policies.
Below is a summary of select provisions included in the final rule that impact health plans and providers.
CMS modifies regulations governing coverage determinations and related enrollee appeal rights. These changes include:
Revising existing guidance to clarify that when a contract provider’s request for payment has been adjudicated and the enrollee is determined to have no further liability to pay for the services furnished by the MAO, the claim payment determination is not subject to the appeal process.
Clarifying that the definition of “organization determination” (decisions that are subject to MA appeal and notification requirements) includes MA plan decisions made concurrent to the enrollee’s receipt of services. This ensures the MA appeal rules apply to adverse decisions, regardless of whether the decision is made before, after, or during the receipt of services.
Clarifying that if a plan provides prior authorization for a covered item/service or makes a concurrent determination during receipt of services, it may not later deny coverage on the basis of lack of medical necessity and may not reopen such a decision for any reason except for good cause or if there is reliable evidence of fraud or similar fault.
Codifying guidance requiring plans give a provider notice of a coverage decision, in addition to notifying the enrollee, whenever the provider submits a request on behalf of an enrollee.
Effective for plan years on or after January 1, 2023, CMS finalizes that the Medicare Part D deductible does not apply to covered insulin products, and the Part D cost-sharing amount for a one-month supply of each covered insulin product must not exceed the proposed “covered insulin product applicable cost-sharing amount” as required by the Inflation Reduction Act (IRA).
The applicable copayment amount for 2023, 2024, and 2025 is $35. For 2026 and subsequent years, the applicable cost-sharing amount is the lesser of $35, 25% of the maximum fair price established for the covered insulin product, or an amount equal to 25% of the negotiated price.
Effective for plan years beginning on or after January 1, 2023, CMS finalizes that the Medicare Part D deductible shall not apply to, and there is no cost sharing for, an adult vaccine recommended by the Advisory Committee on Immunization Practices covered under Part D as required by Section 11401 of the IRA.
The final rule codifies CMS’ practice of requiring the submission of risk adjustment data by Program of All-Inclusive Care for the Elderly (PACE) and Cost plans. The rule also finalizes a technical clarification to the definition of Hierarchical Condition Category (HCC) codes to remove a reference to the specific version of the ICD and replace it with a generic reference.
This Rate Announcement makes technical updates that impact capitated rates for MAOs. The policies included in the Rate Announcement are projected to increase payments to MA plans in CY 2026 by $25 billion (5.06% on average) compared to CY 2025. MA plan sponsors should review the Rate Announcement carefully as they finalize bids for CY 2026. Key technical updates for CY 2026 are summarized below:
For MAOs that are not PACE organizations, CMS completes the phase-in of the CMS-HCC 2024 risk adjustment model by using it to calculate 100% of MA risk scores in CY 2026. Risk scores for payment to MAOs and certain demonstrations will be calculated using only risk-adjustment-eligible diagnoses from encounter data and fee-for-service (FFS) claims.
For MAOs that are PACE Organizations, CMS will begin phasing in the CMS-HCC 2024 risk adjustment model. In CY 2026, the agency will calculate risk scores based on a blend using 10% of the CMS-HCC 2024 model using diagnoses from encounter data and FFS claims only, and 90% of the CMS-HCC 2017 model using diagnoses from the Risk Adjustment Processing System (RAPS), encounter data, and FFS claims.
For non-PACE organizations, CMS will continue using the 2023 End-Stage Renal Disease (ESRD) CMS-HCC models to calculate risk scores for beneficiaries in dialysis, transplant, and post-graft status.
CMS will calculate the risk score trend for CY 2026 using two years of data based on 2022 and 2023 risk scores, rather than using the three most recent continuous years of risk score data. This would exclude 2021 risk scores, which are based on dates of service in 2020 and include utilization data impacted by the COVID-19 public health emergency. The resulting risk score trend is 2.10% (compared to 3.86% for CY 2025). For CY 2027, CMS reiterates its intention to use data from a three-year period to calculate the MA risk score trend.
As finalized in the CY 2024 MA Rate Announcement, CMS fully removes the per capita indirect and direct medical education costs from the MA benchmarks. This change lowers the 2026 non-ESRD Medicare FFS United States Per Capita Costs (USPCC) and the corresponding non-ESRD FFS growth percentage by 1.57%.
CMS is adding one new measure (Kidney Health Evaluation for Patients with Diabetes) to the CY 2026 Star Ratings used to assess the quality of MA and Part D plans. Two other measures (Improving or Maintaining Physical Health and Improving or Maintaining Mental Health) are returning after substantive specification changes.
In 2026, the new measure will have a weight of 1. The two returning measures will also have a weight of 1 for the 2026 Star Ratings, which will increase to a weight of 3 beginning with the 2027 Star Ratings.
The weight of patient experience and complaint measures and access measures decreases from 4 to 2 beginning with the 2026 Star Ratings.
Requests for reviews of Complaint Tracking Module data must be submitted by May 30, 2025. All contracts must submit requests for review of 2024 appeals data by June 30, 2025.
How Forvis Mazars Can Help
As federal healthcare policies continue to evolve, Forvis Mazars is committed to helping healthcare organizations maintain regulatory excellence to support their pursuit of achieving health for their enterprises and those they serve. If you have questions about how the 2026 MA final rule or Rate Announcement may impact your organization, please reach out to our professionals.
