Several April releases seem to signal some basis for optimism for stakeholders in Medicare Advantage and Part D, though with sufficient undertones to recommend caution.

In April, the Centers for Medicare and Medicaid Services (CMS) released its Final Rule on CY 2026 Policy and Technical Changes to the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit (Part D) Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (PACE) (the “2026 Final Rule)—and also released this CY 2026 Rate Announcement for MA and Part D. At approximately the same time, CMS posted an appeal for input on approaches and opportunities to streamline Medicare regulations and reduce unnecessary regulatory burden, providing MA and Part D stakeholders with an opportunity to highlight areas for potential change. 

Of particular note, the CY 2026 Rate Announcement includes a plan payment increase that is up more than $25 billion from its original proposal and continues the three-year phase-in of the move to the V28 risk adjustment model. This came just days after CMS issued the 2026 Final Rule. Created under a sharply different political landscape, the 2026 Final Rule departs from the Proposed Rule of November 26, 2024 (“2026 Proposed Rule”) in a number of ways.

As we predicted in our previous Insight, the Trump Administration chose not to finalize some aspects of the 2026 Proposed Rule. The 2026 Final Rule balked at a number of proposals—owing at least in part to Executive Order 14192 of January 31, 2025, “Unleashing Prosperity Through Deregulation,” which was cited by CMS. With deferrals listed at 90 FR 15795 and 15892, the 2026 Final Rule is perhaps notable for

1. Deferring addressing proposed expansion of the definition of what would be considered Medicare marketing subject to CMS submission, as well as limitations on the marketing of the value of supplemental benefits (see our previous post);
2. Not adopting guardrails for artificial intelligence (AI) in ensuring equitable access to MA services (see our previous post; CMS will continue to consider future AI rulemaking);
3. Not finalizing proposed changes relating to Part D and Medicaid coverage of anti-obesity medications (see our previous post);
4. Deferring various proposed improvements to Star Ratings (see our previous post; the Health Equity Index Reward for Part C and D Star Ratings is still under review, while the 2026 Final Rule updates breast cancer screening measures in Part C by expanding the age range to align with updated clinical guidelines).
5. Not adopting the additional step in a formulary review process for generics and biosimilars (CMS may address formularies in a future rulemaking);
6. Not adopting annual health equity analysis of utilization management policies and procedures (currently under review);
7. Not adopting requirements for MA plans to provide culturally and linguistically appropriate services (currently under review);
8. Not adopting quality improvement and health risk assessments (HRAs) focused on equity and social determinants of health (currently under review);
9. Deferring addressing Part D Medication Therapy Management (MTM) Program Eligibility Criteria (see Table 4 at 90 FR 15892);
10. Deferring ensuring equitable access to behavioral health benefits (see Table 4 and our previous post);
11. Deferring changes regarding MA Provider Directories (see Table 4 and our previous post); and
12. Deferring enhancing rules on internal coverage criteria (see Table 4).

These deferrals represent policy considerations that the Administration neither rejected nor adopted. The long list raises the questions of whether CMS will make the effort to formally address any of these proposals in future rulemaking or will kick these cans down the road for the next administration. We further discuss the Rate Announcement, and what is included in the Final Rule, below.

CY 2026 Rate Announcement

The statutorily required CY 2026 Rate Announcement, formally known as the CY 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, responded to CMS’s request for comments on the 2026 Advance Notice of Methodological Changes which published on January 10, 2025. The effective growth rate—representing the current estimate of growth in benchmarks used to determine payment for MA plans, based on the growth in Medicare Fee For Service (FFS) Medicare per capita costs—is 9.04 percent, which is higher than the estimate of 5.93 percent in the Advance Notice.

Plan Payment Increase. Of particular interest, and based on the significant increase in the actual FFS growth rate over the estimate relied on in the Advance Notice, the Trump Administration announced a plan payment increase that exceeds that proposed by the Biden Administration (an expected average change in revenue that is up 5.06 percent as opposed to 2.23 percent).

V28 CMS-HCC (Hierarchical Condition Category) Risk Adjustment Model. The administration also announced a continuation of the 3-year phase in of the move to the V28 risk adjustment model which began in 2024. For non-PACE organizations, CMS will use 100 percent of the risk score calculated using the 2024 CMS-HCC risk adjustment model. For PACE organizations, for CY 2026, CMS will begin phasing out the 2017 CMS-HCC model as proposed by calculating risk scores as a blend of 10 percent of the risk score calculated using the 2024 CMS-HCC risk adjustment model and 90 percent of the risk score calculated using the 2017 CMS-HCC risk adjustment model.

Star Ratings. Reflecting the estimated effect of changes in the Quality Bonus Payments for the upcoming payment year, this number remains unchanged from the 2026 Advance Notice, at -.0.69 percent. The Rate Announcement includes the list of eligible disasters for adjustment, non-substantive measure specification updates, and the list of measures included in the Part C and D improvement measures and Categorical Adjustment Index for the 2026 Star Ratings. CMS will consider comments to the Advance Notice relating to substantive measure specification changes and new measures, to be made in future rulemaking.

Risk Model Revision and FFS Normalization. Both the 2026 Advance Notice and the 2026 Rate Announcement lists -3.01 percent.

Medical Education Costs. For CY 2026, CMS will complete the phase-in of the technical adjustment as proposed in the 2026 Advance Notice by applying 100 percent of the adjustment for medical education costs associated with services to MA enrollees for CY2026. In CY 2024, CMS initiated a three-year approach for removing these costs, related to services that MA enrollees receive, from the historical and projected expenditures supporting the FFS costs that are included in the growth rate calculations. [From press release and Fact Sheet.]

CY 2026 Final Rule: What Does It Include?

The Final Rule amends regulations for Part C), Part D, Medicare cost plans, and PACE to implement changes related to prescription drug coverage, the Medicare Prescription Payment Plan, dual eligible special needs plans (D-SNPs), Part C and D Star Ratings, the Medicare Drug Price Negotiation Program, and other programmatic areas. The Final Rule also codifies Part C and Part D sub-regulatory guidance; certain Part D requirements from the Inflation Reduction Act of 2022 (IRA); and finalizes two IRA-related provisions regarding selected drugs with maximum fair prices (MFPs) in effect under the negotiation program. Key provisions include:

Vaccine cost-sharing changes. The 2026 Final Rule finalizes as proposed changes to section 11401 of the Inflation Reduction Act (IRA) of 2022—amending section 1860D-2 of the Social Security Act to require that, effective for plan years beginning on or after January 1, 2023, 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 (ACIP) covered under Part D.

Insulin cost-sharing requirements. The 2026 Final Rule finalizes as proposed changes to section 11406 of the IRA—amending section 1860D-2 to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall 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 statutorily defined applicable copayment amount for all enrollees.

For 2026 and each subsequent year, with respect to an insulin product covered under a prescription drug (PDP) plan, or a Medicare Advantage prescription drug (MA-PD) plan, prior to an enrollee reaching the annual out-of-pocket threshold, the applicable cost sharing amount is the lesser of

• $35;
• An amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with Part E of Title XI [of the Social Security Act]; or
• An amount equal to 25 percent of the negotiated price, as defined in § 423.100, of the covered insulin product under the PDP or MA-PD plan.

Medicare Prescription Payment Plan. The 2026 Final Rule largely adopts proposed regulatory changes to codify agency guidance implementing § 11202 of the IRA. The proposal adds a new § 423.137 establishing requirements for the Medicare Prescription Payment Plan, adds new Part D materials and content at § 423.2267, adds Medicare Prescription Payment Plan information to the list of required content for Part D sponsor websites, and adds the Medicare Prescription Payment Plan to the list of Part D requirements waived for the Limited Income Newly Eligible Transition (LI NET) program. It further codifies requirements in the Final CY 2025 Part D Redesign Program Instructions for the treatment for Medical Loss Ratio (MLR) purposes of unsettled balances for 2026 and future years. (The Rule does make “a few exceptions,” listed at 15793).

Dually Eligible Enrollees. The Rule finalizes new federal requirements for D-SNPs designed to address program fragmentation, including for plan use of integrated member identification cards and integrated health risk assessments (HRAs).

Prescription Drug Event (PDE) Records. The Final Rule codifies at § 423.325 specific timely submission requirements for PDE Records, as proposed.

Medicare Transaction Facilitator Requirements for Network Pharmacy Agreements. The 2026 Final Rule finalizes a proposal requiring Part D sponsors’ network participation agreements with contracting pharmacies require such pharmacies to be enrolled in the Medicare Drug Price Negotiation Program’s Medicare Transaction Facilitator Data Module and that such pharmacies certify the accuracy and completeness of their enrollment information in the MTF DM.

MA Organization Determinations. The 2026 Final Rule clarifies the definition of MA “organization determination” to include MA plan decisions made concurrent to the enrollee’s receipt of services. It also codifies requirements related to the delivery of notices of coverage decisions to providers, clarifies that an enrollee’s liability for services cannot be determined until an MA organization has made a claims payment determination, and restricts plans’ ability to use information gathered after an inpatient admission has taken place.

Risk Adjustment Data Updates. The 2026 Final Rule changes the definition of Hierarchical Condition Categories (HCCs) and codifies the practice of requiring the collection and submission of risk adjustment data by PACE organizations and cost plans.

Burden Reduction and Deregulatory Efforts

Also in early April, CMS posted an appeal titled “Unleashing Prosperity Through Deregulation of the Medicare Program Request for Information” (Medicare Deregulation RFI). Through this RFI, CMS asks for input “on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries, Medicare Advantage and Part D plans, and other stakeholders participating in the Medicare program” in an effort “to reduce unnecessary administrative burdens and costs, and create a more efficient healthcare system”. Commenters are asked to identify

• specific Medicare administrative processes, quality, or data reporting requirements that could be automated or simplified to reduce the administrative burden on facilities and providers;
• changes that could be made to simplify Medicare reporting and documentation requirements without affecting program integrity; and
• documentation or reporting requirements within the Medicare program that are overly complex or redundant.

Submissions under this RFI are due by June 10, 2025, and could form the basis for the Trump Administration’s MA and Part D and related regulatory proposals for the 2027 plan year. 

Takeaways

The regulations covered by the Final Rule become effective on June 3, 2025. The Final Rule’s provisions generally apply to coverage beginning January 1, 2026, with exceptions:

• Updates to marketing and communications provisions at §§ 422.2267 (e)(30) and (32) for integrated member ID cards are applicable for CY marketing and communications beginning October 1, 2026;
• Requirements related to eligibility and election, targeted outreach, and general outreach regarding participation in the Medicare Prescription Payment Plan for 2026 (at various provisions) are applicable beginning October 1, 2025;
• The HRA provision at §422.101(f) is applicable beginning October 1, 2026, for HRAs conducted for effective dates of enrollment on or after January 1, 2027;
• The updated Part C Breast Cancer Screening measure as described in section IIIE of the Final Rule is applicable for 2029 Star Ratings beginning January 1, 2027.

Epstein Becker Green Attorney Ann W. Parks contributed to the preparation of this post.