The Centers for Medicare & Medicaid Services (CMS) on April 5 issued the contract year (CY) 2026 Medicare Advantage (MA) and Part D final rule, which includes provisions on prior authorization, the Inflation Reduction Act (IRA) of 2022, and special needs plans.
Prior Authorization and Appeals
CMS finalized a provision that limits plans from reopening and denying previously approved inpatient admissions based on post-authorization information. Plans may reverse these approvals only in cases of fraud or obvious error.
Additionally, the final rule closes loopholes in MA appeals processes by clarifying that all plan decisions affecting care are considered organization determinations and are subject to appeal, regardless of whether they are made before, during, or after services are provided.
CMS also codified requirements for notifying providers of coverage decisions and confirmed that patient financial liability cannot be established until a plan has decided a claim.
IRA-Related Provisions
The final rule includes numerous IRA provisions that require codification by the end of 2025.
A Medicare Part D deductible does not apply to adult vaccines recommended by the Advisory Committee on Immunization Practices and covered under Part D. There is also no cost-sharing.
Additionally, the part D deductible does not apply to covered insulin products, and the cost-sharing amount for a one-month supply must not exceed the covered insulin product applicable cost-sharing amount. After 2025, the cost-sharing amount is capped at $35.
Beginning in 2025, the Medicare Prescription Payment Plan requires all Part D plans to offer enrollees the option to pay their out-of-pocket prescription drug costs through monthly payments instead of a lump sum.
Other Provisions
The rule also codifies requirements designed to improve enrollment in special needs plans for individuals who are dually eligible for Medicare and Medicaid. Additionally, the final rule establishes guardrails for non-allowable Special Supplemental Benefits for the Chronically Ill (SSBCI) by codifying a list of non-allowable examples (e.g., non-healthy food, alcohol, tobacco, life insurance).
CMS did not finalize certain provisions from the proposed rule, including those related to health equity analysis, artificial intelligence (AI) guardrails, and the coverage of anti-obesity medications under Part D and Medicaid. The agency stated that these proposals may be addressed in future rulemaking.
In a January 2025 comment letter on the proposed rule, the association urged CMS to finalize proposed provisions and encouraged the agency to establish robust oversight mechanisms to ensure MA organizations comply with the new requirements. Additionally, the association supported CMS’ efforts to require MA organizations to mitigate bias in AI tools, comply with existing nondiscrimination and cultural competency policies, and ensure equal access to services regardless of delivery method.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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