Each year the Centers for Medicare and Medicaid Services (CMS) proposes policy modifications that impact Medicare Advantage, Medicare Part D, and the Program of All-Inclusive Care for the Elderly (PACE). The proposed rules enable the agency to adjust and refine regulations based on feedback, program experience, and data analysis. It also provides stakeholders, such as MA plans and providers, an opportunity to comment on, anticipate, and adapt to upcoming regulatory changes.
On November 26, 2024, CMS released the Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and PACE. CMS aims for the proposed rule to enhance accountability for MA and Part D plans while protecting access to care.
Here’s an overview of some key 2026 Medicare Advantage Proposed Rule provisions:
Coverage of Anti-Obesity Medications
The proposed rule reinterprets the Social Security Act to allow coverage of anti-obesity medications under Part D and Medicaid for individuals with obesity, recognizing obesity as a chronic disease. Under current policy, these medications are only covered if used to treat another condition.
Individuals enrolled in Medicare Part D with an obesity diagnosis would be eligible for coverage of anti-obesity medications (AOMs) prescribed for obesity treatment. This change aims to recognize obesity as a chronic disease and provide access to drug therapy as part of a comprehensive treatment approach.
The proposal does not define obesity for eligibility purposes but allows Part D sponsors to define it within their prior authorization criteria. However, these criteria cannot be stricter than the FDA labeling for the specific AOM.
Medicaid: The proposed reinterpretation would also apply to Medicaid, requiring states to cover AOMs for weight loss or chronic weight management to treat obesity. This modifies the current state discretion in covering AOMs for obesity treatment. States would still have the flexibility to implement preferred drug lists and prior authorization procedures, as long as they comply with existing requirements to ensure appropriate utilization.
CMS estimates this change could increase costs to the federal government by $24.8 billion for Part D. For Medicaid, the cost is estimated $14.8 billion over 10 years.
Prior Authorization and Internal Coverage Criteria
CMS proposes to clarify definitions for internal coverage criteria used by MA plans to make coverage decisions by defining it as any policies, measures, tools, or guidelines used by MA plans to make medical necessity determinations that are NOT expressly stated in:
- Medicare laws
- CMS manuals
- National Coverage Determinations (NCDs)
- Local Coverage Determinations (LCDs)
The rule emphasizes that MA plans must align internal coverage criteria with Traditional Medicare statutes and regulations. CMS intends to ensure that MA plans do not inappropriately deny services covered under Traditional Medicare.
CMS also proposes prohibitions on the following types of internal coverage criteria:
- Criteria that lack clinical benefit and are primarily used to reduce utilization.
- Criteria that deny coverage automatically without individual medical necessity assessment.
The rule also aims to establish guardrails to preserve access to benefits and add more specific rules about publicly posting internal coverage criteria content on MA organization websites. These guardrails aim to prevent internal coverage criteria that unnecessarily restrict access to care.
The rule includes more specific regulations about publicly posting internal coverage criteria on MA organization websites. CMS intends to increase transparency and allow beneficiaries to understand the basis for coverage decisions.
The proposed rule expands on the required content for public posting, including marking internal criteria within policies, linking evidence with footnotes, providing rationales for each criterion, and listing all items and services subject to internal criteria. The list must be machine-readable, digitally searchable, and downloadable for improved accessibility and research.
Finally, CMS seeks to ensure that plans provide services equitably, regardless of whether they are delivered through human or automated systems. When plans use AI or computerized systems, they must comply with anti-discrimination laws.
Marketing Materials and Beneficiary Protection
The definition of marketing is proposed to be expanded to include all materials intended to draw attention or influence enrollment decisions. This would require the submission and review of a broader range of materials.
The current definition of marketing focuses on both intent and content. While the intent standard remains unchanged, CMS proposes eliminating the content standard. The result is an expansion of the definition of marketing to encompass any material or activity designed to influence enrollment decisions, regardless of the specific content.
For background, the intent standard focuses on materials or activities intended to:
- Draw attention to an MA or Part D plan
- Influence a plan selection
- Encourage beneficiaries to stay enrolled in a plan (retention-based marketing).
The content standard, which would be eliminated, requires materials to include specific information about:
- Plan benefits
- Cost-sharing
- Ranking standards
Why Has CMS Expanded the Definition of Marketing?
CMS argues that this broader definition is necessary to address a perceived loophole in the current regulations. This loophole allows MA plans and Part D sponsors to create misleading advertisements that do not explicitly mention specific benefits or cost-sharing details, evading CMS oversight.
Examples of newly classified marketing materials may include:
- Flyers or advertisements mentioning Medicare Advantage coverage in a specific county without mentioning plan benefits or cost-sharing.
- Television ads suggesting potential changes to Medicare plans and urging them to call a number for more information, without specifying plan details.
- Websites that appear educational but collect beneficiary information for marketing purposes without discussing specific plans.
The proposed rule also expands the list of topics agents and brokers must discuss with beneficiaries before enrollment. These additional topics include:
- Low-Income Subsidy (LIS) Eligibility: Agents and brokers must explain LIS eligibility requirements, the impact of being LIS eligible on drug costs, and resources for applying for LIS.
- Resources for State Programs: Agents and brokers must review existing resources for state programs that can help with healthcare costs. Medicare Savings Programs (MSPs) serve as an example.
- Information for Beneficiaries New to Medicare or Switching from Medigap: Agents and brokers must discuss with these beneficiaries:
- The 12-month trial period to disenroll from their MA plan and switch back to Traditional Medicare with Medigap, with guaranteed issue rights.
- Switching back to Traditional Medicare outside this trial period may result in Medigap insurers considering pre-existing conditions, potentially increasing costs.
- Pausing for Questions: Agents and brokers must pause before finalizing enrollment to allow beneficiaries to ask any remaining questions about the topics discussed or other enrollment-related concerns.
Medicare Prescription Payment Plan
CMS proposes to codify requirements for the Medicare Prescription Payment Plan for 2026 and future years. Additionally, CMS proposed several specific adjustments and new requirements. The agency highlighted areas where it believes feedback should drive improvements or clarifications.
Key Proposed Changes for 2026 include:
Automatic Election Renewal
Participation in the MPPP will automatically carry over to the next year unless an enrollee actively opts out. This mirrors the auto-renewal process for Part D plans. To support this, Part D sponsors must send a renewal notice by December 7th each year, informing enrollees of the automatic continuation and outlining the program terms for the upcoming year.
Unsettled Balances as Plan Losses
CMS clarified that unpaid balances from the MPPP will be treated as plan losses, aligning with the statutory language of the Inflation Reduction Act, which introduced the MPPP.
Exclusion from MLR Numerator
Unsettled balances will be excluded from the Medical Loss Ratio (MLR) numerator, meaning they are not factored into calculations determining the percentage of premium revenue Part D plans spend on healthcare costs.
Modifications to Claims Adjustment Handling
CMS proposes to streamline how Part D sponsors handle claim adjustments that either increase or decrease the amount a participant owes. For overpayments, plans should follow their standard adjustment and refund procedures. For underpayments, plans should include an increase in the remaining balance. The goal is to create consistent billing practices.
Grace Period and Notice of Non-Payment Timing
The start date of the grace period for unpaid balances is being adjusted. Instead of beginning on the 1st of the month in which the balance is due or the month following the payment request, it will now consistently start on the 1st of the month after the payment due date.
Effective Date of Voluntary Termination
CMS proposed to shorten the time for processing voluntary terminations from the MPPP, requiring the effective date to be within 24 hours of receiving the request. This aligns with the time frame for processing initial enrollment requests.
Transparency of OOP Costs at POS
Recognizing concerns about limited visibility into incurred costs for MPPP participants who pay $0 at the point of sale, CMS proposed requiring Part D sponsors to make OOP cost information easily accessible to pharmacies. Pharmacies would then provide this information to participants during prescription pickup, increasing transparency.
Medicare Plan Finder
CMS proposes to enhance Medicare Plan Finder (MPF) by including searchable provider directories for all MA organizations (MAO). CMS would require MAOs to submit provider directory information in a standardized format.
As a result, beneficiaries and caregivers could directly search for specific providers or facilities within the MPF, eliminating the need to visit multiple plan websites. To ensure the reliability of the provider directory information on the MPF, MAOs must attest to the accuracy of the data they submit.
MAOs would need to update the provider directory data on the MPF within 30 days of receiving notification of any changes from providers. This requirement aligns with existing provider directory standards.
Supplemental Benefits and Debit Cards
CMS seeks to clarify when and how debit cards may be used for supplemental benefits. Although debit cards offer a convenient way to administer supplemental benefits, their use has confused enrollees. Beneficiaries often lack clear guidance about:
- Which specific supplemental benefits can be purchased using the debit card.
- Where beneficiaries can use the debit card, including merchants or providers.
- Using the debit card effectively, including PIN requirements, transaction limits, and balance inquiries.
To address these concerns, CMS proposes several measures to enhance transparency and empower informed decision-making.
CMS intends to formalize existing guidelines, previously communicated through the Medicare Managed Care Manual and memos, into regulations. This codification aims to create consistent standards and expectations for MAOs across the industry:
- The proposed regulations would mandate that debit cards be electronically linked to plan-covered benefits through a real-time identification mechanism. This linkage would ensure that the debit card can only purchase eligible items or services, preventing unauthorized spending and ensuring compliance with benefit parameters.
- CMS proposes expanding disclosure requirements, compelling MAOs to provide clear instructions for debit card use, robust customer service support, and alternative reimbursement processes in case of issues.
- CMS proposes prohibiting MAOs from marketing the dollar value of supplemental benefits or the specific method of administration (e.g., debit card). The agency aims to prevent potentially misleading advertising,
Other Notable Proposals
Medical Loss Ratio (MLR) reporting: Changes to align with Medicaid and commercial requirements.
Behavioral Health: Limit beneficiary cost-sharing to no greater than traditional Medicare.
Vaccine Cost Sharing: Eliminating cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices.
Insulin Cost Sharing: Codify IRA provisions restricting Part D cost-sharing for a one-month supply of insulin.
Part D Medication Therapy Management: Expand eligibility criteria.
Star Ratings: Add and update measures, beginning with the 2028 Star Ratings.
Health Equity Analyses: Require plans to report the metrics by each item or service, rather than aggregated.
Community-Based Services: Promote these services and enhance the transparency of in-home service contractors.
Will CMS Finalize These Proposed Rules?
The comment period for these proposed rules ends January 27, 2025. The proposed rule represents the final major Medicare regulations by the Biden administration but the finalization process falls under the incoming Trump administration. As a result, uncertainty exists about the future of these proposals.
Dr. Mehmet Oz, a known advocate for Medicare Advantage, is a potential candidate for a CMS leadership position. His influence could contribute to a greater emphasis on MA expansion. That emphasis could lead to modifications in the proposed rules.
Additionally, the Trump administration has indicated it will favor a less stringent regulatory approach than the Biden administration, particularly concerning AI in healthcare. For example, the proposed rules emphasize non-discriminatory AI use. The Trump administration could prioritize innovation and economic growth, leading to relaxed regulatory measures.
The Trump administration recently appointed Elon Musk and Vivek Ramaswamy to a new cost-cutting Department of Government Efficiency (DOGE). The fiscal impact of the proposal to reinterpret the Social Security Act to allow coverage of anti-obesity medications in Part D and Medicaid could be scrutinized by the incoming Trump administration – including DOGE – leading to potential modifications or even the exclusion of this provision.
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