WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services (CMS) issued a final rule on Friday, April 4, 2025, that introduces sweeping updates to Medicare Advantage (MA), Medicare Prescription Drug Benefit (Part D), Medicare cost plans, and Programs of All-Inclusive Care for the Elderly (PACE). Known as the Contract Year (CY) 2026 Medicare Advantage and Part D Final Rule, these changes aim to improve patient care, ensure equitable access, and provide greater transparency across critical healthcare programs.
The finalized provisions include reforms to prescription drug coverage, risk adjustment policies, and enhanced protections for dually eligible beneficiaries. Additionally, the rule codifies existing guidance within MA and Part D programs, setting a clear regulatory framework for future implementation.
Strengthening Medicare Advantage and Part D Policies
Significant updates were introduced to safeguard beneficiaries and streamline processes under Medicare Advantage plans and Part D programs.
One key provision mandates that Medicare Advantage plans will be restricted from reopening and altering previously approved hospital admission decisions unless there is evidence of fraud or clear administrative error. This change ensures that prior authorizations are honored, offering beneficiaries greater peace of mind when seeking care.
The rule also addresses gaps in MA appeals processes to enhance fairness and ensure continuity in treatment. Newly finalized steps include clarifications around plan determinations that qualify for appeals, requiring dual notifications of coverage decisions to both providers and beneficiaries, and confirming that a beneficiary’s payment liability cannot be determined until the provider’s claim has been adjudicated.
Additionally, CMS codified guidelines for Special Supplemental Benefits for the Chronically Ill (SSBCI). These benefits, which may include non-healthcare-related items or services, are now subject to stricter oversight. Non-allowable benefits, such as tobacco products and alcohol, are explicitly excluded, ensuring that the program focuses on meaningful interventions to improve patients’ health.
Expanded Protections for Dual-Eligible Populations
CMS has introduced new requirements for dual-eligible special needs plans (D-SNPs), which serve beneficiaries enrolled in both Medicare and Medicaid. By 2027, D-SNPs must provide integrated health risk assessments that merge data from both programs and distribute unified member identification cards for enrollees. These measures aim to simplify access to services for eligible individuals, improve care coordination, and reduce administrative burdens.
Updates to Prescription Costs and Access
The final rule codifies new requirements to minimize costs to Medicare beneficiaries under the Inflation Reduction Act (IRA) of 2022. Effective for plan years beginning on January 1, 2023, all Part D plans must provide coverage for ACIP-recommended adult vaccines with zero cost-sharing. Insulin products covered under Medicare Part D will also be subject to caps, with out-of-pocket costs limited to a maximum of $35 per month per covered insulin product.
Additionally, CMS finalized updates to launch the Medicare Prescription Payment Plan. Starting in 2025, all Part D plans will allow enrollees to spread out out-of-pocket prescription costs through monthly payments, easing the financial burden for many beneficiaries.
Enhancing Data Integrity and Equity
Technical improvements were also finalized to bolster data accuracy and better align CMS systems with established healthcare standards. These updates include adjustments to the risk adjustment methodology for PACE organizations and cost plans, ensuring that diagnosis codes consistently follow industry classifications under the ICD framework.
Efforts to advance health equity were further prioritized through improved utilization management policies. CMS codified standardized timeframes for individualized care plans, ensuring timely interventions and fostering enrollees’ active engagement in their health decisions.
Implications for Stakeholders
These comprehensive reforms demonstrate CMS’s commitment to improving the Medicare experience for millions of Americans. They are especially significant for vulnerable populations, such as those with chronic illnesses and dually eligible beneficiaries, as they ensure greater equity, stronger safeguards, and streamlined access to healthcare services.
For providers and insurers, the final rule emphasizes transparency, accountability, and consistency. By codifying many sub-regulatory guidelines, CMS has provided a clearer roadmap for stakeholders to meet program requirements and uphold the integrity of Medicare’s mission.
Looking ahead, these updates also reflect CMS’s broader goal of promoting affordability and ease of access, particularly for life-saving medications and healthcare interventions. “By finalizing these critical measures, CMS is advancing its commitment to equitable and high-quality care for all Medicare beneficiaries,” the agency stated in its announcement.
With these reforms set to take effect in 2026 and beyond, Medicare stakeholders now face a pivotal transition as they align with the updated standards while continuing to adapt to the evolving needs of beneficiaries.
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