CY 2026 Medicare advantage and Part D final rule: Key policy changes under review

The CY 2026 Medicare Advantage (MA) and Part D final rule is currently under review by the Office of Management and Budget (OMB), a crucial step before its official release. This regulation, initially proposed by the Biden administration in November 2024, now faces scrutiny under the Trump administration, which may shape it according to its healthcare agenda. While the final rule is expected between late March and early April 2025, some provisions may be altered or delayed based on political priorities and cost concerns.

This article explores the major policy changes under consideration, including anti-obesity drug coverage, prior authorization reforms, Medicare Part D cost-sharing adjustments, and Star Ratings modifications. Understanding these changes is essential for healthcare providers, insurers, and beneficiaries as they prepare for the next phase of Medicare policy.

Costly expansion of anti-obesity drug coverage

A key proposal in the CY 2026 MA and Part D rule is expanding Medicare coverage for anti-obesity medications, specifically GLP-1 drugs like Wegovy and Zepbound. Historically, these drugs were excluded under Medicare Part D, but CMS proposed reinterpreting the statute to allow coverage, arguing that they offer broader health benefits beyond weight loss.

Financial and policy implications

Expanding coverage for anti-obesity drugs could increase Medicare spending by $25 billion over a decade, while Medicaid costs could rise by nearly $15 billion. This has sparked debate.

Supporters, including healthcare advocates and pharmaceutical companies, argue that treating obesity reduces long-term healthcare costs by lowering risks for diabetes and cardiovascular diseases.

Opponents, primarily insurers and budget-conscious policymakers, worry about the financial strain on Medicare and Medicaid programs, potentially leading to higher premiums or reduced benefits elsewhere.

Given these concerns, some stakeholders suggest delaying implementation until 2027 or later, allowing time to adjust risk models and Part D plan structures before finalizing coverage.

Prior authorization reforms

Prior authorization policies have been a longstanding issue in Medicare Advantage, often leading to delays in care. The CY 2026 rule aims to refine these rules, ensuring greater transparency and fairness in how plans apply utilization management.

Proposed changes to prior authorization

The proposed changes to Medicare Advantage (MA) coverage policies aim to improve transparency and consumer protections. MA plans would be required to publicly disclose internal coverage rules, giving beneficiaries a clearer understanding of their options. Additionally, CMS seeks to clarify the use of prior authorization, ensuring that medically necessary services are not wrongfully denied. Beneficiaries would also receive clearer information on their appeal rights if their services are denied.

While insurers have pushed back, arguing that recent prior authorization reforms should be fully evaluated before introducing new regulations, consumer advocacy groups support these changes, emphasizing the need for greater accountability in Medicare Advantage decision-making.

Medicare Part D cost-sharing rules

Several provisions in the CY 2026 rule stem from the Inflation Reduction Act (IRA), which introduced cost-sharing changes for Medicare Part D. These policies aim to reduce out-of-pocket expenses and improve access to essential medications.

Medicare payment plan implementation

A major provision of the Inflation Reduction Act (IRA) set to take effect in January 2025 is the Medicare Prescription Payment Plan, which allows Part D enrollees to spread out their cost-sharing payments over the year. The CY 2026 rule proposes to formally establish these requirements while introducing automatic enrollment renewal for beneficiaries already using the plan.

Additionally, it aims to provide more flexibility for insurers to refine payment structures. While consumer groups support these changes, insurers have raised concerns about the administrative burden, arguing that more time is needed before these policies are fully implemented.

The IRA also included cost-sharing reductions for vaccines and insulin under Medicare Parts B and D, which are expected to be finalized in the CY 2026 rule. These changes have been well-received, as they align with broader efforts to lower prescription drug costs for seniors.

Star ratings and plan finder updates

CMS has proposed multiple adjustments to the Medicare Advantage and Part D Star Ratings system, which evaluates plan performance.

Breast cancer screening measure update: Aligning this measure with the latest medical guidelines to improve accuracy.

Removal of performance guardrails: Eliminating restrictions that limit year-to-year Star Ratings fluctuations, allowing for more dynamic performance assessments.

Health equity index adjustments: Modifications to the 2027 Health Equity Index to promote fairer evaluations of plans serving diverse populations.

Insurance providers have resisted some of these changes, arguing that rapid adjustments could lead to inconsistent ratings and confusion among enrollees.

AI and Medicare plan finder requirements

Another set of proposals aims to improve the accuracy of the Medicare Plan Finder while addressing the role of artificial intelligence (AI) in healthcare decision-making. Under these changes, Medicare Advantage plans would need to ensure that AI-driven decisions do not create barriers to equitable access to care.

Additionally, insurers would be required to maintain more accurate and up-to-date provider directory information to help beneficiaries make informed choices. However, some insurers argue that existing regulations already address data accuracy concerns. Given these objections, many expect the administration to delay the finalization of AI-related rules to allow for further research and policy refinement.

Behavioral health, benefits, and marketing

The CY 2026 rule also proposes new requirements for behavioral health services, supplemental benefits, and marketing transparency in Medicare Advantage.

Behavioral health cost-sharing adjustments: CMS has suggested aligning cost-sharing for behavioral health services with traditional Medicare to ensure parity in access. However, given broader uncertainties in behavioral health policy, this provision may not be finalized immediately.

Supplemental benefit distribution and eligibility: The proposed changes to supplemental benefits include stricter regulations on the use of debit cards for benefit distribution to prevent misuse. Additionally, CMS is considering revising the eligibility criteria for chronically ill enrollees, which could limit access to certain benefits. Insurers have expressed concerns that these changes might reduce flexibility in how plans structure their benefits, potentially impacting high-need enrollees who rely on these services.

Strengthening marketing regulations and broker oversight: CMS is considering expanding the definition of “marketing” to address misleading advertising and improve transparency for Medicare beneficiaries. Additionally, the agency aims to increase broker responsibilities, ensuring that enrollees fully understand their plan options before making decisions. These changes build on previous efforts to regulate Medicare marketing; however, CMS may delay implementation to first evaluate the impact of existing rules.

Future developments

While the final rule remains under OMB review, another key document—the Final Notice—is set for release by April 7, 2025. This notice will finalize payment rates for MA and Part D plans, influencing insurer bidding strategies for 2026.

Key stakeholders—including insurers, healthcare providers, and consumer advocacy groups—are closely monitoring the rule’s development to understand which provisions will be finalized and which may be postponed or revised. Given the Trump administration’s recent executive order on regulatory reductions, some proposed rules may be scaled back or delayed to align with broader policy goals.

The rule represents a significant shift in Medicare policy, with far-reaching implications for costs, coverage, and patient access. As the OMB review process continues, industry leaders and policymakers must navigate the delicate balance between expanding benefits and maintaining financial sustainability.

Ultimately, the final version of the rule will shape Medicare’s direction in 2026 and beyond, impacting millions of beneficiaries and the broader healthcare landscape.