In recent days, the Centers for Medicare & Medicaid Services (CMS) issued two significant policy updates relating to Medicare Advantage (MA): the final CY2026 rule and the CY2026 Rate Announcement.
FY2026 Final Rule – Important Consumer Protections Left Out
On April 1, 2025 the Center for Medicare Advocacy released an issue brief titled “Improvements to Medicare Advantage Oversight and Consumer Protections Must Be Preserved and Expanded.” The brief outlines some recent improvements in important oversight and consumer protection measures surrounding the MA program, including in the CY2026 proposed rule issued at the end of the Biden Administration (also see our comments to the proposed CY2026 rule here).
On April 4, 2025, CMS issued the final rule for CY2026, to be published in the Federal Register on April 15, 2025 (also see CMS Fact Sheet). We are still reviewing the rule, but it appears that the final rule fails to implement a number of important consumer protections that were in the proposed rule. For example, in addition to declining to implement the proposal for Medicare and Medicaid to cover GLP-1 weight loss drugs, Fierce Healthcare (April 4, 2025) notes that the rule “also does not include an annual health equity analysis of utilization management policies and procedures nor new guardrails on artificial intelligence in the MA program.” CMS had proposed to require MA plans to ensure that services are provided equitably, irrespective of delivery method or origin, whether from human or automated systems.
CMS did finalize certain improvements to MA appeals in the hospital setting and other protections surrounding MA appeals (described as “closing MA appeals loopholes in CMS’ Fact Sheet). While CMS finalized a provision that establishes additional criteria for MA plans’ offering of Special Supplemental Benefits for the Chronically Ill (SSBCI), the agency did not finalize proposals to limit consumer confusion surrounding MA flex cards, including prohibiting the marketing of the dollar value of such cards.
CMS also did not finalize (or “deferred for subsequent rulemaking”) several provisions, including:
- Promoting informed choice by expanding the number of required topics that an agent or broker must cover before an individual’s enrollment into an MA plan (including the Part D Low-Income Subsidy, Medicare Savings Programs, and Medigap plans);
- Enhancing review of plan marketing and communications by changing the definition of “marketing” to increase the number and type of advertisements that are required to be submitted to CMS and subject to review before their use;
- Formatting MA provider directories so that such information is searchable on the Medicare Plan Finder; and
- Enhancing rules on internal coverage criteria used by MA plans, including establishing guardrails to preserve access to benefits and adding more specific rules about publicly posting such criteria on MA organization websites.
As discussed in our issue brief referenced above, measures taken over the last several years to improve consumer protections for MA enrollees are an important first step, but much more is needed. Finalization of the provisions that were proposed, but not finalized, in CMS’ recent rule would have improved consumer protections.
FY 2026 Rate Notice- Increased Payment to Plans Despite Existing Overpayment
As discussed in a previous CMA Alert (Feb. 13, 2025), in January 2025 CMS issued a proposed payment rate for MA plans for CY2026. On April 7, 2025, CMS issued the CY2026 Rate Announcement, which finalizes payment rates (also see CMS Fact Sheet and Press Release).
CMS retained the phase-in of updates to the risk adjustment model that will theoretically make payment to MA plans more accurate – something that the insurance lobby has opposed. However, MA plan payment will increase on average by 5.06% from 2025 to 2026, which CMS attributes to a growth rate that his set in statute. This represents an increase of more than $25 billion from this year.
As noted in a HEALTH CARE un-covered post titled “Despite Overpayment Concerns, CMS Finalizes $25 Billion Hike in Medicare Advantage Payments for 2026” by Rachel Madley (April 9, 2025):
Though required by law, this excessive increase in payments to Big Insurance – when evidence demonstrates they are already being overpaid – demonstrates the crucial need for Congress to fix the way payment rates for MA insurers are calculated. Sadly, analysts expect the extra payments Big Insurance will get in 2026 will go to increasing profit margins, not increasing benefits or availability of care
Wall Street reacted positively to this rate increase. Merril Goozner, in a Substack post titled “Health insurers’ big win” (April 8, 2025) noted:
Health insurer stocks are soaring today after the Trump administration doubled their Medicare Advantage plans’ payment boost for next year. The Center for Medicare and Medicaid Services’ final rule gave the plans a 5% bump compared to the 2.2% increase proposed by the Biden administration in late November.
While MA payment rates increase, providers that contract with MA plans continue to struggle. Goozner’s post also references a recent KFF Health News article titled “Rural Hospitals Question Whether They Can Afford Medicare Advantage Contracts” by Arielle Zionts (April 8, 2025), which highlights that MA plans pay hospitals lower rates than traditional Medicare, and states:
Rural hospital leaders are questioning whether they can continue to afford to do business with Medicare Advantage companies, and some say the only way to maintain services and protect patients is to end their contracts with the private insurers.
The KFF Health News article cites a report by the American Hospital Association finding that average MA reimbursements to rural hospitals were 90% of what traditional Medicare paid. The article also referenced a study in the Health Services Research journal which “found that rural patients on private plans struggled to access and afford care more often than rural enrollees on traditional Medicare and urban participants in both kinds of plans.”
Conclusion
In order to adequately safeguard Medicare Advantage enrollees, and the Medicare program’s overall finances, MA plans need more oversight – not less – coupled with more accurate payment.
April 10, 2025 – D. Lipschutz