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Healthcare Policy
April 28, 2025
Medicare Advantage: Final Rule for 2026

Medicare Advantage: Final Rule for 2026

The Centers for Medicare and Medicaid Services (CMS) issued a final rule earlier this month, that makes changes to the Medicare Advantage (MA) program, as well as to the Medicare Prescription Drug Benefit (Part D), the Medicare cost plan and Programs of All-Inclusive Care for the Elderly (PACE).  The rule, which goes into effect on January 1 of next year, was published along with a CMS fact sheet that provides a summary of the rule. Below, we have provided the highlights from that summary and other assessments that may be of some interest to our readers.

Medicare Advantage: Final Rule for 2026

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Approved Admission Decisions

CMS is finalizing a provision that will restrict MA plans’ ability to “reopen and modify” a previously approved inpatient-hospital decision on the basis of information gathered after the approval. In other words, MA plans will no longer be able to retroactively deny inpatient admissions that were previously authorized, except under extraordinary circumstances.

Under the final rule, MA plans will only be able to reopen an approved admission for obvious error or fraud. The goal of this provision is to ensure that if a plan approves an inpatient admission, it will have to honor the prior authorization.

Appeals Loopholes

CMS is taking steps to close MA appeals loopholes that adversely affect providers and enrollees.  These steps include:

  • Clarifying that the definition of “organization determination” (decisions that are subject to MA appeal and notification requirements) includes MA plan decisions made concurrent to the enrollee’s receipt of services. This clarification will ensure that MA appeals rules apply to adverse plan decisions, regardless of whether the decision is made before, after or during the receipt of services.
  • Codifying existing guidance that requires plans to give a provider notice of a coverage decision, in addition to notifying the enrollee, whenever the provider submits a request on behalf of an enrollee.
  • Modifying existing regulations to clarify that an enrollee’s liability to pay for services cannot be determined until an MA organization makes a decision on a contracted provider’s claim for payment.  This clarification will ensure that an enrollee always has the right to appeal MA plan coverage denials that affect their ongoing course of treatment.

Here's how one healthcare law firm described this section of the final rule:

These finalized requirements are intended to eliminate surprise denials, ensure transparency for providers and beneficiaries, and create a consistent standard across MA plans for inpatient decision-making. The Final Rule also introduces certain limited protections for beneficiaries and providers navigating MA plans’ prior authorization (“PA”) processes, including several provisions that restrict a plan’s ability to retroactively deny care after initial approval.

It appears, then, that one of the major complaints launched in recent months by providers against this particular payer is being addressed in this final rule. It will be harder for these plans to deny payment.

Diagnosis Classification

The rule makes a technical change to the definition of Hierarchical Condition Categories to make the reference to International Classification of Diseases (ICD) general rather than version specific (i.e., from “ICD-9” to “ICD”) and substituting the terms “disease codes” with “diagnosis codes” and “disease groupings” with “diagnosis groupings” to be consistent with ICD terminology.

Authorizations with AI

The final rule failed to address the use of  artificial intelligence (AI) in prior authorizations. According to Becker’s Hospital Review, “CMS declined to finalize proposed rules that would have placed guardrails around such authorizations, despite widespread interest from stakeholders.” The agency said it will consider regulatory approaches to AI in the future.

The final rule can be downloaded here: https://www.federalregister.gov/public-inspection/2025-06008/medicare-and-medicaid-programs-contract-year-2026-policy-and-technical-changes-to-the-medicare.

Payment Rates

In a separate press release, CMS announced the following:

Payments from the government to MA plans are expected to increase on average by 5.06% from 2025 to 2026. This is an increase of 2.83 percentage points since the CY 2026 Advance Notice, which is largely attributable to an increase in the effective growth rate.

The press release went on to explain that the effective growth rate is 9.04%, which is higher than the estimate of 5.93% in the CY 2026 Advance Notice. This change is primarily due to the inclusion of additional data on fee-for-service (FFS) expenditures, including payment data through the fourth quarter of 2024 (which was not included on account of the early Advance Notice publication). 

In summation, while the final MA rule for 2026 contains a few potentially impactful provisions, it is fair to wonder if this slimmed-down version has sufficiently addressed the main concern providers have had with the MA program over the last few years: unwarranted denials of payment. We shall see.