On December 10, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule, which, if finalized as proposed, has potentially significant implications for Medicare Advantage (MA) plans and Medicare Prescription Drug Benefit Program (PDP) plans in Contract Year (CY) 2026.
The proposals demonstrate CMS’ continued focus on promoting informed beneficiary choice and increased access to services. Among other things, the proposed rule could create additional reporting, marketing, cost-sharing, and other compliance requirements for MA and PDP plans. It is possible, however, that the incoming administration – which scaled back Parts C and D rules during its last term and which has historically favored reduced administrative burden on industry and increased government efficiency – will withdraw or otherwise decline to finalize certain of these policies.
Key Proposals
Key proposals relevant to MA and PDP plans include the following:
Expanded Scope of “Marketing”
CMS proposes to expand the scope of marketing materials that must be prospectively submitted to CMS for review. Specifically, the proposed rule would eliminate from the “marketing” definition the requirement for communications materials and activities to include or address content regarding: (1) the plan’s benefits, benefits structure, premiums or cost-sharing; (2) measuring or ranking standards; or (3) rewards and incentives for MA plans. If the rule is finalized as proposed, then beginning on October 1, 2025, for CY 2026, CMS would rely only on “intent” to determine whether communications materials and activities meet the “marketing” definition.
Agent and Broker Communication with Beneficiaries
CMS proposes to require agents and brokers to discuss the availability of Part D Low-Income Subsidy (commonly known as “Extra Help”) and Medicare Savings Programs. When beneficiaries are enrolling in Medicare or an MA plan after switching from Medigap for the first time, the rule would also require agents and brokers to discuss Medigap guaranteed issue rights under federal and state law as well as the practical implications of switching from MA to Traditional Medicare. Prior to enrollment, brokers and agents would also be required to pause to address any remaining questions the beneficiary may have related to plan enrollment.
Internal Coverage Criteria
CMS proposes to clarify previous regulations related to aligning MA coverage responsibilities for basic benefits with Traditional Medicare, which became effective on January 1, 2024. Specifically, the proposed rule would define “internal coverage criteria” as “any policies, measures, tools, or guidelines, whether developed by an MA organization [(MAO)] or a third party, that are not expressly stated in applicable statutes, regulations, NCDs, LCDs, or CMS manuals and are adopted or relied upon by an [MAO] for purposes of making a medical necessity determination.” The proposal also adds more specific and robust requirements regarding publicly posting internal coverage criteria content on MAO websites and additional guardrails that would apply to all internal coverage criteria prohibiting criteria that do not have any clinical benefit or automatically deny coverage of basic benefits.
Guardrails for Artificial Intelligence
In response to the growing prominence of artificial intelligence (AI) in healthcare, CMS proposes guardrails to ensure equitable services regardless of whether they are provided by human or automated systems. CMS also reiterates existing applicable regulations and requirements related to MA plan use of automated systems (e.g., internal coverage criteria rules) with a focus on equitable access to services and non-discrimination. CMS also provided examples for how MAOs could remain in compliance with the proposal, which involve MAOs ensuring they (1) understand and limit the impact of biased data inputs; (2) create processes to review any automated systems to ensure they are non-discriminatory; and (3) confirm outputs with any known bias are not used within an automated system.
Changes to the MA and Part D Medical Loss Ratio Program
CMS proposes to include clinical and quality improvement standards for provider incentives and bonus arrangements in the MA Medical Loss Ratio (MLR) and exclude administrative costs from both the MA and Part D MLR numerator. If finalized as written, the proposed rule would establish new audit and appeals processes for MLR compliance and amend reporting requirements for provider payment arrangements. Additionally, CMS has requested additional information on how to calculate MA and Part D MLRs to address vertical integration concerns.
Transparency and Promotion of Community-Based Services, In-Home Service Contractors, Direct Furnishing Entities
CMS proposes to define “community-based organizations” (CBOs), in-home or at-home supplement benefit providers, and direct furnishing entities. The proposed rule would also require plans to identify which providers meet these definitions in the provider directory and include all direct furnishing entities in the provider directory. CMS added this proposal after becoming aware that some entities that provide covered benefits, especially supplemental benefits that are primarily non-health related (e.g., adult day care, transportation, pest control services, etc.), may not be included in the directories.
Behavioral Health Services In-Network Cost Sharing Limits
CMS proposes to limit in-network cost-sharing for certain categories of behavioral health services to the Traditional Medicare cost sharing for those services beginning January 1, 2026. These categories include mental health specialty services, psychiatric services, partial hospitalization, intensive outpatient services, inpatient hospital psychiatric services, outpatient substance use disorder services, and opioid treatment program services. CMS also proposes a 50% coinsurance limit (meaning a prohibition against payment of less than 50% of total plan financial liability) on in-network basic benefits.
D-SNP Applicable Integrated Plan Requirements
CMS proposes to require Applicable Integrated Plans to have integrated member ID cards for a beneficiary’s Medicare and Medicaid plan enrollments, conduct integrated Health Risk Assessments (HRAs) for Medicare and Medicaid, and conduct HRAs within a specific timeframe and develop Individual Care Plans (ICPs) with the enrollee or their representative’s involvement.
Additional Proposals
Other proposals include (1) changes to vaccine and insulin cost-sharing amounts; (2) the establishment of a Medicare Prescription Plan Payment Program requiring Part D enrollees to have the option to pay out-of-pocket prescription drug costs in monthly increments; (3) expansion of Part D anti-obesity medication coverage when used for weight loss or chronic weight management to treat obesity; (4) requirements and formatting for MA provider directory data submission for MAOs; and (5) enhanced protections for enrollees in inpatient settings.
Additional provisions in the proposed rule relate to transparency and contracting requirements between Part D sponsors and pharmacies, as well as certifications of enrollment information in network pharmacy agreements. Finally, the proposed rule includes changes to the administration of supplemental benefits coverage through plan debit cards and the disaggregation of annual health equity analysis of prior authorization use metrics.
Comments to the proposed rule are due by 5:00 p.m. EST on January 27, 2025. Should you have any questions regarding the proposed rule or submitting comments to CMS, please contact the authors.