Medicare Advantage Assessing Key Regulatory Actions Now

Overview of Medicare Advantage Regulations

Medicare Advantage (MA) has grown into the dominant form of Medicare coverage in the United States. Today, it covers approximately 35 million beneficiaries — nearly 55% of all eligible seniors. Yet this growth comes at a cost. The Medicare Payment Advisory Commission projects that MA will cost the federal government $76 billion more in 2026 than traditional fee-for-service Medicare would. As a result, regulatory scrutiny of the program has intensified significantly.

Regulators face a balancing act. On one side, MA offers seniors richer supplemental benefits and coordinated care. On the other, persistent concerns about prior authorization overuse, overpayments, and limited transparency have put payers and policymakers at odds. In response, the Centers for Medicare and Medicaid Services (CMS) has moved through an active rulemaking cycle that shapes how these tensions are managed going forward.

CMS 2026 Final Rule: Key Changes

In April 2025, CMS released the final rule for Contract Year (CY) 2026. The rule finalizes a targeted set of policies, primarily addressing Part D, inpatient protections, and dual-eligible beneficiary care. However, it notably leaves several high-profile proposals unaddressed.

Payment Rate Increases for MA Plans

Federal payments to MA plans will increase by an average of 5.06% from 2025 to 2026 — a $25 billion jump. This is notably higher than the 2.23 percentage point increase initially projected in the Advance Notice. CMS attributes the upward revision largely to a rise in the effective growth rate, which moved from 5.93% in the Advance Notice to 9.04% in the final rate announcement.

Inpatient Protections and Appeal Rights

CMS finalized new requirements that limit MA plans’ ability to reopen a previously approved inpatient hospital admission decision. Under the new rule, plans may reopen an approved admission only in cases of error or fraud. Additionally, MA appeals rules now apply to adverse plan decisions made before, during, or after inpatient stays. This change strengthens beneficiary rights and closes an important loophole that payers previously used to reverse coverage after care was already rendered.

Prior Authorization Oversight Under Scrutiny

Prior authorization (PA) remains the most contentious regulatory battleground in Medicare Advantage. Providers argue that MA plans overuse it, denying patients timely access to medically necessary services. Government reports support this concern — an OIG review found that MA plans overturned roughly three-quarters of their own prior authorization denials, indicating significant review failures at the first-pass level.

What CMS Did Not Finalize

The 2026 final rule stops short of several closely watched reforms. Specifically, CMS chose not to finalize:

• Guardrails for the use of artificial intelligence in prior authorization decisions
• Expanded coverage for anti-obesity medications such as GLP-1 drugs under Part D
• New requirements for utilization management (UM) committee composition based on health equity expertise
• Individualized health equity analyses of prior authorization by service type

CMS Administrator Mehmet Oz has acknowledged that prior authorization practices and health risk assessments that lead to upcoding warrant further review. This signals potential regulatory shifts — and possibly legislative action — in future rulemaking cycles.

Transparency Rules Still in Effect

Despite rolling back some proposals, CMS has maintained key transparency requirements. Starting in 2026, MA organizations must publish a complete list of all services requiring prior authorization. Moreover, they must report eight distinct metrics on PA approval and denial rates, including average decision turnaround times. However, these reports will be published in aggregate at the contract level — not broken down by individual service or plan — which limits the ability of beneficiaries and providers to make meaningful plan comparisons.

Health Equity Requirements Stall

The Biden-era requirement for MA plans to establish Utilization Management Committees with health equity expertise has not been enforced by the Trump administration. In June 2025, CMS indicated it will not enforce rules requiring these committees to include health equity specialists or to produce publicly available, plan-level reports identifying disparities in care approval or denial rates.

This is significant. Research shows that dually eligible beneficiaries — those enrolled in both Medicare and Medicaid — face denial rates up to twice as high as non-dual enrollees, despite submitting fewer prior authorization requests on average. Without equity-focused oversight, these disparities risk going unaddressed. Some transparency requirements do remain. Beginning in 2026, plans must still publish aggregate metrics on PA decisions, giving policymakers a baseline for future action.

What Regulators Are Watching Next

The current regulatory calendar signals more activity ahead. Key dates and developments to watch include:

• October 2025: Updated Star Ratings released, informing enrollment decisions for 2026
• October 2025: MA plan offerings for 2026 become public; marketing begins
• Fall 2025: CMS expected to release a proposed rule for MA and Part D for 2027 — the first opportunity for current CMS leadership to lay out its full policy agenda
• Second Final Rule (CY 2026): CMS sent a second final rule to OMB in July 2025 for review. It is expected to address network pharmacy protections, medication therapy management for dementia, and supplemental benefit guardrails, including limits on debit card delivery of benefits.

Furthermore, GAO recently noted that CMS has not targeted behavioral health services in its MA prior authorization audits — an area it identified as a significant gap, given the high rates of depression and substance use disorder among Medicare enrollees.

Key Takeaways for Stakeholders

The 2026 regulatory cycle reflects a CMS that is cautiously stabilizing the MA program rather than pursuing sweeping reforms. Stakeholders across the healthcare ecosystem should note the following:

• Payers must prepare for increased audit scrutiny, expanded RADV (Risk Adjustment Data Validation) methodologies, and evolving documentation requirements
• Providers face continued uncertainty around prior authorization, especially as health equity and AI guardrails remain unresolved
• Beneficiaries gain stronger inpatient protections but have limited access to plan-level data on prior authorization denials
• Policymakers can expect the 2027 proposed rule to be the defining moment for the Trump administration’s long-term vision for Medicare Advantage

Overall, the regulatory environment for Medicare Advantage is in transition. The direction of future rulemaking — particularly on prior authorization, AI oversight, and health equity — will shape both the quality of care seniors receive and the financial sustainability of the program.