Understanding the impact of Medicare Advantage changes on providers

The Centers for Medicare & Medicaid (CMS) recently released important policy updates for the Medicare Advantage program, providing critical insights for providers into the new administration’s views on the Medicare Advantage program.

There has been significant uncertainty regarding how the new administration would handle Medicare Advantage amid growing bipartisan scrutiny. According to MedPAC, the federal government is projected to spend US$84 billion more for beneficiaries in managed care plans than if they were enrolled in traditional fee-for-service Medicare. 

These policies erased any doubt that the administration would view the program and Medicare Advantage Organizations (MAOs) favorably. The Announcement of Calendar Year (CY) 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (Announcement) and the Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program Final Rule (Final Rule) offer some important tea leaves for the future of the Medicare Advantage program.

Here are three essential takeaways for providers:

Medicare Advantage will remain an attractive proposition for MAOs

The policies in the Announcement will boost average per capita payments to MA organizations by 5.06 percent in CY 2026, representing an increase of 2.83 percentage points compared with the 2026 Advance Notice. As a result of the increased payments, robust participation from MAOs is expected to continue.

In contrast, prior scrutiny and lower payments to MAOs led to a decline in total plans offered to beneficiaries in 2025. However, the higher per capita payments have exceeded expectations and are anticipated to benefit health insurers. Overall, these policies, along with the decision not to finalize certain proposals, are expected to incentivize participation by MAOs.

Limits on reopening of inpatient determinations

The final rule prohibits MAOs from reopening approvals for inpatient care coverage based on clinical information obtained after the initial organizational determination. CMS states that “[a]ny additional clinical information obtained after the initial organization determination cannot have the effect of creating a good cause reopening because the determination was made based on what was known by the physician and documented in the medical record at the time of admission.” Consequently, a prior authorization determination regarding inpatient care will require error or fraud to be reconsidered. 

The final rule also codifies previous CMS guidance requiring that plans give providers notice of coverage decisions in circumstances where the provider submits a coverage request on behalf of an MAO enrollee. The final rule states that “[t] his longstanding policy is premised on a reasonable belief that an enrollee will welcome and be informed of their provider or physician's willingness to pursue an organization determination on their behalf.” Medicare Advantage regulations provide that a failure to meet notice requirements results in an appealable adverse organization determination. 

CMS didn’t finalize certain policies that increased scrutiny on MAOS

CMS proposed policies that would have established guardrails for MAOs’ use of artificial intelligence, increased CMS oversight and review of marketing and communications materials, modified rules on internal coverage criteria, and implemented further scrutiny of provider directories. For example, Medicare Advantage plans are permitted to establish their own “internal coverage criteria” so long as they follow clinical guidelines and are annually reviewed by a clinical committee. CMS had proposed to define “internal coverage criteria” and to make them publicly available. 

CMS also proposed guardrails for MAOs’ use of AI in managing patient care management, expressing concerns regarding “algorithmic discrimination” and provisions relating to utilization management and ensuring equitable access to services. Although the final rule did not establish the proposed AI guardrails, CMS acknowledged “the broad interest in regulation of AI” stating that it “will continue to consider the extent to which it may be appropriate to engage in future rulemaking in this area.” The agency further states that it may finalize the policies at a later date.

The policies in the Announcement and Final Rule will, for the most part, become applicable for coverage that begins January 1, 2026. The policies provide certainty that despite recent scrutiny of the Medicare Advantage program, the new administration is unlikely to significantly restrict or otherwise inhibit its growth.