Medicare Advantage Developments For 2026

December 11, 2025

MA in store for a challenging year

There have been significant developments on the Medicare Advantage (MA) front of late. Here is a recap of some big developments going into the new year.

2026 program audit protocols

On November 20, the Centers for Medicare and Medicaid Services (CMS) issued its annual program audit memo to describe changes. While in the past few years little changed, there were some major developments this year. Let’s briefly describe them:

CMS will continue using the existing 2025 Final Audit Protocols for the Medicare Part C and Part D Program Audits and Industry-Wide Part C Timeliness Monitoring Project (CMS-10717) to conduct 2026 program audits.

But CMS did announce a great many process changes:

CMS began scoring program audit findings based on condition classification in 2012 in an effort to provide some insights into plan performance. However, since that time, CMS has concluded that scoring on audits does not fully reflect a Sponsor’s audit performance or how the Sponsor is performing overall.
Thus, CMS is making several changes related to the classification of findings and scoring in program audits beginning in 2026.
CMS will remove scoring from audits, and conditions will no longer have a point value associated with them regardless of classification.
CMS also is removing the classifications of Immediate Corrective Action Required (ICAR) and Observation Requiring Corrective Action (ORCA). While CMS continues to support the concept that some noncompliance requires corrective action to be taken more quickly, CMS understands it may not be feasible for Sponsors to develop a full and comprehensive corrective action plan within three business days of notification.
With the removal of ICAR and ORCA classifications, CMS will simplify its analysis of noncompliance. For 2026, when noncompliance is identified on audit, CMS will determine if correction is needed to either prevent a recurrence or remediate impacted enrollees. If correction is needed, the condition will be classified as a Corrective Action Required (CAR). If CMS determines that correction is not needed, the condition will be classified as an Observation.
Additionally, CMS will continue applying the Invalid Data Submission (IDS) classification when a universe is deemed inaccurate or invalid and CMS cannot determine compliance with requirements as a result.
On Compliance Program Effectiveness, CMS is shifting its audit approach to be more consistent with how compliance oversight is conducted by Sponsors. CMS will pilot this new approach for reviewing CPE during the 2026 audits. While reviewing other program areas of the audit, CMS will have in-depth discussions with the Sponsor about how it prevents, detects, and corrects noncompliance related to the audited program areas, and how the compliance program impacts the Sponsor’s ability to comply with CMS’s requirements during the course of conducting business.
In addition to piloting a new CPE audit approach, CMS will begin hosting quarterly educational calls with industry compliance officers. The purpose of these calls will be to share information about compliance issues detected during CMS’s program audits.
CMS will also streamline audit follow-up. In the past, CMS required Sponsors to hire an independent auditor to validate if deficiencies found during an audit were corrected and not likely to recur. In 2026, for the most part, CMS will dispense with validation audits and work directly with plans to validate corrective actions. More complex findings will still be subject to testing through a full validation audit.

CMS also updated on the 2026 schedule:

CMS will send scheduled program audit engagement letters to Sponsors starting in February through August 2026.
To reduce burden and promote efficiency, CMS will continue conducting audit field work across two weeks. Due to the change to CPE, the other audited program areas will be spread out within those two weeks which should alleviate some of the burden in those areas.
All audits involving Part C will continue assessing compliance with the coverage and utilization management (UM) requirements finalized in CMS-4201-F to ensure Medicare Advantage beneficiaries can access medically necessary services without excessive burden or delays.
CMS is still suspending collection of FA Table 3: Prescription Drug Event (PDE), CDAG Table 7: Comprehensive Addiction and Recovery Act (CARA) At-Risk Determination (AR) and ODAG Table 6: Dual Special Needs Plan – Applicable Integrated Plan Reductions, Suspensions, and Terminations (AIP).

MA changes going into 2026

MA is contracting again, but there are some interesting trends.

Across the 10 largest MA Part D (MA-PD) plans, there is a reduction of about 10% overall in plan offerings, but an 11% growth in Special Needs Plans (SNPs).
Six plans exited MA entirely.
Preferred Provider Organization (PPO) plans are contracting again given costs.
SNPs are seeing huge investments, including Chronic Care or C-SNPs and Dual eligible or D-SNPs.
UnitedHealth Group is contracting demonstrably in 2026 and expects to lose about 1 million members, up from its original projection of 600,000.
Humana contracted in 2025 and is going into 2026 with a goal of growth.
Kaiser Permanente invested both in MA plans generally and SNPs.

Star performance and changes

When Star Year (SY) 2026 ratings were announced in October, we saw a negligible recovery from SY 2025. Star rating peaked in 2022 and fell three years in a row.

Now CMS wants to radically change Star ratings. It has proposed to remove about a dozen measures that are either operational in nature or no longer show variability between plans. The Excellent Health Outcomes for All (EHO4all) health equity reward will not go into effect and instead the Reward Factor for consistently high achieving plans will stay in regulation. All this will have the effect of making Star achievement tougher. About a quarter of plans are slated to see a lower rating when all the changes are put in place. That number could be higher when all is said and done.

Are radical changes in store?

CMS is also sponsoring a series of Requests for Information (RFIs), two of which could have sweeping impacts. CMS wants broad input on changes to reform and modernize the risk adjustment and quality bonus payment systems.

The risk adjustment request stems from the overpayment controversy at large plans and views that the system may discriminate against smaller, newer, and regional plans. CMS may want to migrate to an encounter-based rate-setting system.

Some within CMS and on Capitol Hill also want the Star program to be budget neutral and not additive in terms of funding. MA has the only quality bonus that comes from added dollars. CMS also wants to reduce the two-year time lag in ratings.

Another RFI will vet how to handle the demonstrable growth in Chronic Care SNPs over the past two years. Dual Eligible Special Needs Plans (D-SNPs) were meant to enroll dual eligibles, but more and more are going into the fast-growth C-SNPs. CMS may want to require state Medicaid contracting for C-SNP as well as Institutional Special Needs Plans (I-SNPs).

GLP-1s in Medicare

President Trump seemingly plans to significantly expand GLP-1 weight-loss drugs in Medicare. In November 2024, the Biden administration proposed Medicare and Medicaid coverage of GLP-1s for obesity alone. The Trump administration did not finalize the rule, which reinterpreted obesity as a qualifying disease state in Medicare. The Trump administration argued at the time it would lead to huge cost increases at current prices.

But that may have changed with the new prices Trump obtained from major brand drug makers Novo Nordisk and Eli Lilly. Trump’s remarks and other officials seem to say that Medicare will be opened up to GLP-1 coverage for obesity alone. The government provided few details, however. Reports suggest that savings generated for existing prescriptions will be used to provide new coverage for GLP-1s to patients with obesity.

A big question is how all this will be implemented and does Trump have the legal authority to do so and how. A Novo-Nordisk press release says that Part D coverage for anti-obesity medicines will be enabled through a pilot program designed to cover a majority of Part D beneficiaries. CMS does have wide experimental authority. But does that voluntary program cover both extending the coverage to those with obesity alone as well as capping cost-sharing at $50 for everyone on the drug for any disease state? The latter copay issue would be similar to what Trump did in Trump 45 for insulin prices.

And could a pilot program extend covered benefits? If so, could plans for electing to participate in the pilot see major adverse selection and costs? To address this issue of adverse selection and coverage of GLP-1s for obesity alone, might the Trump administration have done this via rule, effectively backtracking on striking down what Biden proposed. And would that re-interpretation now by Trump on obesity as a covered condition stand up in court as allowable via rule or will it need broader action by Congress?

It is also unclear how quickly the changes will begin. An Eli Lilly press release suggests the $50 cap in costs for enrollers begins as early as 2026. But benefit design and bids have long been put to bed.

Rebates will likely disappear and costs to Medicare will increase – at least in the short term. Medicare has already expanded GLP-1 coverage from diabetes and heart disease to other disease states, such as prediabetes with obesity. Even with the discounts, liberal expansion of GLP-1 coverage could mean a huge surge in Medicare Part D costs. The $245 Medicare price appears good for Mounjaro/Zepbound compared with other nations, but still very high for Ozempic/Wegovy.

The impact on plans could be major. The standalone Part D plans or PDPs are already financially precarious. Greater costs of weight-loss drugs even with price reductions could further complicate PDP solvency. It could lead to cutbacks in other areas or increased premiums or deductibles. Similar things could happen in MA.

#medicareadvantage #regulations #enrollment #compliance #stars #quality #cms #riskadjustment #snps

— Marc S. Ryan