Prior authorizations, pharmacy transparency, vertical integration all part of the Medicare 2026 rule

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Prior authorizations, vertical integration in health care organizations, and transparency for pharmacies all are part of the proposed rule for the 2026 Medicare contract year.

The U.S. Centers for Medicare & Medicaid Services (CMS) made a splash across health care with the proposal to cover effective but expensive antiobesity medications. That was not the only change pitched for 2026 for Medicare Advantage (Part C) and Medicare Prescription Drug Benefit Program (Part D) drug coverage.

CMS is seeking public comments on its proposals, with responses due Jan. 27, 2025. The proposed rule was announced Nov. 26, but it was unclear whether the CMS regulations published under the administration of President Joe Biden would part of any health care plans when president-elect Donald Trump takes office.

Prior auths

CMS appears to be using health equity as the foundation for tackling recurring problems with the prior authorization (PA) processes that Medicare Advantage insurers use. Equitable access to care stands as a pillar for CMS and the Biden administration, according to the rule.

Utilization management practices including prior authorizations “can sometimes create a barrier for patients in accessing medically necessary care,” the proposed 2026 rule said. Research from 2024 noted use of PA may disproportionately affect people who historically have been underserved, marginalized, or dealing with persistent poverty and inequality, it said. Utilization management practices may not be used to discriminate or direct enrollees away from certain types of services.

Medicare is forming a UM committee that will examine effects of PAs per plan. The 2026 rule would require insurers to disaggregate PA data by item and service to ensure CMS can identify specific services that may be disproportionately denied, the rule said. PA data will be compiled to log:

• Approvals, denials, numbers of PA request approved after appeals
• PA requests with extended reviews
• Approved and denied expedited PA requests
• Average and median times for decisions on standard and expedited PA requests

The metrics likely will not result in enrollee privacy issues, but there could be provisions to leave out certain small data points that could put enrollee privacy at risk.

Some commenters have argued the data would be challenging for enrollees and the public to understand. CMS is proposing an executive summary with context and clarifications to make the figures understandable.

Pharmacy transparency

CMS is proposing Medicare Part D sponsors to notify network pharmacies about which plans the pharmacies will be in network for in a given plan year, by Oct. 1 of the year before that plan year. Plan sponsors also would be required to provide pharmacies with list of in-network plans on request after Oct. 1.

“We believe this change is necessary to ensure that pharmacies can provide their customers with accurate information about which plans the pharmacy is participating in,” the rule said.

The proposed change is based on timing of pharmacy contracts, insurers’ bidding on Medicare Part D plans, approval of plans, and multiple contracts and marketing names. In short, “pharmacies often do not have the ability to meaningfully negotiate with or demand clear information from PBMs and plans regarding which networks they will participate in,” the 2026 rule said. Congress and the Federal Trade Commission have inquired into negotiations between pharmacy benefit managers and smaller pharmacies not affiliated with large chains, the rule said. Consumers also get confused about whether preferred pharmacies are in their coverage networks, and even request special enrollment periods when they discover their preferred pharmacies are not in-network, the rule said.

Vertical integration and insurance spending

CMS is seeking comments on potential new rules about reporting requirements for medical loss ratio (MLR). By law, MA insurers must spend at leas 80% of premium dollars on medical care, or issue rebates to customers.

The 2026 rule would said MLR data may be less transparent for vertically integrated health care system in which MA or Medicare Part D sponsors are subsidiaries, owners or affiliates in those systems.

“Policymakers, MedPAC, and other researchers have raised concerns that large MA organizations are becoming more vertically integrated by acquiring hospitals, physician practices, pharmacy benefit managers, specialty pharmacies, and other related health care businesses,” the 2026 proposed rule said, referring to the Medicare Payment Advisory Commission. “Furthermore, there is evidence that this vertical integration is associated with higher health and prescription drug expenditures.”

CMS hopes to get public comment on policies that could guide policymakers in addressing concerns about vertical integration in MA and Medicare Part D plans.