The past several years have been active in the policy space for Medicare Advantage (MA) stakeholders, including 2025, which has seen two final rules released (to date), following publication in December 2024 of a proposed rule addressing policy and technical changes to MA and Part D. The Centers for Medicare & Medicaid Services (CMS) released a final rule in April that addressed some proposals from that rule, and the agency recently issued a second final rule addressing additional proposals. A new proposed rule is under review at the Office of Management and Budget. As we await further CMS rulemaking and potential policy action in the MA space, this +Insight examines the status of six key MA issues – prior authorization, risk adjustment, Star Ratings, supplemental benefits, provider directories, and marketing – and considers likely next steps for policymakers.
Key takeaway: Following several years of increased regulation and bipartisan scrutiny around prior authorization, the likelihood of further CMS action in the near term is unclear. Congressional action on prior authorization remains a possibility.
Prior authorization refers to processes that require providers to give advance notice to and receive approval from health plans before a service may be performed and reimbursed by the plan. While prior authorization (and other utilization management tools) is used by payers in various market segments, the issue has recently received significant attention in the context of MA.
Prior authorization is a key tool that helps plans reduce unnecessary spending, allowing them to deliver benefits at a lower cost than traditional Medicare and provide supplemental benefits, including premium and cost-sharing reductions that make Medicare coverage more affordable for many Americans. For providers, however, prior authorization creates additional administrative burdens, requiring time and resources to submit prior authorization requests according to different payers’ rules and, in some cases, limiting coverage for services that a treating provider believes are appropriate. As with many aspects of the healthcare delivery system, battles over prior authorization have received considerable attention in recent years.
CMS has taken steps to impose clearer rules around prior authorization in MA. In 2023, CMS finalized a rule clarifying when MA plans may use prior authorization, specifying that prior authorization may only be used to confirm the presence of diagnoses or ensure an item or service is medically necessary. CMS also specified that a prior authorization approval must remain valid for as long as medically necessary, including through the first 90 days after an individual switches to a new MA plan while undergoing active treatment. Finally, CMS specified that MA plans must abide by national coverage determinations, local coverage determinations, and general coverage rules in traditional Medicare.
Subsequently, a December 2024 rule proposed several additional clarifications and limitations on plan use of prior authorization, including removing plans’ ability to add new or unrelated criteria when using internal coverage rules to supplement existing traditional Medicare coverage criteria. CMS proposed to require that plans post additional information about the use of prior authorization on their websites. CMS also proposed additional rules about when plans may reopen decisions around inpatient care. CMS finalized the limitations on post-service payment reviews but has otherwise not taken action on the proposed prior authorization provisions.
Prior authorization in MA has also been the subject of proposed legislation for many years. Most recently, the Improving Seniors’ Timely Access to Care Act was introduced in May 2025 and would codify provisions from the 2024 CMS Interoperability and Prior Authorization Final Rule to facilitate an electronic prior authorization process in MA. The legislation would require faster approval timelines for prior authorization than currently required under regulation.
In June 2025, AHIP and the Blue Cross Blue Shield Association, on behalf of their member plans, jointly announced a set of voluntary commitments to address concerns raised by patients, providers, and policymakers. Industry leaders subsequently joined CMS, HHS, and congressional leaders to announce a “voluntary pledge” to standardize prior authorization submission interfaces, reduce the number of medical services subject to prior authorization, recognize existing prior authorization approvals when individuals transition across insurers, increase the share of prior authorization requests that are answered in real time, improve communication with providers and patients, and ensure that only medical professionals make decisions to deny a prior authorization request.
While the announcement applies to various health subsectors beyond MA, this voluntary commitment by the industry may reduce the likelihood of additional agency action on prior authorization in the short term. It is still possible CMS may address prior authorization in the upcoming proposed rule, but any changes are likely to be focused on clarifying existing rules and definitions rather than proposing new restrictions.
Key takeaway: Risk adjustment will continue to be a focus for policymakers, but the path forward is uncertain.
Medicare pays MA plans, in part, based on the health status of the individuals enrolled in the plan. Risk adjustment ensures that plans have an incentive to enroll both healthy and sick individuals and that they receive payments sufficient to provide needed benefits and services. While the concept of risk adjustment is straightforward, its implementation is not. Three elements of risk adjustment policy are important for the industry to keep an eye on:
Risk model
In 2023, CMS introduced an updated version of the risk model that determines the payment adjustments made for specific demographic and health conditions of MA enrollees. Known as version 28 (v28), the updated risk model phased in over three years beginning in 2024. One hundred percent of risk adjustment payments will be determined by v28 in 2026. Many MA plans were opposed to the introduction of v28, and a number have pointed to the updated model as one reason for worsening financials in the MA market in recent years.
Following full implementation of v28, a key question is what lies ahead for the MA risk adjustment model. In the 2026 Advance Notice released earlier this year, CMS said that work was underway to develop a new risk model based on encounter data, reflecting utilization and health status of MA enrollees rather than that of traditional Medicare beneficiaries, which is the current norm. CMS suggested the agency could be ready to shift to an “encounter data calibrated” model as soon as 2027. That shift would likely bring significant changes to risk adjustment payments across plans and potentially for the industry in general. However, the impact would depend on how CMS chooses to implement such a model. To date, CMS has not released any specific information about how an encounter data model would be operationalized. Stakeholders have long encouraged CMS to share information about a potential transition of this magnitude well in advance and allow sufficient time for feedback and discussion. The fact that CMS has not shared additional information about ongoing work around the risk model may be a sign that an encounter data model is off the table for 2027.
RADV audits
In 2023, CMS released a long-awaited rule finalizing a methodology for conduct of risk adjustment data validation (RADV) audits that examine the accuracy of the diagnosis codes that plans submit to CMS for determining risk adjustment payments. In the intervening two years CMS moved slowly to begin finalizing audits that had been underway prior to the final rule and preparing for initiation of new audits. Then in May 2025, CMS surprised many by announcing a sudden and dramatic increase in new RADV audit activity, stating that all eligible contracts going forth would be audited every year and audits – including many that had not yet been initiated – would be finalized in a matter of months. To accomplish this, CMS anticipated hiring hundreds of medical coders to determine diagnosis code accuracy and using technology to support the process.
Another big development came recently when a judge invalidated the 2023 rule in a court case challenging the rule. The government may appeal the ruling, leaving the ultimate status of the rule – and the methods, timing, and impact of RADV audits on risk adjustment payments in MA – uncertain.
Coding intensity
To account for purported differences in the completeness of diagnosis coding between traditional Medicare and MA, CMS reduces MA risk scores by a certain percentage. Congress has specified that the reduction must be at least 5.9%. CMS has authority to increase the reduction but has not done so to date. Bipartisan legislation introduced earlier in 2025 would direct CMS to change its approach to coding intensity adjustments in MA payments. The outlook for the legislation is uncertain.
Key takeaway: Methodological changes to Star Ratings in recent years have contributed to declines in ratings across the industry, with the potential for additional changes ahead that will require plans to adapt in order to maintain and improve ratings.
All MA and Part D plans receive an annual Star Rating – between 1 and 5 stars – that captures plan performance across a set of measures reflecting patient satisfaction, quality of care, and customer service. Star Ratings offer beneficiaries important information about plan quality as they make enrollment decisions. In addition, plans that achieve an overall rating of 4 or more stars are eligible for bonus payments of 5%, and Star Ratings determine the generosity of rebates that plans use to fund supplemental benefit offerings.
Bonuses and higher rebates serve as strong incentives to improve quality, but they have also increased scrutiny of plan performance and the Star Ratings system more generally. Between 2011 and 2022, the average Star Rating rose from 3.18 to 4.37, and the share of MA enrollees in plans rated 4 stars or higher grew from 24% to 90%.
Along with overall increases, ratings for many individual measures have risen and are now topped out, with very high thresholds for 4 or 5 stars. For the 2026 ratings, plans must achieve perfect scores to be rated 5 stars on four measures. For two of those measures, plans must achieve at least 90% success to receive even 3 stars.
The list of measures included in the Star Ratings is ever-changing. As measure developers, such as the National Committee for Quality Assurance (NCQA) and the Pharmacy Quality Alliance (PQA), create new measures or alter the specifications of existing measures, CMS makes annual changes to the list of Star Ratings measures. CMS has also made numerous technical changes to the way ratings are calculated in recent years, including modifying the weighting of individual measures to give greater weight to clinical outcome measures and adopting a new statistical technique that removes outliers before establishing rating thresholds.
The changes made in recent years have reduced the number of plans earning 4 stars or higher and, therefore, those earning bonus payments. For 2025, the share of enrollees in bonus-eligible plans declined to 62%, down from the high of 90% in 2022; bonus payments in 2025 are expected to total $12.7 billion. MA plans have expressed concerns about CMS’ administration of the Star Ratings program and called for changes – through both litigation and advocacy – to address the issues.
More changes to Star Ratings measures and methods are likely. A new index measure, initially called the Health Equity Index but renamed to the Excellent Health Outcomes for All (EHO4all) in the 2026 Rate Announcement, is scheduled to go into effect for the 2027 Star Ratings, which will debut in October 2026. The new index is intended to capture how well plans improve performance for populations with social risk factors, including disabled enrollees and low-income enrollees who qualify for Medicaid benefits or the Part D low-income subsidy. The EHO4all index would replace an existing reward factor that boosts the Star Rating for plans that consistently perform at a high level. The EHO4all index has received considerable attention from plans not only because it is new and performance is unknown but also because it upends existing rewards for high-achieving plans. However, in recent months, CMS has moved to de-emphasize health equity activities, and the agency could move to delay, modify, or cancel the planned adoption of the EHO4all index in upcoming rulemaking.
Another change we could see is an additional technical adjustment to the ways ratings are calculated. In a 2022 rule, CMS proposed removing guardrails that prevent measure thresholds from changing too dramatically from one year to the next. Although CMS has not finalized this provision to date, the agency indicated in late 2024 that it is considering doing so in upcoming rulemaking. While technical in nature, if finalized, this change could have significant implications for measure thresholds and plan ratings. A recent analysis found that 22 measure thresholds were affected by existing guardrails for 2026 ratings and 24 were affected for 2025 ratings. Removing these guardrails could lead to share changes in measure thresholds and unexpected shifts in ratings as plans adjust.
More generally, CMS has signaled interest in streamlining the Star Ratings measure set and focusing on Universal Foundation measures, which the agency describes as “a core set of measures that are aligned across CMS programs.” While the Universal Foundation concept is still evolving (as are the included measures), CMS may become more active in this area in future rulemaking.
Key takeaway: Supplemental benefits face increased scrutiny, and plans are under pressure to demonstrate the value these benefits deliver to enrollees.
When an MA plan bids below the benchmark amount in its service area, the plan receives a portion of the difference between the bid and the benchmark to fund additional benefits for its members, beyond those benefits and services required under the traditional Medicare program. Over time, MA plan bids have decreased, increasing the availability of supplemental benefits. Supplemental benefits can include things like dental or vision benefits, hearing aids, reduced-cost fitness memberships, travel coverage, transportation to medical appointments, home-delivered meals following a hospital admission, and many others [1]. In recent years, plans are also allowed to offer supplemental benefits that fall outside traditionally health-related services to beneficiaries with certain chronic illnesses, known as special supplemental benefits for the chronically ill. Benefits – such as payment for home modifications or assistance with housing, food, and nutrition – are allowed when the plan shows evidence that they can contribute to improved health.
Good information on supplemental benefit offerings is readily available, but information on beneficiary use of these benefits is limited. While MA plans are required to submit records for all enrollee encounters in which a plan-covered service is provided, including supplemental benefit services, data limitations mean that few supplemental benefit encounter records have been submitted. CMS has taken steps in recent years to increase information about supplemental benefit utilization. In 2024, the agency announced new steps to make supplemental benefit encounter submissions more feasible and put plans on notice that they must submit supplemental benefit records for 2024 (and future) encounters. In a 2022 final rule, CMS expanded medical loss ratio reporting to require plans to break out spending for specific categories of supplemental benefits and expanded Part C reporting requirements to include utilization and spending across a wide set of supplemental benefit categories.
All these steps are promising, but they are slow to produce data that CMS and policymakers can use to assess the value that supplemental benefits and the Medicare spending that funds them are delivering to enrollees. In its most recent report to Congress, the Medicare Payment Advisory Commission expressed concerns about the ongoing lack of reliable data on supplemental benefit utilization and spending. Plans are likely to face continued pressure to demonstrate the value that enrollees receive from these benefits. In an effort to ensure enrollees know about and use the supplemental benefits available to them, CMS imposed new requirements on plans to notify enrollees of benefits that remain unused mid-year. The requirement was expected to go into effect in 2026, but CMS recently announced a delay in enforcement “until further notice.” This move may signal the agency’s intention to revise or remove the requirement in upcoming rulemaking.
Supplemental benefits are also vulnerable following several years of rate pressure. Payers, including those in the MA space, have reported increases in service use in the years following the COVID-19 pandemic, which have driven up costs. At the same time, CMS implemented various changes in the way MA plan payments are determined, including technical changes to the benchmark calculations and introduction of a new risk adjustment model, both of which reduced funding to plans. As a result, plans have fewer dollars available to put toward supplemental benefits, leading some plans to pull back on their supplemental benefit offerings for 2025 and 2026. Initial indications for 2026 suggest reductions in the generosity of supplemental benefits, though CMS has said availability of key supplemental benefits such as dental, vision, and hearing will remain “stable.”
Key takeaway: CMS has moved decisively to improve access to provider directory information for beneficiaries and enrollees, but ongoing concerns about the accuracy of information make further policy action likely.
The majority of MA participants (56% in 2024) enroll in health maintenance organizations (HMOs), which limit coverage to providers within the health plan’s network. Enrollees rely on the plan’s provider directory for participating providers, their location, and their contact information. Beneficiary advocates and CMS have long expressed concerns about the accuracy of these provider directories, which is a multifaceted issue as MA plans rely on receipt of accurate and timely information updates from providers in order to keep these materials up to date.
Concerns about the accuracy of provider directories is not limited to MA; the issue extends across health insurance markets. In 2022, CMS published a Request for Information seeking feedback on the concept of a National Directory of Healthcare Providers & Services. Insurers pointed to the shared responsibility between payers and providers to make sure directory information is complete and up to date, while providers urged CMS to build on existing efforts to collect provider information. CMS now requires qualified health plans offering coverage through the federally facilitated exchange to submit information on participating providers in a format that allows the information to be readable and accurate.
Over the past year, CMS has taken several steps to improve beneficiary access to information on which providers participate in an MA plan’s network. In the December 2024 rule, CMS proposed to require that plans submit provider directory data to the agency and do so in a way that allows for inclusion of the data on the Medicare Plan Finder website, which beneficiaries use to compare Medicare plan options. CMS then announced in late August 2025 that provider directory information would be added to Medicare Plan Finder in time for the 2026 open enrollment period, which began in October. In a memo to plans, CMS said it was partnering with a technology company to supply in-network provider and facility data for inclusion on Medicare Plan Finder. In the absence of final rulemaking, plans were encouraged, but not required, to submit information to the contractor. According to the memo, in cases where the plan does not submit the information, Medicare Plan Finder would include a link to the company’s website. However, that option will soon go away because, in the second final rule published in September, CMS finalized the requirement that plans submit provider directory data beginning January 1, 2026.
The move to add provider directory information to Medicare Plan Finder is likely not the last word on provider directories. Plans and providers will almost certainly continue their push for CMS to lead development of a national provider directory that would reduce administrative burden and the patient friction that results from inaccurate information.
Key takeaway: After moves to tighten oversight of marketing activity in MA over several years, this issue seems to be less of a priority for further policy action in the immediate future.
The way MA plans are marketed, including the role of agents, brokers, and third-party organizations in influencing individual enrollment choices, has received considerable attention in recent years. In 2022 the National Association of Insurance Commissioners sent a letter to Congress outlining concerns about MA plan marketing and urging Congress to examine the issue. Democratic members of the Senate Finance Committee issued a report in March 2025 describing examples of problematic marketing materials and the role that third-party marketing organizations play in MA enrollment.
In response, CMS has issued new rules that impose tighter oversight of marketing ads and limit the activities of agents and brokers in marketing to Medicare beneficiaries. While some of those rules have taken effect, others remain unimplemented. Following finalization of new restrictions on how broker compensation may be structured and limitations on certain payment amounts, court rulings prevented CMS from moving forward with the new rules. In June 2025, CMS officially reversed the rules in light of the ongoing litigation. In the 2026 proposed rule released in December 2024, CMS proposed to expand the definition of marketing materials subject to CMS review, allowing the agency tighter control over communications between plans and potential enrollees. CMS did not address this provision in either the two final rules released in 2025.
[1] Supplemental benefits also include reductions in cost sharing for services covered by traditional Medicare, reductions in premiums for Part B or Part D coverage integrated with the MA plan, and enhancements to standard Part D coverage. These types of supplemental benefits are an important source of value to enrollees, and information on their use is available through prescription drug event and encounter data records. This section is focused on additional services that are not covered under the traditional Medicare program.
