2026 Medicare Final Rule: Key Implications for Health Plan Pharmacy Leaders

The Centers for Medicare & Medicaid Services (CMS) has released its final rule outlining significant pharmacy changes for Medicare and Medicaid in 2026. Some highly anticipated provisions, such as mandatory GLP-1 coverage for obesity did not make the cut, yet several finalized policies carry significant operational and strategic weight for health plans. This analysis highlights the critical aspects of the rule and provides actionable next steps for your organization.

Effective Dates to Note:

• Most provisions take effect January 1, 2026
• Medicare Prescription Payment Plan (M3P) regulations applicable starting October 2, 2025
• Marketing and communications for integrated ID cards begin October 1, 2026

Key Finalized Provisions and Strategic Considerations:

1. Enhancing Experiences for Dually Eligible Enrollees (D-SNPs):
   • What’s New: Applicable integrated plan (AIP) D-SNPs are now required to issue an integrated ID card for both the Medicare and Medicaid plans in which the member is enrolled. Additionally, these plans must conduct an integrated health risk assessment (HRA).
   • Next Step: Integrated plans must prioritize the development and implementation of integrated ID cards and revise HRA policies and systems to align with these requirements for all contract year 2027 marketing and communications, starting October 1, 2026.
2. Impact of the Inflation Reduction Act (IRA):
   • Vaccine Cost-Sharing: CMS has codified the elimination of the Part D deductible for all ACIP-recommended adult vaccines, effective for plan years beginning on or after January 1, 2023.
   • Insulin Cost-Sharing: For 2026 and subsequent years, the maximum cost-sharing for a one-month supply of covered insulin is capped at the lesser of:
     • $35
     • 25% of the Maximum Fair Price (MFP) set for the covered insulin product under the Medicare Drug Price Negotiation Program; or
     • 25% of the negotiated price of the covered insulin
   • Next Step: Part D sponsors must work closely with their Pharmacy Benefit Managers (PBMs) to ensure systems accurately reflect zero out-of-pocket costs for approved vaccines and adhere to the insulin cost-sharing limits in 2026.
3. Medicare Prescription Payment Plan (M3P):
   • Key Updates: While real-time M3P election at the point of sale (POS) was not mandated, CMS codified existing guidance with crucial modifications, including:
     • Requiring plans to have M3P information on its website
     • Updating the MLR rules to include M3P unsettled balances for 2026 and beyond
     • Timing and content of the renewal noticeTelephonic notice of election approval
     • Timing for voluntary termination effective datesTiming for involuntary disenrollment notice
     • Requiring long-term care (LTC) pharmacies to provide the Likely to Benefit Notice to the enrollee or their authorized representative during the cost-sharing billing process
     • Exempting DSNPs from outreach and education requirements
     • Removed a requirement for pharmacies to be prepared to share out-of-pocket (OOP) costs for M3P at the POS
   • Next Step: Part D sponsors and their PBMs need to urgently update system processes, policies, procedures, and member communications to align with these refined M3P requirements for 2026.
4. Timely Submission of Prescription Drug Event (PDE) Records:
   • Accelerated Timelines: A significant change is the accelerated 7-calendar-day PDE submission timeframe for drugs subject to Medicare price negotiation. For all other PDEs, the deadlines remain 30 days for initial submission and 90 days for adjustments, deletions, and CMS rejection resolutions.
   • Next Step: Part D sponsors should update their processes and work with their PBMs to ensure the timeliness of PDE submissions is accurately reflected.
5. Medicare Transaction Facilitator (MTF) Requirements:
   • New Contract Language: Plans and PBMs must amend their network pharmacy agreements to require pharmacy enrollment in the MTF DM to certify the accuracy and completeness of enrollment information the pharmacies provide to the MTF on the claim.
   • Next Step: Legal and contracting teams need to prioritize updating network pharmacy agreements to incorporate these MTF requirements, ensuring a smooth transition and ongoing compliance.
6. Star Rating Changes:
   • EHO4all (Formerly HEI): The Health Equity Index has been rebranded as “Excellent Health Outcomes for All” (EHO4all), reinforcing the ongoing focus on incentivizing quality care for high-risk populations.
   • Next Step: Despite earlier speculation, EHO4all remains a critical component of Star Rating. Plans should continue strategically prioritizing initiatives to improve health equity and outcomes for vulnerable populations to maintain and improve their Star Rating.

Unfinalized Provisions and Implications for Future Strategy:

While the following proposals were not finalized for 2026, they offer insights into CMS’s evolving priorities:

• Enhancing Health Equity Analyses: CMS will not require Medicare Advantage plans to operate stand-alone utilization management committees mandating a health equity expert member, annual health equity analysis of prior authorization.
• Guardrails for Artificial Intelligence: CMS will not require the use of AI within health care organizations to provide equal opportunity and not discriminate on the basis of the enrollee’s health status.
• GLP-1 Coverage of Anti-Obesity Medications (AOMs): CMS will not require plans to cover GLP-1 for obesity. Each state has the option to cover anti-obesity drugs through Medicaid.
• Formulary Inclusion and Placement of Generics and Biosimilars: CMS did not add the additional step in their formulary review process described in the proposed rule. However, CMS did codify additional requirements under the IRA Medicare Drug Price Negotiation Program.

Next Steps:

• Part D plans must include the selected 10 negotiated brand-name drugs on their formularies starting January 1, 2026. Biosimilars or generics can be added as equivalent alternative(s).
• CMS allows Part D plans to make immediate formulary changes (within 30 days) to include newly available biosimilars, unbranded biologics, or authorized generics. This means plans can remove the brand-name drug from the formulary or place it on a higher cost-sharing tier once a biosimilar or generic becomes available without needing a full formulary change request to CMS.
• Plans must provide advance general notice of any immediate negative formulary changes following CMS guidance.

Moving Forward

The 2026 Medicare Final Rule presents both challenges and opportunities for health plan pharmacy leaders. A proactive and strategic approach to implementation is essential for compliance, operational efficiency, and ultimately, for delivering high-quality care to beneficiaries.

Our team of government program experts is closely monitoring these developments and are available to provide further clarity, validation, and strategic guidance. Please don’t hesitate to reach out for a consultation to discuss the specific implications for your organization.

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