NHC Submits Comments to CMS on Advance Notice of Methodological Changes for CY 2026 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies
NHC Submits Comments to CMS on Advance Notice of Methodological Changes for CY 2026 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (PDF)
February 11, 2025
Stephanie Carlton Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
7500 Security Boulevard
Baltimore, MD 21244-1850
RE: Advance Notice of Methodological Changes for Calendar Year (CY) 2026 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (CMS-2024-0360)
Submitted electronically via regulations.gov
Dear Acting Administrator Carlton,
The National Health Council (NHC) appreciates the opportunity to provide comments on the Centers for Medicare & Medicaid Services’ (CMS) Advance Notice of Methodological Changes for Calendar Year (CY) 2026 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies.
Created by and for patient organizations over 100 years ago, the NHC brings diverse organizations together to forge consensus and drive patient-centered health policy. We promote increased access to affordable, high-value, equitable, and sustainable health care. Made up of more than 170 national health-related organizations and businesses, the NHC’s core membership includes the nation’s leading patient organizations. Other members include health-related associations and nonprofit organizations including the provider, research, and family caregiver communities; and businesses and organizations representing biopharmaceuticals, devices, diagnostics, generics, and payers.
Overarching Comments
The NHC acknowledges CMS’ efforts to implement meaningful policy updates in CY 2026 to advance equity, affordability, and access to high-value care for Medicare beneficiaries. However, we urge CMS to carefully evaluate and mitigate any unintended consequences of these changes, particularly for patients with chronic conditions or other complex care needs. Below, we provide detailed recommendations for refining and implementing the proposed updates to MA and Part D policies.
Updates to MA and Part D Risk Adjustment Models
The NHC supports CMS’ intention to refine the CMS-Hierarchical Condition Categories (CMS-HCC) and prescription drug hierarchical condition categories (RxHCC) risk adjustment models to better capture the health care needs of Medicare beneficiaries. These updates are a crucial step in aligning reimbursement with patient needs, particularly for those with chronic conditions and complex care requirements. However, we remain concerned about potential downstream effects on plan offerings, provider reimbursement, and patient access to care.1 Changes must be implemented with careful monitoring and stakeholder input to prevent unintended consequences, such as increased financial burdens on patients, disincentives for plans to enroll high-cost beneficiaries, or reductions in provider payments.
Rigorous, real-time monitoring of the impacts of risk adjustment model changes is essential to identify and promptly address potential disruptions. CMS should track beneficiary out-of-pocket costs to ensure that changes do not lead to increased financial burdens, particularly for high-cost, high-need populations managing chronic conditions. Additionally, CMS must evaluate service utilization patterns to detect reductions in access to necessary treatments or care. Monitoring plan formulary designs is equally important to ensure that risk adjustment changes do not incentivize restrictive formularies that could limit access to vital medications for vulnerable populations.2 Moreover, provider reimbursement should be closely examined to ensure that lower plan payments do not result in lower physician reimbursement rates or increased administrative burdens that negatively affect patient care.3 Establishing a feedback loop with stakeholders during this monitoring process will provide additional safeguards against adverse effects.
Incorporating additional patient-reported outcomes and social drivers of health (SDOH) into risk adjustment models will improve their accuracy and equity.4 Patient-reported outcomes offer valuable insights into beneficiaries’ lived experiences, unmet needs, and satisfaction with care, which are often absent from administrative claims data. SDOH, such as income level, housing stability, food security, and access to transportation, profoundly influence health outcomes.5 By systematically including these factors in model refinements, CMS can create a more comprehensive and equitable framework that better addresses the realities of underserved populations and reduces health disparities. Additionally, CMS should evaluate how risk adjustment methodology impacts younger beneficiaries with disabilities and chronic illnesses, ensuring that payment changes do not disproportionately disadvantage these populations.
Engaging stakeholders in transparent decision-making processes is critical to the success of risk adjustment model updates. CMS should establish formal mechanisms to gather input from a diverse range of stakeholders, including patient organizations, health care providers, and payer organizations. However, patient organizations historically have had limited influence in shaping risk adjustment refinements compared to insurers and actuaries. CMS should consider creating a dedicated advisory group composed of patient organizations, disability rights representatives, and other subject matter experts to ensure that risk adjustment refinements do not disadvantage high- need populations. Additionally, CMS should require greater transparency in the justification for condition weight changes, including the rationale for why certain conditions are downweighted or removed from the risk adjustment model. By allowing patient organizations to formally appeal such decisions and submit real-world patient impact data, CMS can ensure that risk adjustment changes reflect actual care needs rather than strictly actuarial calculations.
The NHC also emphasizes the importance of clear communication and transition planning to minimize disruptions. CMS should provide detailed guidance and training resources to plans to help them adapt to the new methodologies without reducing benefits or increasing costs for beneficiaries. Guidance should include case studies, best practices, and practical tools to support plans in aligning with updated models while maintaining high standards of care. CMS should also work directly with providers to minimize administrative burdens caused by risk adjustment changes, as increased documentation requirements could further strain providers, particularly those treating high-cost populations. Transparent explanations of the changes and their implications will also help mitigate confusion among stakeholders and beneficiaries, ensuring confidence in the updated frameworks.
Finally, CMS should prioritize continuous evaluation and iterative improvement of the risk adjustment models. Establishing mechanisms to assess the real-world impacts of these changes on health outcomes, plan offerings, provider reimbursement, and beneficiary satisfaction will ensure that the models remain responsive to evolving needs. CMS should develop publicly available impact reports that track how risk adjustment refinements affect plan participation, benefit design, provider reimbursement rates, and patient access to care. By maintaining transparency and ongoing engagement with patient organizations, CMS can ensure that the models achieve their intended goals of promoting equity and improving access to high-quality care for all Medicare beneficiaries.
Part D Redesign Program and Out-of-Pocket (OOP) Cap
The NHC commends CMS for continuing the implementation of the Inflation Reduction Act’s (IRA) transformative provisions, including the $2,100 OOP cap and the Manufacturer Discount Program, which have been in effect since CY 2025. These changes mark progress toward improving the affordability of prescription drugs for Medicare beneficiaries. However, achieving the full potential of these reforms requires meticulous planning, comprehensive beneficiary education, and an ongoing commitment to monitoring and evaluation. Additionally, the NHC acknowledges the guidance CMS has released to date and encourages continued stakeholder engagement to refine implementation as needed.
The transition to the Manufacturer Discount Program represents a major shift in how drug costs are managed under Medicare Part D. CMS must ensure a seamless transition by providing detailed, standardized operational guidance to plan sponsors and stakeholders. This guidance should address key operational challenges, such as accurately calculating and applying manufacturer discounts during both the initial coverage and catastrophic phases of the benefit. Additionally, CMS must ensure that plan sponsors understand their responsibilities and have access to the resources needed to implement the program without administrative delays that could disrupt patient access to medications. The NHC encourages CMS to provide regular updates on guidance documents and implementation progress to keep stakeholders informed and responsive to emerging challenges.
Equally critical is clear and accessible communication with beneficiaries. Many Medicare beneficiaries, particularly those with limited health literacy or English proficiency, may struggle to understand how these changes affect their out-of-pocket costs.6 CMS should develop multilingual and culturally appropriate educational materials that clearly explain the details of the Manufacturer Discount Program, the new OOP cap, and how beneficiaries can maximize their benefits. These materials should be distributed through multiple channels, including mail, online platforms, and community-based outreach initiatives, to ensure they reach diverse beneficiary populations. In addition to partnering with patient organizations, outreach to community organizations and advocacy groups will be essential to extending the reach of these communications and addressing unique population needs. CMS’ existing educational efforts have been beneficial, and the NHC urges continued investment in outreach strategies that ensure all beneficiaries fully understand these policy changes.
While the $2,100 OOP cap represents a critical improvement, it is important to recognize that many beneficiaries still face substantial financial burdens from deductibles, co-payments, and other health care expenses. The NHC urges CMS to work with Congress to explore additional policy options to address these broader affordability challenges. Additionally, CMS should evaluate opportunities to reduce costs for high-value medications that play a crucial role in managing chronic conditions, as these can have a disproportionate impact on beneficiaries’ overall health and financial well-being.
To ensure the effectiveness of the $2,100 OOP cap, CMS should establish robust mechanisms for ongoing evaluation. This includes tracking key metrics such as medication adherence, rates of beneficiary cost-related nonadherence, and overall health outcomes. Regular assessments will allow CMS to identify any unintended consequences, such as shifts in prescribing patterns or access barriers, and make necessary adjustments to the program. Additionally, CMS should publish periodic reports on the program’s impact to maintain transparency and build stakeholder confidence in its success. Given that implementation began in CY 2025, early data from the first year should be leveraged to assess real-world effects and guide refinements moving forward.
Engaging patient organizations in these evaluations is vital. These groups bring firsthand knowledge of beneficiary experiences and can help CMS identify areas for improvement.7,8,9 For example, patient organizations can provide insights into how the OOP cap impacts medication adherence and health outcomes among specific populations, such as individuals with disabilities or those in rural areas. Their input can also inform future policy refinements to ensure the program remains responsive to beneficiaries’ needs. The NHC encourages CMS to formalize a structured engagement process with patient organizations to gather ongoing feedback and ensure that program adjustments reflect beneficiary experiences.
Finally, the NHC urges CMS to consider the long-term sustainability of the Manufacturer Discount Program and the OOP cap. As the health care landscape evolves, it will be important to evaluate how these programs interact with other policy initiatives and adapt them to meet emerging challenges. For example, as new high-cost therapies enter the market, CMS may need to explore innovative payment models or additional cost- sharing protections to maintain the affordability and accessibility of these therapies for Medicare beneficiaries. By fostering a culture of continuous improvement and adaptability, CMS can ensure that these transformative provisions deliver lasting benefits to beneficiaries while maintaining the financial viability of the Medicare program.
Proposed Changes to Star Ratings and Health Equity Index (HEI)
The NHC supports CMS’ efforts to streamline MA and Part D Star Ratings and incorporate social risk factors into the Health Equity Index (HEI). These updates hold promise for incentivizing improvements in quality of care and addressing disparities. However, ensuring these measures achieve their intended outcomes requires careful consideration, robust stakeholder engagement, and detailed guidance to plans.
CMS should conduct comprehensive testing of new measures before implementing them into the Star Ratings or HEI. Pilot programs that simulate real-world scenarios are critical to evaluating the validity and reliability of these measures. Such testing will also help identify potential unintended consequences, such as incentivizing plans to prioritize easily measurable but less meaningful metrics over those that better reflect patient health outcomes and equity improvements. For instance, a measure related to chronic disease management should not only evaluate clinical metrics but also patient satisfaction and adherence, ensuring that the measure aligns with patients’ real-world experiences and needs.10
The HEI should be expanded to incorporate additional social risk factors that more accurately capture the challenges faced by socially vulnerable populations.11 Factors such as income level, housing instability, food insecurity, and access to transportation are critical determinants of health and should be reflected in the HEI framework.
Incorporating these factors will allow CMS to better evaluate and reward plans that address systemic barriers to care. For example, plans that demonstrate effective interventions to address housing instability or food insecurity should be acknowledged and incentivized to continue and expand these efforts.
Patient organizations must play a central role in developing and refining Star Ratings and HEI measures. Engagement with these organizations that have direct access to beneficiaries can ensure that these measures align with their priorities and reflect their lived experiences. CMS should establish advisory panels that represent the full breadth and depth of the Medicare population. This collaboration can also provide critical insights into how measures impact different populations, ensuring that they drive equitable outcomes across beneficiary groups.
Detailed guidance for plans on operationalizing HEI criteria is essential to ensure successful implementation. Plans require clear instructions on how to integrate HEI measures into their operations, collect relevant data, and report outcomes. CMS should provide examples of best practices, case studies of successful equity-focused initiatives, and technical assistance to support plans as they work to meet HEI objectives. For example, a plan serving predominantly rural beneficiaries could benefit from guidance on leveraging local partnerships to address transportation barriers, thus ensuring access to care.
Continuous evaluation and improvement of Star Ratings and HEI measures will be necessary to adapt to evolving beneficiary needs and health care landscapes. CMS should establish mechanisms for ongoing monitoring and refinement, incorporating feedback from plans, providers, and patients. This iterative process will ensure the measures remain relevant, actionable, and aligned with CMS’ goals of improving health outcomes and reducing disparities.
Finally, CMS should incentivize plans that excel in addressing social risk factors and achieving meaningful equity-focused outcomes. Plans that demonstrate innovative approaches to overcoming systemic barriers to care should be recognized through enhanced Star Ratings or additional financial incentives. For instance, plans that successfully implement community-based interventions to improve food security or housing stability should be rewarded, encouraging broader adoption of such impactful strategies. By emphasizing the importance of equity-focused innovation, CMS can foster a competitive environment that prioritizes health equity and improved patient outcomes.
Impacts of the Continued Phase-In of MA Risk Adjustment Changes
The NHC acknowledges CMS’ measured approach to phasing in MA risk adjustment model changes, which mitigates abrupt disruptions and allows stakeholders to adapt incrementally. This approach reflects a balance between implementing necessary updates and avoiding immediate, widespread disruptions. However, the projected 3.01% reduction in plan payments for 2026 raises concerns about the potential impacts on plan participation, benefit design, and beneficiary access to care. CMS must remain vigilant in monitoring these effects and be prepared to make timely adjustments to ensure that the changes do not inadvertently harm beneficiaries or undermine the goals of the MA program.
Monitoring plan participation rates is critical to identifying market exits or reductions in plan offerings that could diminish beneficiary options. CMS should closely track trends in plan enrollment and market availability, particularly in areas with fewer participating plans. Early detection of declining participation can enable CMS to intervene and address underlying issues, such as the financial viability of plans under the new risk adjustment model. For example, targeted financial assistance or adjustments to payment methodologies may be necessary to stabilize the market and encourage continued plan participation.
CMS must also evaluate the effects of payment reductions on plan benefits, particularly for high-need populations who rely on robust and comprehensive coverage. Payment reductions could incentivize plans to scale back benefits, increase cost-sharing requirements, or narrow provider networks—all of which would negatively impact beneficiaries. To mitigate these risks, CMS should conduct in-depth analyses of how plans are adjusting their benefit designs and ensure that any changes prioritize maintaining access to high-quality care for vulnerable populations.
Analyzing potential disparities in access and affordability resulting from these changes is essential to achieving equitable outcomes. CMS should consider implementing targeted interventions, such as financial incentives or regulatory flexibilities, for plans that continue to serve high-risk or geographically isolated populations. Additionally, CMS should work with community organizations and advocacy groups to identify and address barriers that may prevent beneficiaries in these areas from accessing necessary care.
Transparency is key to maintaining stakeholder trust and fostering collaboration in addressing emerging challenges. CMS should regularly publish detailed data on the phase-in’s impact, including its effects on plan participation, benefit design, and beneficiary outcomes. These reports should be accessible to all stakeholders and include insights into geographic and demographic trends. By providing clear and actionable information, CMS can empower plans, advocacy groups, and policymakers to collaboratively identify solutions to mitigate any negative consequences.
Furthermore, CMS should establish mechanisms for ongoing stakeholder engagement to gather feedback and monitor the real-world impact of these changes. Regular forums or advisory panels composed of patient advocates, plan representatives, and providers can offer valuable insights into how the phase-in is affecting various populations. These groups can also help CMS identify potential unintended consequences and propose refinements to the risk adjustment model.
Finally, CMS should consider the long-term implications of these changes on the MA program as a whole. As the health care landscape evolves, it is crucial to ensure that the risk adjustment model remains responsive to emerging trends and challenges. This includes adapting the model to account for innovations in care delivery, such as telehealth, and ensuring that it adequately reflects the cost of managing chronic conditions. By prioritizing continuous evaluation and improvement, CMS can ensure that the phase-in of these changes supports the sustainability of the program and promotes equitable, high-quality care for all beneficiaries.
While the measured phase-in of MA risk adjustment changes demonstrates CMS’ commitment to a thoughtful implementation process, its success depends on robust monitoring, stakeholder engagement, and a proactive approach to addressing potential challenges. By taking these steps, CMS can ensure that the updates achieve their intended goals without compromising accessibility, affordability, or quality of care for Medicare beneficiaries.
Expanding Access to High-Value Care
The NHC commends CMS for prioritizing access to high-value care in its policy updates, recognizing the importance of care that is both effective and affordable for Medicare beneficiaries. By focusing on high-value care, CMS has the opportunity to improve health outcomes while addressing systemic disparities that continue to challenge the health care landscape. However, it is critical to ensure that policy updates are implemented in a way that mitigates unintended consequences, such as increased utilization management, formulary restrictions, or narrowed provider networks, which could inadvertently hinder access for people with chronic diseases and disabilities.
CMS should strengthen its oversight of plan designs to prevent inappropriate restrictive practices that limit beneficiary access to necessary care. For example, formularies that exclude high-cost but clinically essential medications can disproportionately harm populations managing chronic or rare conditions. Enhanced oversight mechanisms should focus on identifying and addressing these issues before they negatively impact beneficiaries. This could include requiring plans to justify exclusions of specific therapies or medications and creating accountability measures to ensure access to the full spectrum of clinically necessary treatments.
To further promote high-value care, CMS should incentivize plans to invest in innovative therapies and evidence-based programs that improve health outcomes. Plans that demonstrate a commitment to integrating cutting-edge treatments, such as gene therapies or personalized medicine, should be rewarded through higher Star Ratings or financial incentives. Additionally, CMS should encourage plans to adopt comprehensive care models, such as patient-centered medical homes or integrated care networks, which have been shown to enhance care coordination and improve outcomes for beneficiaries with complex needs. Recognizing and rewarding plans that integrate telehealth services for chronic disease management and preventive care is another critical strategy for expanding access to high-value care. For example, plans that use telehealth to increase access for beneficiaries in rural or underserved areas should be prioritized for additional recognition.
Transparency is another essential component of expanding access to high-value care. Beneficiaries must be empowered with clear, easy-to-understand information about their plan options to make informed decisions. CMS should develop standardized tools and resources that allow beneficiaries to compare plans based on their access to high-value care, provider networks, and out-of-pocket costs. These tools should also highlight key features of each plan, such as access to innovative therapies or comprehensive care models, to help beneficiaries select plans that align with their specific needs and priorities. Accessible information is especially important for beneficiaries with limited health literacy or language barriers, and CMS should ensure that all resources are available in multiple languages and formats.
CMS should also establish mechanisms to monitor the impact of policies aimed at promoting high-value care. Regular evaluations should assess whether these policies are improving access to essential services, enhancing health outcomes, and reducing disparities among different beneficiary populations. These evaluations should include metrics such as patient satisfaction, adherence to evidence-based guidelines, and reductions in avoidable hospitalizations or emergency department visits. Stakeholder engagement, including input from patient organizations and health care providers, will be critical to ensuring that monitoring efforts are comprehensive and reflective of beneficiary experiences.
In addition to strengthening oversight and promoting transparency, CMS should explore innovative payment models that align incentives with the delivery of high-value care. For example, value-based payment arrangements that tie reimbursement to outcomes rather than volume can encourage providers and plans to prioritize interventions that yield the greatest health benefits. CMS could also pilot programs that reward plans for achieving measurable improvements in equity, such as reducing disparities in access or outcomes among different racial or socioeconomic groups. These models could serve as a blueprint for broader adoption across the Medicare program.
Finally, CMS should actively support collaboration among plans, providers, and community-based organizations to address the SDOH that often serve as barriers to high-value care. Partnerships with local organizations can help plans address issues such as food insecurity, housing instability, and transportation challenges, which are critical to improving overall health outcomes. CMS should encourage plans to integrate these efforts into their broader care delivery strategies and provide financial or regulatory support to facilitate such collaborations.
Conclusion
The NHC appreciates CMS’ ongoing commitment to advancing MA and Part D programs to better serve beneficiaries. The proposed changes for CY 2026 represent critical opportunities to enhance equity, affordability, and access for millions of Americans. However, these updates must be carefully implemented and continuously evaluated to ensure they achieve their intended outcomes without unintended consequences. We welcome the opportunity to work with CMS to advance these goals and provide further input as needed. Please do not hesitate to contact Jennifer Dexter, Vice President of Policy and Government Affairs, at jdexter@nhcouncil.org if you or your staff would like to discuss these comments in greater detail.
Sincerely,
Randall L. Rutta
Chief Executive Officer
1 McKinsey & Company, “Implications of Current Trends on Medicare Advantage Stakeholders,” McKinsey Healthcare Blog, 2024, https://www.mckinsey.com/industries/healthcare/our-insights/healthcare- blog/implications-of-current-trends-on-medicare-advantage-stakeholders.
2 IQVIA. Use of Medicines in the U.S. May 2024. https://www.iqvia.com/-/media/iqvia/pdfs/institute- reports/the-use-of-medicines-in-the-us-2024/the-use-of-medicines-in-the-us-2024-usage-and-spending- trends-and-outlook-to-2028.pdf.
3 American Medical Association. Prior Authorization Physician Survey Report. 2023. https://www.ama- assn.org/system/files/prior-authorization-survey.pdf.
4 National Health Council. NHC Report: Exploring the Burden of Prior Authorization on Patients with Chronic Disease. November 2023. https://nationalhealthcouncil.org/wp-content/uploads/2023/11/NHC- Report-Exploring-the-Burden-of-Prior-Authorization-on-Patients-with-Chronic-Disease.pdf
5 National Health Council. Access, Affordability and Quality: A Patient-Focused Blueprint for Real Health Equity, February 2022, https://nationalhealthcouncil.org/wp-content/uploads/2022/01/Access-Affordability- and-Quality-A-Patient-Focused-Blueprint-for-Real-Health-Equity.pdf
6 Wändi Bruine de Bruin et al., “Medicare Part D Beneficiaries’ Self-Reported Barriers to Switching Plans and Making Plan Comparisons at All,” Health Affairs Scholar 2, no. 11 (November 2024): qxae141, https://doi.org/10.1093/haschl/qxae141.
7 Bombard, Yvonne, et al. “Engaging Patients to Improve Quality of Care: A Systematic Review.” Implementation Science 13, no. 1 (2018): 98. https://doi.org/10.1186/s13012-018-0784-z.
8 Carman, Kristin L., et al. “Patient and Family Engagement: A Framework for Understanding the Elements and Developing Interventions and Policies.” Health Affairs 32, no. 2 (2013): 223–231. https://doi.org/10.1377/hlthaff.2012.1133.
9 Doyle, Cathal, Laura Lennox, and Derek Bell. “A Systematic Review of Evidence on the Links Between Patient Experience and Clinical Safety and Effectiveness.” BMJ Open 3, no. 1 (2013): e001570. https://bmjopen.bmj.com/content/3/1/e001570.
10 Yue Lu, Yuhui Zhao, Xinyu Shangguan, Bin Lv, and Rui Huang, “Patient Attitude and Determinants toward Chronic Diseases Control: A Cross-Sectional Survey in Rural China,” Frontiers in Public Health 10 (2022): 970032, https://doi.org/10.3389/fpubh.2022.970032.
11 National Health Council, Access, Affordability and Quality.
NHC Submits Comments to CMS on Advance Notice of Methodological Changes for CY 2026 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies
02/11/2025
NHC Submits Comments to CMS on Advance Notice of Methodological Changes for CY 2026 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (PDF)
February 11, 2025
Stephanie Carlton Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
7500 Security Boulevard
Baltimore, MD 21244-1850
RE: Advance Notice of Methodological Changes for Calendar Year (CY) 2026 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (CMS-2024-0360)
Submitted electronically via regulations.gov
Dear Acting Administrator Carlton,
The National Health Council (NHC) appreciates the opportunity to provide comments on the Centers for Medicare & Medicaid Services’ (CMS) Advance Notice of Methodological Changes for Calendar Year (CY) 2026 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies.
Created by and for patient organizations over 100 years ago, the NHC brings diverse organizations together to forge consensus and drive patient-centered health policy. We promote increased access to affordable, high-value, equitable, and sustainable health care. Made up of more than 170 national health-related organizations and businesses, the NHC’s core membership includes the nation’s leading patient organizations. Other members include health-related associations and nonprofit organizations including the provider, research, and family caregiver communities; and businesses and organizations representing biopharmaceuticals, devices, diagnostics, generics, and payers.
Overarching Comments
The NHC acknowledges CMS’ efforts to implement meaningful policy updates in CY 2026 to advance equity, affordability, and access to high-value care for Medicare beneficiaries. However, we urge CMS to carefully evaluate and mitigate any unintended consequences of these changes, particularly for patients with chronic conditions or other complex care needs. Below, we provide detailed recommendations for refining and implementing the proposed updates to MA and Part D policies.
Updates to MA and Part D Risk Adjustment Models
The NHC supports CMS’ intention to refine the CMS-Hierarchical Condition Categories (CMS-HCC) and prescription drug hierarchical condition categories (RxHCC) risk adjustment models to better capture the health care needs of Medicare beneficiaries. These updates are a crucial step in aligning reimbursement with patient needs, particularly for those with chronic conditions and complex care requirements. However, we remain concerned about potential downstream effects on plan offerings, provider reimbursement, and patient access to care.1 Changes must be implemented with careful monitoring and stakeholder input to prevent unintended consequences, such as increased financial burdens on patients, disincentives for plans to enroll high-cost beneficiaries, or reductions in provider payments.
Rigorous, real-time monitoring of the impacts of risk adjustment model changes is essential to identify and promptly address potential disruptions. CMS should track beneficiary out-of-pocket costs to ensure that changes do not lead to increased financial burdens, particularly for high-cost, high-need populations managing chronic conditions. Additionally, CMS must evaluate service utilization patterns to detect reductions in access to necessary treatments or care. Monitoring plan formulary designs is equally important to ensure that risk adjustment changes do not incentivize restrictive formularies that could limit access to vital medications for vulnerable populations.2 Moreover, provider reimbursement should be closely examined to ensure that lower plan payments do not result in lower physician reimbursement rates or increased administrative burdens that negatively affect patient care.3 Establishing a feedback loop with stakeholders during this monitoring process will provide additional safeguards against adverse effects.
Incorporating additional patient-reported outcomes and social drivers of health (SDOH) into risk adjustment models will improve their accuracy and equity.4 Patient-reported outcomes offer valuable insights into beneficiaries’ lived experiences, unmet needs, and satisfaction with care, which are often absent from administrative claims data. SDOH, such as income level, housing stability, food security, and access to transportation, profoundly influence health outcomes.5 By systematically including these factors in model refinements, CMS can create a more comprehensive and equitable framework that better addresses the realities of underserved populations and reduces health disparities. Additionally, CMS should evaluate how risk adjustment methodology impacts younger beneficiaries with disabilities and chronic illnesses, ensuring that payment changes do not disproportionately disadvantage these populations.
Engaging stakeholders in transparent decision-making processes is critical to the success of risk adjustment model updates. CMS should establish formal mechanisms to gather input from a diverse range of stakeholders, including patient organizations, health care providers, and payer organizations. However, patient organizations historically have had limited influence in shaping risk adjustment refinements compared to insurers and actuaries. CMS should consider creating a dedicated advisory group composed of patient organizations, disability rights representatives, and other subject matter experts to ensure that risk adjustment refinements do not disadvantage high- need populations. Additionally, CMS should require greater transparency in the justification for condition weight changes, including the rationale for why certain conditions are downweighted or removed from the risk adjustment model. By allowing patient organizations to formally appeal such decisions and submit real-world patient impact data, CMS can ensure that risk adjustment changes reflect actual care needs rather than strictly actuarial calculations.
The NHC also emphasizes the importance of clear communication and transition planning to minimize disruptions. CMS should provide detailed guidance and training resources to plans to help them adapt to the new methodologies without reducing benefits or increasing costs for beneficiaries. Guidance should include case studies, best practices, and practical tools to support plans in aligning with updated models while maintaining high standards of care. CMS should also work directly with providers to minimize administrative burdens caused by risk adjustment changes, as increased documentation requirements could further strain providers, particularly those treating high-cost populations. Transparent explanations of the changes and their implications will also help mitigate confusion among stakeholders and beneficiaries, ensuring confidence in the updated frameworks.
Finally, CMS should prioritize continuous evaluation and iterative improvement of the risk adjustment models. Establishing mechanisms to assess the real-world impacts of these changes on health outcomes, plan offerings, provider reimbursement, and beneficiary satisfaction will ensure that the models remain responsive to evolving needs. CMS should develop publicly available impact reports that track how risk adjustment refinements affect plan participation, benefit design, provider reimbursement rates, and patient access to care. By maintaining transparency and ongoing engagement with patient organizations, CMS can ensure that the models achieve their intended goals of promoting equity and improving access to high-quality care for all Medicare beneficiaries.
Part D Redesign Program and Out-of-Pocket (OOP) Cap
The NHC commends CMS for continuing the implementation of the Inflation Reduction Act’s (IRA) transformative provisions, including the $2,100 OOP cap and the Manufacturer Discount Program, which have been in effect since CY 2025. These changes mark progress toward improving the affordability of prescription drugs for Medicare beneficiaries. However, achieving the full potential of these reforms requires meticulous planning, comprehensive beneficiary education, and an ongoing commitment to monitoring and evaluation. Additionally, the NHC acknowledges the guidance CMS has released to date and encourages continued stakeholder engagement to refine implementation as needed.
The transition to the Manufacturer Discount Program represents a major shift in how drug costs are managed under Medicare Part D. CMS must ensure a seamless transition by providing detailed, standardized operational guidance to plan sponsors and stakeholders. This guidance should address key operational challenges, such as accurately calculating and applying manufacturer discounts during both the initial coverage and catastrophic phases of the benefit. Additionally, CMS must ensure that plan sponsors understand their responsibilities and have access to the resources needed to implement the program without administrative delays that could disrupt patient access to medications. The NHC encourages CMS to provide regular updates on guidance documents and implementation progress to keep stakeholders informed and responsive to emerging challenges.
Equally critical is clear and accessible communication with beneficiaries. Many Medicare beneficiaries, particularly those with limited health literacy or English proficiency, may struggle to understand how these changes affect their out-of-pocket costs.6 CMS should develop multilingual and culturally appropriate educational materials that clearly explain the details of the Manufacturer Discount Program, the new OOP cap, and how beneficiaries can maximize their benefits. These materials should be distributed through multiple channels, including mail, online platforms, and community-based outreach initiatives, to ensure they reach diverse beneficiary populations. In addition to partnering with patient organizations, outreach to community organizations and advocacy groups will be essential to extending the reach of these communications and addressing unique population needs. CMS’ existing educational efforts have been beneficial, and the NHC urges continued investment in outreach strategies that ensure all beneficiaries fully understand these policy changes.
While the $2,100 OOP cap represents a critical improvement, it is important to recognize that many beneficiaries still face substantial financial burdens from deductibles, co-payments, and other health care expenses. The NHC urges CMS to work with Congress to explore additional policy options to address these broader affordability challenges. Additionally, CMS should evaluate opportunities to reduce costs for high-value medications that play a crucial role in managing chronic conditions, as these can have a disproportionate impact on beneficiaries’ overall health and financial well-being.
To ensure the effectiveness of the $2,100 OOP cap, CMS should establish robust mechanisms for ongoing evaluation. This includes tracking key metrics such as medication adherence, rates of beneficiary cost-related nonadherence, and overall health outcomes. Regular assessments will allow CMS to identify any unintended consequences, such as shifts in prescribing patterns or access barriers, and make necessary adjustments to the program. Additionally, CMS should publish periodic reports on the program’s impact to maintain transparency and build stakeholder confidence in its success. Given that implementation began in CY 2025, early data from the first year should be leveraged to assess real-world effects and guide refinements moving forward.
Engaging patient organizations in these evaluations is vital. These groups bring firsthand knowledge of beneficiary experiences and can help CMS identify areas for improvement.7,8,9 For example, patient organizations can provide insights into how the OOP cap impacts medication adherence and health outcomes among specific populations, such as individuals with disabilities or those in rural areas. Their input can also inform future policy refinements to ensure the program remains responsive to beneficiaries’ needs. The NHC encourages CMS to formalize a structured engagement process with patient organizations to gather ongoing feedback and ensure that program adjustments reflect beneficiary experiences.
Finally, the NHC urges CMS to consider the long-term sustainability of the Manufacturer Discount Program and the OOP cap. As the health care landscape evolves, it will be important to evaluate how these programs interact with other policy initiatives and adapt them to meet emerging challenges. For example, as new high-cost therapies enter the market, CMS may need to explore innovative payment models or additional cost- sharing protections to maintain the affordability and accessibility of these therapies for Medicare beneficiaries. By fostering a culture of continuous improvement and adaptability, CMS can ensure that these transformative provisions deliver lasting benefits to beneficiaries while maintaining the financial viability of the Medicare program.
Proposed Changes to Star Ratings and Health Equity Index (HEI)
The NHC supports CMS’ efforts to streamline MA and Part D Star Ratings and incorporate social risk factors into the Health Equity Index (HEI). These updates hold promise for incentivizing improvements in quality of care and addressing disparities. However, ensuring these measures achieve their intended outcomes requires careful consideration, robust stakeholder engagement, and detailed guidance to plans.
CMS should conduct comprehensive testing of new measures before implementing them into the Star Ratings or HEI. Pilot programs that simulate real-world scenarios are critical to evaluating the validity and reliability of these measures. Such testing will also help identify potential unintended consequences, such as incentivizing plans to prioritize easily measurable but less meaningful metrics over those that better reflect patient health outcomes and equity improvements. For instance, a measure related to chronic disease management should not only evaluate clinical metrics but also patient satisfaction and adherence, ensuring that the measure aligns with patients’ real-world experiences and needs.10
The HEI should be expanded to incorporate additional social risk factors that more accurately capture the challenges faced by socially vulnerable populations.11 Factors such as income level, housing instability, food insecurity, and access to transportation are critical determinants of health and should be reflected in the HEI framework.
Incorporating these factors will allow CMS to better evaluate and reward plans that address systemic barriers to care. For example, plans that demonstrate effective interventions to address housing instability or food insecurity should be acknowledged and incentivized to continue and expand these efforts.
Patient organizations must play a central role in developing and refining Star Ratings and HEI measures. Engagement with these organizations that have direct access to beneficiaries can ensure that these measures align with their priorities and reflect their lived experiences. CMS should establish advisory panels that represent the full breadth and depth of the Medicare population. This collaboration can also provide critical insights into how measures impact different populations, ensuring that they drive equitable outcomes across beneficiary groups.
Detailed guidance for plans on operationalizing HEI criteria is essential to ensure successful implementation. Plans require clear instructions on how to integrate HEI measures into their operations, collect relevant data, and report outcomes. CMS should provide examples of best practices, case studies of successful equity-focused initiatives, and technical assistance to support plans as they work to meet HEI objectives. For example, a plan serving predominantly rural beneficiaries could benefit from guidance on leveraging local partnerships to address transportation barriers, thus ensuring access to care.
Continuous evaluation and improvement of Star Ratings and HEI measures will be necessary to adapt to evolving beneficiary needs and health care landscapes. CMS should establish mechanisms for ongoing monitoring and refinement, incorporating feedback from plans, providers, and patients. This iterative process will ensure the measures remain relevant, actionable, and aligned with CMS’ goals of improving health outcomes and reducing disparities.
Finally, CMS should incentivize plans that excel in addressing social risk factors and achieving meaningful equity-focused outcomes. Plans that demonstrate innovative approaches to overcoming systemic barriers to care should be recognized through enhanced Star Ratings or additional financial incentives. For instance, plans that successfully implement community-based interventions to improve food security or housing stability should be rewarded, encouraging broader adoption of such impactful strategies. By emphasizing the importance of equity-focused innovation, CMS can foster a competitive environment that prioritizes health equity and improved patient outcomes.
Impacts of the Continued Phase-In of MA Risk Adjustment Changes
The NHC acknowledges CMS’ measured approach to phasing in MA risk adjustment model changes, which mitigates abrupt disruptions and allows stakeholders to adapt incrementally. This approach reflects a balance between implementing necessary updates and avoiding immediate, widespread disruptions. However, the projected 3.01% reduction in plan payments for 2026 raises concerns about the potential impacts on plan participation, benefit design, and beneficiary access to care. CMS must remain vigilant in monitoring these effects and be prepared to make timely adjustments to ensure that the changes do not inadvertently harm beneficiaries or undermine the goals of the MA program.
Monitoring plan participation rates is critical to identifying market exits or reductions in plan offerings that could diminish beneficiary options. CMS should closely track trends in plan enrollment and market availability, particularly in areas with fewer participating plans. Early detection of declining participation can enable CMS to intervene and address underlying issues, such as the financial viability of plans under the new risk adjustment model. For example, targeted financial assistance or adjustments to payment methodologies may be necessary to stabilize the market and encourage continued plan participation.
CMS must also evaluate the effects of payment reductions on plan benefits, particularly for high-need populations who rely on robust and comprehensive coverage. Payment reductions could incentivize plans to scale back benefits, increase cost-sharing requirements, or narrow provider networks—all of which would negatively impact beneficiaries. To mitigate these risks, CMS should conduct in-depth analyses of how plans are adjusting their benefit designs and ensure that any changes prioritize maintaining access to high-quality care for vulnerable populations.
Analyzing potential disparities in access and affordability resulting from these changes is essential to achieving equitable outcomes. CMS should consider implementing targeted interventions, such as financial incentives or regulatory flexibilities, for plans that continue to serve high-risk or geographically isolated populations. Additionally, CMS should work with community organizations and advocacy groups to identify and address barriers that may prevent beneficiaries in these areas from accessing necessary care.
Transparency is key to maintaining stakeholder trust and fostering collaboration in addressing emerging challenges. CMS should regularly publish detailed data on the phase-in’s impact, including its effects on plan participation, benefit design, and beneficiary outcomes. These reports should be accessible to all stakeholders and include insights into geographic and demographic trends. By providing clear and actionable information, CMS can empower plans, advocacy groups, and policymakers to collaboratively identify solutions to mitigate any negative consequences.
Furthermore, CMS should establish mechanisms for ongoing stakeholder engagement to gather feedback and monitor the real-world impact of these changes. Regular forums or advisory panels composed of patient advocates, plan representatives, and providers can offer valuable insights into how the phase-in is affecting various populations. These groups can also help CMS identify potential unintended consequences and propose refinements to the risk adjustment model.
Finally, CMS should consider the long-term implications of these changes on the MA program as a whole. As the health care landscape evolves, it is crucial to ensure that the risk adjustment model remains responsive to emerging trends and challenges. This includes adapting the model to account for innovations in care delivery, such as telehealth, and ensuring that it adequately reflects the cost of managing chronic conditions. By prioritizing continuous evaluation and improvement, CMS can ensure that the phase-in of these changes supports the sustainability of the program and promotes equitable, high-quality care for all beneficiaries.
While the measured phase-in of MA risk adjustment changes demonstrates CMS’ commitment to a thoughtful implementation process, its success depends on robust monitoring, stakeholder engagement, and a proactive approach to addressing potential challenges. By taking these steps, CMS can ensure that the updates achieve their intended goals without compromising accessibility, affordability, or quality of care for Medicare beneficiaries.
Expanding Access to High-Value Care
The NHC commends CMS for prioritizing access to high-value care in its policy updates, recognizing the importance of care that is both effective and affordable for Medicare beneficiaries. By focusing on high-value care, CMS has the opportunity to improve health outcomes while addressing systemic disparities that continue to challenge the health care landscape. However, it is critical to ensure that policy updates are implemented in a way that mitigates unintended consequences, such as increased utilization management, formulary restrictions, or narrowed provider networks, which could inadvertently hinder access for people with chronic diseases and disabilities.
CMS should strengthen its oversight of plan designs to prevent inappropriate restrictive practices that limit beneficiary access to necessary care. For example, formularies that exclude high-cost but clinically essential medications can disproportionately harm populations managing chronic or rare conditions. Enhanced oversight mechanisms should focus on identifying and addressing these issues before they negatively impact beneficiaries. This could include requiring plans to justify exclusions of specific therapies or medications and creating accountability measures to ensure access to the full spectrum of clinically necessary treatments.
To further promote high-value care, CMS should incentivize plans to invest in innovative therapies and evidence-based programs that improve health outcomes. Plans that demonstrate a commitment to integrating cutting-edge treatments, such as gene therapies or personalized medicine, should be rewarded through higher Star Ratings or financial incentives. Additionally, CMS should encourage plans to adopt comprehensive care models, such as patient-centered medical homes or integrated care networks, which have been shown to enhance care coordination and improve outcomes for beneficiaries with complex needs. Recognizing and rewarding plans that integrate telehealth services for chronic disease management and preventive care is another critical strategy for expanding access to high-value care. For example, plans that use telehealth to increase access for beneficiaries in rural or underserved areas should be prioritized for additional recognition.
Transparency is another essential component of expanding access to high-value care. Beneficiaries must be empowered with clear, easy-to-understand information about their plan options to make informed decisions. CMS should develop standardized tools and resources that allow beneficiaries to compare plans based on their access to high-value care, provider networks, and out-of-pocket costs. These tools should also highlight key features of each plan, such as access to innovative therapies or comprehensive care models, to help beneficiaries select plans that align with their specific needs and priorities. Accessible information is especially important for beneficiaries with limited health literacy or language barriers, and CMS should ensure that all resources are available in multiple languages and formats.
CMS should also establish mechanisms to monitor the impact of policies aimed at promoting high-value care. Regular evaluations should assess whether these policies are improving access to essential services, enhancing health outcomes, and reducing disparities among different beneficiary populations. These evaluations should include metrics such as patient satisfaction, adherence to evidence-based guidelines, and reductions in avoidable hospitalizations or emergency department visits. Stakeholder engagement, including input from patient organizations and health care providers, will be critical to ensuring that monitoring efforts are comprehensive and reflective of beneficiary experiences.
In addition to strengthening oversight and promoting transparency, CMS should explore innovative payment models that align incentives with the delivery of high-value care. For example, value-based payment arrangements that tie reimbursement to outcomes rather than volume can encourage providers and plans to prioritize interventions that yield the greatest health benefits. CMS could also pilot programs that reward plans for achieving measurable improvements in equity, such as reducing disparities in access or outcomes among different racial or socioeconomic groups. These models could serve as a blueprint for broader adoption across the Medicare program.
Finally, CMS should actively support collaboration among plans, providers, and community-based organizations to address the SDOH that often serve as barriers to high-value care. Partnerships with local organizations can help plans address issues such as food insecurity, housing instability, and transportation challenges, which are critical to improving overall health outcomes. CMS should encourage plans to integrate these efforts into their broader care delivery strategies and provide financial or regulatory support to facilitate such collaborations.
Conclusion
The NHC appreciates CMS’ ongoing commitment to advancing MA and Part D programs to better serve beneficiaries. The proposed changes for CY 2026 represent critical opportunities to enhance equity, affordability, and access for millions of Americans. However, these updates must be carefully implemented and continuously evaluated to ensure they achieve their intended outcomes without unintended consequences. We welcome the opportunity to work with CMS to advance these goals and provide further input as needed. Please do not hesitate to contact Jennifer Dexter, Vice President of Policy and Government Affairs, at jdexter@nhcouncil.org if you or your staff would like to discuss these comments in greater detail.
Sincerely,
Randall L. Rutta
Chief Executive Officer
1 McKinsey & Company, “Implications of Current Trends on Medicare Advantage Stakeholders,” McKinsey Healthcare Blog, 2024, https://www.mckinsey.com/industries/healthcare/our-insights/healthcare- blog/implications-of-current-trends-on-medicare-advantage-stakeholders.
2 IQVIA. Use of Medicines in the U.S. May 2024. https://www.iqvia.com/-/media/iqvia/pdfs/institute- reports/the-use-of-medicines-in-the-us-2024/the-use-of-medicines-in-the-us-2024-usage-and-spending- trends-and-outlook-to-2028.pdf.
3 American Medical Association. Prior Authorization Physician Survey Report. 2023. https://www.ama- assn.org/system/files/prior-authorization-survey.pdf.
4 National Health Council. NHC Report: Exploring the Burden of Prior Authorization on Patients with Chronic Disease. November 2023. https://nationalhealthcouncil.org/wp-content/uploads/2023/11/NHC- Report-Exploring-the-Burden-of-Prior-Authorization-on-Patients-with-Chronic-Disease.pdf
5 National Health Council. Access, Affordability and Quality: A Patient-Focused Blueprint for Real Health Equity, February 2022, https://nationalhealthcouncil.org/wp-content/uploads/2022/01/Access-Affordability- and-Quality-A-Patient-Focused-Blueprint-for-Real-Health-Equity.pdf
6 Wändi Bruine de Bruin et al., “Medicare Part D Beneficiaries’ Self-Reported Barriers to Switching Plans and Making Plan Comparisons at All,” Health Affairs Scholar 2, no. 11 (November 2024): qxae141, https://doi.org/10.1093/haschl/qxae141.
7 Bombard, Yvonne, et al. “Engaging Patients to Improve Quality of Care: A Systematic Review.” Implementation Science 13, no. 1 (2018): 98. https://doi.org/10.1186/s13012-018-0784-z.
8 Carman, Kristin L., et al. “Patient and Family Engagement: A Framework for Understanding the Elements and Developing Interventions and Policies.” Health Affairs 32, no. 2 (2013): 223–231. https://doi.org/10.1377/hlthaff.2012.1133.
9 Doyle, Cathal, Laura Lennox, and Derek Bell. “A Systematic Review of Evidence on the Links Between Patient Experience and Clinical Safety and Effectiveness.” BMJ Open 3, no. 1 (2013): e001570. https://bmjopen.bmj.com/content/3/1/e001570.
10 Yue Lu, Yuhui Zhao, Xinyu Shangguan, Bin Lv, and Rui Huang, “Patient Attitude and Determinants toward Chronic Diseases Control: A Cross-Sectional Survey in Rural China,” Frontiers in Public Health 10 (2022): 970032, https://doi.org/10.3389/fpubh.2022.970032.
11 National Health Council, Access, Affordability and Quality.