Changes Are Coming to 2026 Medicare Benefits

1. Changes to reimbursements. Reimbursements for qualifying alternative payment model participants will increase 3.77% and 3.26% for non-participants. However,  the Centers for Medicare & Medicaid Services (CMS) also announced an “efficiency adjustment” of -2.5% that will particularly impact specialty providers who utilize procedure, non-time based service codes. This impacts services ranging from surgery and pain management to cancer care. These changes have been met with resistance from some medical groups, most notably the American Medical Association (AMA). .

There are also changes to Medicare’s Quality Payment Program/Merit-based Incentive Payment System and Medicare Shared Savings Program. Eligibility is now more clearly identified for beneficiaries who have at least one qualifying primary care service from an Affordable Care Organization provider. This results in less ambiguity about the beneficiaries’ assignment and attribution.  The greater overlap should improve the validity of quality performance scores and streamline data collection and processing. This change should also improve alignment between financial and clinical performance since quality measures would drive improvements in the same group of patients whose outcomes determine shared savings.

CMS will also now recognize and incentivize behavioral health and psychiatric services in a primary care setting, an action long sought by primary care clinicians, who want to see behavioral and psychiatric health considered a core component of the comprehensive primary care plan. 

2. Prior authorization pilot testing.  Medicare prior authorization will be tested in six states — Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. Providers in those states will need to receive pre-authorization for 17 services including skin and tissue substitutes, spinal cord implants, and knee arthroscopy. It is important for providers and their staff to be aware of the types of procedures affected and how that may impact their budget, workflow, and treatment timeline. 

The pilot pre-authorization requirements also include a component to test the efficacy of AI in the authorization process. If these tests go well and expenses related to services are reduced without impacting patients’ ability to access care, I expect these changes will be more widely adopted in the future.

While these changes only impact six states for 2026, it is expected that Medicare Advantage will mimic the pre-authorization requirements across the country. Therefore, providers outside of the initial six states should also be aware of how pre-authorization could impact their business.

3. AI integration. Providers need to push CMS for clarity and understand what criteria is being used to train AI in the authorization process and how the appeals process will work. 

The testing of AI in the pre-authorization process has been met with skepticism in the past. A recent AMA study found that more than 60% of physicians said a payers’ reliance on AI has increased denial rates, and 93% said prior authorization delays care. Even minor delays in care can have serious consequences for seniors on Medicare. 

With that said, AI can be helpful and should be embraced by providers where it makes the most sense. For example, many electronic health records offer online training modules that provide a guide for prior authorization forms. AI documentation tools are also available, taking key notes from an office visit and highlighting pertinent information that may be needed to obtain pre-authorization. These options could save time and money, reduce denials, and ultimately help lower provider burnout by reducing administrative tasks.