Understanding CY 2026 Bid Review Out-of-Pocket Cost Models for Medicare Advantage and Part D Plans
Relevant to: PDP, PDF, TrOOP, Drug Pricing, Part D
Each week, we scan the latest CMS memos to find the most important ones that apply for PACE programs. Below is a summary of what you need to know.
Disclaimer: The content provided on this site is a summary for informational purposes only, and Grane PBM, Inc. assumes no liability for any errors or omissions in the site’s content. The information does not constitute legal or regulatory advice or replace the original CMS memo. Readers are advised to consult the CMS memo in its entirety and to verify information independently before making any decisions based on this information.
Click here to read the complete memo from CMS.
Introduction
The Centers for Medicare & Medicaid Services (CMS) has published the Contract Year 2026 Bid Review Out-of-Pocket Cost (OOPC) Models for Medicare Advantage and Prescription Drug plans. This tool assists providers in calculating and reviewing costs associated with drug plans, incorporating significant updates aligned with the Part D Inflation Reduction Act. Important for timely planning, these models include considerations for insulin cost shares and the use of maximum fair prices to ensure cost transparency.
Key Dates and Deadlines
- April 1, 2025: Reference date for “Contract Year (CY) 2026 Final Part D Bidding Instructions” memo.
- April 7, 2025: Release date for “Final CY 2026 Part D Redesign Program Instructions.”
- April 17, 2025: Availability date for CY 2026 Bid Review Out-of-Pocket Cost (OOPC) Models on CMS.gov.
- June 2, 2025: Deadline for bid submission.
- Late-May 2025: Expected release date for the refreshed CY 2026 Part D Bid Review OOPC model with May FRF changes.
PACE Compliance
The memorandum detailing the Contract Year (CY) 2026 Bid Review Out-of-Pocket Cost (OOPC) Models is relevant to PACE (Programs of All-Inclusive Care for the Elderly) compliance because it affects how Medicare Advantage Organizations (MAOs) and Part D Plan Sponsors calculate and report out-of-pocket costs, which can influence the costs and coverage offered to PACE participants.
PACE participants are often dual-eligible for Medicare and Medicaid, which means the bid review and outcomes of OOPC models can directly impact their coverage options and financial obligations. Therefore, understanding how these calculations are configured and their regulatory underpinnings is essential for maintaining compliance with Medicare requirements.
For compliance, PACE programs should note the following:
1. MAOs must calculate their Part C and Part D OOPC values separately and combine them for their total OOPC value. Even for PACE plans that may not include a Part D benefit, Part C and Part D OOPC calculations are necessary for bid review purposes.
2. Implement the Part D Inflation Reduction Act (IRA) provisions effectively for CY 2026. This includes using maximum fair prices (MFPs) for selected drugs and incorporating the “lesser of” cost-sharing logic for insulin products.
3. Transition to using True-Out-Of-Pocket Costs (TrOOP) instead of estimated total gross covered drug costs for determining beneficiary progression through benefit phases, to align with Part D redesign provisions.
4. Use the functionality in the OOPC model for running the formulary through a Defined Standard (DS) benefit design to meet enhanced alternative (EA) benefit and meaningful difference requirements.
5. Stay updated with any changes in the May Formulary Reference File (FRF), as these can affect OOPC estimates, although expected to have a neutral or reducing impact.
It is crucial for PACE programs to engage with these requirements to ensure they are meeting all compliance standards as part of their service delivery. Understanding and implementing these OOPC models will support PACE programs in offering accurate and compliant coverage options to their participants.
Required Actions
1. Access and review the Contract Year 2026 Bid Review Out-of-Pocket Cost (OOPC) Models for Part C and Part D on the CMS.gov website on or about April 17, 2025.
2. Calculate the Part C and Part D OOPC values separately and combine them for the total OOPC value applicable to each plan offering for CY 2026.
3. Refer to the HPMS memorandums from April 1, 2025 and the forthcoming final instructions for guidance on using these models in bid review activities.
FAQs
- “What are the Contract Year 2026 Bid Review Out-of-Pocket Cost Models?”
- “How can Medicare Advantage Organizations calculate OOPC values for CY 2026?”
- “What updates are included in the CY 2026 Part D Bid Review OOPC Model?”
- “How does the CY 2026 Bid Review OOPC Model incorporate insulin cost sharing?”
- “Where can I find the technical specifications for the CY 2026 OOPC Models?”
