CMS Issues Proposed Rule to Implement Requirements for Medicare Advantage, Part D, and Pharmacy Benefit Managers – On October 20, 2026, CMS published a proposed rule that would implement three sections of the Consolidated Appropriations Act of 2026, including section 6219 (Adjustments to Medicare Part D Cost-Sharing Reductions for Low-Income Individuals), section 6220 (Requiring Enhanced and Accurate Lists of Health Providers Act), and section 6224 (Modernizing and Ensuring Pharmacy Benefit Manager Accountability). The proposed rule would amend existing regulations and have significant implications for Medicare Advantage organizations, Part D plan sponsors, and pharmacy benefit managers and their affiliates. 

The Consolidated Appropriations Act of 2026 (CAA), enacted on February 3, 2026, made significant changes to the Medicare Advantage (Part C) and Medicare Part D programs. The proposed rule would implement those changes as follows:

• Adjustments to Medicare Part D Cost-Sharing Reductions for Low-Income Individuals: The generic drug copayment under Section 1860D-14(a) of the Social Security Act would be reduced from $1 to $0 for full-benefit dual eligible individuals with incomes at or below 100% of the Federal Poverty Level, effective for plan years beginning on or after January 1, 2028.
• Requiring Enhanced and Accurate Lists of (REAL) Health Providers Act: Beginning in contract year 2028, each Medicare Advantage (MA) organization offering a “specified MA plan” (generally, a network-based plan) would be subject to the following provider directory accuracy and accountability requirements:
• Maintain an accurate provider directory on a public website.
• Verify and update the provider directory information of each listed provider at least once every 90 days. CMS proposes that information pertaining to acute inpatient hospitals, critical care services, and surgical services may be verified at least once every 12 months.
• If the MA organization is unable to verify a provider’s information, include a clear indication in the directory that the provider’s information may not be up to date. 
• Remove any provider from the directory within 5 business days if the organization determines that the provider is no longer participating in the network. Enrollees that request hardcopies of the directory would receive quarterly addenda. 
• Disclose in the directory any network provider that is under common ownership or control with the MA organization, its parent, or an affiliate. 
  
  Beginning on or after January 1, 2028, each MA organization would also be required to conduct an annual analysis of a random sample of provider records in the directory to estimate the accuracy of the information contained therein. As proposed, 35% of the sample would be drawn from mental health and substance use disorder treatment specialties. Results would be reported to CMS as a letter-grade score and, beginning in contract year 2029, CMS would publicly display the scores in a machine-readable format, and MA organizations must prominently display those scores in their provider directories. The proposed rule would also establish cost sharing protections for enrollees who rely on inaccurate provider directory information, such as a listing for a provider that is no longer in-network. 
• Modernizing and Ensuring Pharmacy Benefit Manager Accountability: The proposed rule would implement the following compensation, transparency, and enforcement requirements for pharmacy benefit managers (PBMs) and their affiliates, both which CMS defines in this proposed rule:
  
  
  1. Remuneration Limits: PBMs and their affiliates could not receive remuneration for services in connection with the utilization of Part D drugs other than bona fide service fees. A bona fide service fee must be a flat dollar amount reflecting fair market value for an itemized service actually performed that the paying entity would otherwise perform or contract for, and may not be based on drug price, rebate amounts, formulary placement, or referral volume. Exceptions include certain incentive payments, manufacturer rebates, discounts, and other price concessions. The restrictions would not prohibit flat dispensing fees or reimbursement for ingredient costs, including customary, industry-standard discounts.
  2. Price Guarantee Transparency: PBMs would be required to provide transparency regarding price guarantees and cost performance evaluations in their arrangements with Part D plan sponsors. 
  3. Reporting, Disclosures, and Audits: PBMs would be required to submit an annual report to Part D plan sponsors and CMS, describing, among other things, drug lists, pharmacy information, generic and biosimilar data, revenue retained by the PBM, and broker, consultant, advisor, and auditor relationships. PBMs would also have to provide written explanations of contracts with manufacturers. Further, PBMs would be required to permit audits to ensure compliance, with the Part D plan sponsor having the right to select the auditor.
  4. Compliance and Enforcement: CMS would establish compliance and enforcement mechanisms, including disgorgement of fees to CMS for violations of the remuneration requirements, civil money penalty pass-through penalties, remedies for breach of contract, anti-retaliation and anti-coercion protections, and a certificate of compliance.

The proposed rule was published in the Federal Register on October 20, 2026, and the comment period will end on December 15, 2026, at 5 p.m. Eastern Standard Time. 

The CMS Fact Sheet is available here, and the complete proposed rule is available on the Federal Register here.

Reporter, Rebecca Hsu, Atlanta, GA, +1 404 572 3339, rhsu@kslaw.com

HHS and DOJ Launch Six-Month Healthcare False Claims Act Self-Disclosure Pilot Program – On October 22, 2026, HHS and the Department of Justice (DOJ) Civil Division announced the launch of the Healthcare False Claims Act Self-Disclosure Pilot Program (FCA SDPP or Pilot Program), a six-month initiative offering healthcare companies a pathway to obtain a coordinated resolution of civil liability under the False Claims Act (FCA) and certain HHS administrative authorities—namely, revocation of Medicare enrollment and permissive exclusion—by self-disclosing, remediating, and making a financial repayment for potential FCA violations. The Pilot Program is being undertaken by the DOJ Civil Division and three HHS components: (1) CMS; (2) the Office of the General Counsel; and (3) the Office of the Inspector General (OIG). According to the Pilot Program protocol, the program is intended to support legitimate American healthcare businesses seeking to quickly and cooperatively resolve prior misconduct and “move forward with a clean slate.”

The Pilot Program is open to healthcare providers, suppliers, manufacturers, payors, and related entities that furnish, arrange for, manufacture, distribute, insure, administer, or bill for items or services paid for, directly or indirectly, by HHS Federal health care programs. To qualify, the submission must disclose a potential FCA violation previously unknown to the federal government. A company that discloses conduct of which the government was already aware may still receive self-disclosure and cooperation credit under DOJ’s Justice Manual Section 4-4.112, but it is not eligible for a resolution under the Pilot Program. 

Submissions must describe all relevant details of the conduct that potentially violates the FCA, including the specific laws, regulations, or other binding requirements at issue and the relevant time period of the violations, include exhibits reflecting the nature, terms, and operation of the conduct, and provide financial information sufficient for the Civil Division to calculate a “Base Self-Disclosure Repayment” amount. DOJ and HHS reserve the right to request supplemental information in connection with any submission.

Disclosing parties will receive a civil release with no factual admissions for the disclosed conduct. Consistent with the OIG Health Care Fraud Self-Disclosure Protocol, OIG will not require a Corporate Integrity Agreement as part of any resolution of its exclusion authorities, and CMS will not impose civil monetary penalties or seek revocation of Medicare enrollment. Disclosing parties also need not separately disclose the same conduct through the OIG Self-Disclosure Protocol or the CMS Self-Referral Disclosure Protocol.

As a further inducement for self-disclosure under the Pilot Program, the financial repayment to be made in connection with any self-disclosure under the program will be 1.25 to 1.6 times the Base Self-Disclosure Repayment amount. This represents a significant discount from the potential treble damages and per-claim penalties available in an FCA action. The applicable multiplier depends on the timeliness of the disclosure, the duration and scope of the disclosed misconduct, the involvement of senior leadership, the financial benefit to the company, and whether the disclosing company has successor liability for the misconduct but promptly remediated. For Anti-Kickback Statutebased disclosures, the government will forgo damages based on claims-paid amounts and will instead calculate the Base Self-Disclosure Repayment by considering the amount of the remuneration, the revenue derived from the conduct, and the absence of aggravating factors such as patient harm.

Submissions are due by 11:59 p.m. on April 22, 2027, sent to FCA-SDPP@usdoj.gov. Late or partial submissions will not be accepted or reviewed

DOJ’s press release announcing the Pilot Program can be found here, and the FCA SDPP protocol can be found here.

Reporter, David Tassa, Los Angeles, CA, +1 213 443 4335, dtassa@kslaw.com

DOJ Announces Whistleblower Program Offering Early Cash Awards for Fraud Tips

On October 20, 2026, DOJ announced the Fraud Whistleblower Incentive Program (WHIP) which pays tipsters $10,000 to $30,000 for information that leads to criminal charges in certain fraud cases. The program pays awards when charges are filed, which is earlier than most federal whistleblower programs, which pay only after a case is fully resolved. WHIP was developed by the National Fraud Enforcement Division and the Department of Treasury has already committed $25 million to implement it.

DOJ explained that the early payments are intended to encourage prompt disclosure by giving whistleblowers more certainty about the amount and timing of an award. Participants remain eligible for potentially larger awards if their tips ultimately lead to large financial penalties or forfeiture, including through other programs such as the Criminal Division’s Corporate Whistleblower Awards Pilot Program.

The program covers information about federal health care offenses and related crimes, as well as fraud on government programs and benefits administered by the Departments of Agriculture, Labor, Health and Human Services, Housing and Urban Development, Education, Veterans Affairs, and War, and by the Small Business Administration. Within health care, DOJ announced that it will prioritize submissions involving hospice, home health care, day care, and special services fraud.

Tips can be submitted at america.gov/fraud. The program’s terms and conditions are posted at justice.gov/fraud/whistleblower. According to DOJ’s press release, awards will be made in the DOJ’s sole discretion after criminal charges are filed.

WHIP follows Directive 26-12, “Corporate Enforcement in the Fight Against Fraud,” which Assistant Attorney General Colin M. McDonald issued on October 1, 2026. The directive told division leadership to work with law enforcement partners to design programs that encourage whistleblowers to bring forward credible information about fraud. DOJ announced WHIP nineteen days later.

DOJ launched the National Fraud Enforcement Division on April 7, 2026 to centralize and coordinate the investigation and prosecution of fraud involving taxpayer dollars and taxpayer-funded programs. The division is focused on pursuing tax crimes and corporate enforcement, and its work supports the administration’s Task Force to Eliminate Fraud, a government-wide effort chaired by Vice President J.D. Vance that targets fraud, waste, and abuse in federal benefit programs. 

The DOJ press release is available here. 

Reporter, Taylor Whitten, Sacramento, CA, +1 916 321 4815, twhitten@kslaw.com

UPCOMING EVENTS

Life in the Government’s Crosshairs: A Survival Guide for Providers in a New Era of Medicare Advantage Enforcement

Thursday, October 29, 1:00 P.M. – 2:00 P.M. ET

Join us for a roundtable webinar examining critical developments for providers who contract with and submit claims to Medicare Advantage plans, including the evolving enforcement landscape, the growing role of AI in compliance and government oversight, intensified scrutiny of risk adjustment diagnosis coding and its implications for providers, key considerations for MA contract negotiations, and important factors for providers entering marketing arrangements with MA plans. We will also outline practical steps providers can take to minimize risk in this rapidly shifting environment.

For questions, contact Ella Peek.

Editors: Chris Kenny and Ahsin Azim

Issue Editors: Lindsay Greenblatt and Brittany Tandy