CMS Tightens the Bolts on Supplemental Benefit Reporting

On November 12, 2025, the Centers for Medicare & Medicaid Services (CMS) released a high-impact memorandum, “Submission of Supplemental Benefits Data on Medicare Advantage Encounter Data Records – Reminders and Other Supplemental Service Updates.”
Authored by Jennifer R. Shapiro, Director of the Medicare Plan Payment Group, this memo provides crucial clarifications and operational updates for Medicare Advantage (MA) organizations reporting supplemental benefits through the Medicare Advantage Encounter Data System (EDS).

This in-depth article breaks down the memo into actionable guidance, best practices, and compliance priorities for operations teams, encounter data submitters, plan benefit designers, vendor managers, and Medicare compliance leads preparing for Contract Year (CY) 2026.

Why CMS Released This Update Now

CMS has continued to identify persistent gaps and inconsistencies in supplemental benefit encounter data, including:

  • Missing SBSC codes

  • Incorrect mapping for the year of service

  • Incomplete vendor data

  • Supplemental benefits not aligning with PBP-approved benefits

  • Data not submitted at all for certain benefit types

With supplemental benefits expanding rapidly — including food, utilities, transportation, in-home support, SSBCI offerings, and VBID enhancements — CMS is tightening expectations around accuracy, completeness, and traceability.

This memo serves as both a compliance reminder and a technical implementation guide for MA plans heading into the 2026 benefit year.

1. Mandatory Requirement: All Supplemental Benefits Must Be Reported Through EDS

CMS reiterates that MA organizations are required under 42 CFR §422.310 to submit all supplemental benefits via encounter data.
This includes:

  • Traditional supplemental benefits

  • Expanded VBID benefits

  • SSBCI benefits

  • Benefits delivered through pre-funded cards

  • Benefits administered through multiple vendors

CMS uses these encounter submissions for:

  • Program integrity

  • Validation of PBP-approved benefits

  • Evaluation of supplemental benefit impact

  • Monitoring MA benefit design trends

  • Oversight of member equity and access

Failure to submit complete encounter data may trigger additional CMS follow-up or corrective action.

2. New SBSC Code Update for CY 2026

CMS issued a single but important SBSC code update for the upcoming benefit year:

-  “Three (3) Pint Deductible Waived” → SBSC 9d-1 (effective CY 2026)

Plans must use the SBSC code list that corresponds to the year of service, not the year of submission.

Using the incorrect SBSC year is a leading cause of EDPS Edit 19005 — “Missing Supplemental Benefit Details.”

3. CMS Identifies Key Operational Issues & Best Practices

Based on industry outreach, CMS highlighted several recurring issues:

Common Data Problems

  • Vendors using outdated SBSC codes

  • Inconsistent file formats across different vendors

  • Supplemental services not mapped correctly to benefit categories

  • Inaccurate treatment of returns for pre-funded cards

  • Misclassification of supplemental vs. Medicare-covered extensions

CMS-Recommended Best Practices

  • Standardize file layouts and data dictionaries across all vendors

  • Define internal business rules for Medicare-covered extensions

  • Establish year-of-service SBSC validation checks

  • Create audit processes for supplemental benefit mapping

  • Implement exception reporting for incomplete or unmatched vendor files

Plans that operationalize these best practices will reduce EDS rejections and strengthen compliance.

4. Expectations for 2024 and 2025 Dates of Service

CMS acknowledges that some plans may lack full historical data for early 2024, but makes expectations clear:

• Plans should submit complete 2025 DOS supplemental benefit data.

• 2024 DOS data should be submitted when available.

CMS is monitoring data completeness and may reach out when encounter volume appears low relative to approved benefits.

5. Guidance for Handling Returns on Pre-Funded Cards

One of the most challenging areas involves returns for purchases made with pre-funded cards used across categories such as:

  • Grocery

  • OTC

  • Utilities

  • Transportation

  • Wellness support

Because vendor systems often cannot link returns to original purchases, CMS allows:

  • A reasonable allocation methodology

  • Documentation of consistent, repeatable processes

  • Vendor improvements to strengthen linking capabilities

CMS is actively seeking feedback to develop future policy around these scenarios.

6. VBID and SSBCI Reporting Requirements

CMS explicitly states that both VBID benefits and Special Supplemental Benefits for the Chronically Ill (SSBCI) must be submitted through EDS.

Example mappings:

  • Food/produce packages → SBSC 13i1

  • Utility support → SBSC 13n

  • Transportation support → SBSC 14b1

Accurate reporting ensures CMS can evaluate utilization, health equity outcomes, and program effectiveness.

7. Supplemental Extensions of Medicare-Covered Services

CMS clarifies that extensions of Medicare-covered services can be supplemental benefits, and encounter reporting must reflect the correct SBSC.

Plans must:

  • Document internal logic

  • Train claims, configuration, and vendor teams

  • Ensure clarity in system configuration

No changes to current reporting formats were introduced — but CMS expects improved consistency.

8. Dental Encounters: Important MA-Specific Clarification

CMS reiterates:

  • MA plans must follow the MA Supplemental Dental Submission Guide.

  • A/B MAC billing rules do not apply to MA 837D dental encounters.

This is a critical distinction for plans using dental TPAs who may default to Medicare FFS rules.

9. CMS Will Increase Monitoring and Follow-Up

CMS will monitor supplemental benefit encounter submissions to verify:

  • Completeness

  • Accuracy

  • Alignment with PBP benefits

  • Consistency across vendors

  • Proper SBSC mapping by year

Plans should expect inquiries where patterns appear unusual.

10. CMS Requests Industry Feedback

Feedback is specifically requested for:

  • Challenges with pre-funded card returns

  • Vendor tracking limitations

  • Mapping complexities

  • Data linkage issues

Send comments to:
📩 RiskAdjustmentOperations@cms.hhs.gov
Subject: “Supplemental Benefits Submission – November 2025 Memorandum”

What Plans Should Do Before CY 2026

Here is a recommended readiness checklist:

  • Update SBSC codes for 2026

  • Audit 2025 supplemental encounters for completeness

  • Align all vendors to standardized file formats

  • Strengthen validation logic for year-specific SBSC

  • Enhance pre-funded card transaction tracking

  • Document rules for Medicare-covered extensions

  • Train all internal stakeholders and vendors

Final Takeaway

CMS is making supplemental benefit encounter reporting more structured, transparent, and data driven. As supplemental benefits expand in scope and importance — especially for food, utilities, transportation, in-home support, SSBCI, and VBID — the integrity of encounter data will directly influence oversight, policy, and program success.

CY 2026 is a turning point. Plans that invest now in stronger governance, vendor alignment, and data controls will be best positioned for compliance and performance.