Medicare Advantage insurers get a 3.7% payment increase in proposed update
AHIP says it is reviewing the "complex set" of proposals.
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Medicare Advantage payments are expected to increase on average by 3.7%, or over $16 billion, from 2024 to 2025, as proposed, from the Centers for Medicare and Medicaid Services.
The 2025 Advance Notice for the Medicare Advantage and Medicare Part D Prescription Drug Programs released Wednesday complements a proposed rule, also for 2025, that CMS released in November 2023. This rule would, if finalized, strengthen protections for the millions of people who rely on MA and Medicare Part D prescription drug coverage.
WHY THIS MATTERS
AHIP, the organization representing insurers, said it is reviewing the proposal.
"We are carefully reviewing this complex set of proposals which will impact coverage and care for the more than 50 million beneficiaries who rely on Medicare Advantage and Part D," AHIP President and CEO Mike Tuffin said by statement. "We know that in the post-pandemic environment, MA plans are supporting seniors as they access deferred care and resume normal utilization of medical services at a time of rising medical costs. As significant reforms to Part D are implemented and drug costs continue to rise, it is also critical to ensure enrollees continue to have stable access to high-quality, affordable drug coverage."
WHAT CMS PROPOSES
CMS said it is detailing improvements to the structure of the Medicare Part D drug benefit for 2025 that will result in lower drug costs for millions of people with Medicare through the concurrent release of the Draft CY 2025 Part D Redesign Program Instructions. In 2025, the Inflation Reduction Act reduces annual out-of-pocket costs by capping them at $2,000 for people with Medicare Part D.
The advance notice proposes annual updates to MA payment growth rates and changes to the MA and Part D payment methodologies to improve payment accuracy.
Last year, CMS finalized CY 2024 technical and clinical updates to the MA risk adjustment model, as well as updates to the calculation of growth rates to better account for medical education costs. For 2024, MA offerings for people with Medicare remain stable, including premiums, supplemental benefits and choice.
The CY 2025 Advance Notice includes the continued phase-in of the updated MA risk adjustment model and updates to the calculation of growth rates related to medical education costs, and other technical improvements.
CMS will accept public comment through 6 p.m. ET on Friday, March 1 with publication no later than April 1, 2024.
THE LARGER TREND
More than half of Medicare beneficiaries choose a Medicare Advantage plan, according to AHIP because it provides them with better care at lower costs.
"In addition, more than 23 million seniors and individuals with disabilities have chosen to enroll in stand-alone Part D plans for affordable access to the prescription drugs they need," Tuffin said.
The proposed rule is being released at a time when Medicare Advantage insurers are reporting lower profitability - according to a Moody's report –and earnings statements are reflecting higher utilization of medical services with the resulting impact to medical loss ratios.
ON THE RECORD
"Today's release on the Medicare Advantage payment system proposes the continued phase-in of commonsense technical updates that ensure payments accurately reflect individuals' costs. These updates not only ensure payment is higher for enrollees with the most complex needs, they also make Medicare Advantage less susceptible to gaming and protect the long-term stability of the Medicare program," said CMS Deputy Administrator and Director of the Center for Medicare Dr. Meena Seshamani. "We are also releasing guidance on implementation of vital parts of the president's drug law, including the $2,000 out-of-pocket cap for 2025, which will provide needed relief for millions of Americans who rely on prescription drugs to stay healthy."
Email the writer: SMorse@himss.org
