On April 1, CMS released its finalized payment updates within the 2025 Medicare Advantage and Part D Rate Announcement. The Full Fact Sheet provides details.
The following are some announcement highlights:
- CMS’s goals for all MA and Part D programs to mirror CMS’s vision:
- Advance health equity.
- Drive comprehensive, person-centered care.
- Promote affordability and the sustainability of the Medicare program.
- CMS payments increase from 2024-2025.
- For MA plans: 3.70%, over $16 billion, on average.
- For Private Health Plans: projected to pay between $500 and $600 billion in Medicare Advantage payments.
Expected impact of 2025 changes
Some key things to consider with these changes:
- Growth Rate – Reflects the growth in per capita costs for non-ESRD individuals enrolled in either Medicare Fee-for-Service (FFS) or Medicare health plans. However, the growth in Medicare Fee-For-Service (FFS) per capita costs are what mostly drives this rate.
- Rebasing/Re-pricing – Dependent on the average geographic adjustment index, which is not yet available.
- Change in STAR Ratings – 2025 bonus payments are based on 2024 Stars, which are based on 2022 performance measures. This could impact change between Advance Notice and Rate Announcement due to the QBP ratings plan appeals process. Star Rating updates are in accordance with regulations 42 C.F.R. §§ 422.164, 422.166, 423.184, and 423.186
- Risk Model Revisions and FFS Normalization – Due to a lot of interaction between the MA risk adjustment model updates and the normalization factor update, this impact has been combined
- MA Risk Score Trend – An industry average increase of MA risk scores excluding the normalization and coding pattern adjustments. Individual plan experiences will vary, but taking the industry annual average along with MA demographics and diagnosis coding patterns, this historical data allows the estimate for how MA risk scores to increase for the next year, which results in higher payments to plans.
This CMS Announcement complements policies in the Contract Year 2025 Medicare Advantage and Part D Final Rule (CMS-4205-F), released by CMS on 4/4/2024.
This final rule has some great enhancements to Medicare Advantage and Medicare Part D program, including:
- New guardrails for plan compensation to agents and brokers to stop anti-competitive steering.
- Limiting the distribution of personal beneficiary data by third-party marketing organizations.
- Improving access to behavioral health care providers.
- Mid-year enrollee notification of available supplemental benefits.
- New standards for supplemental benefits for the chronically ill.
- Annual health equity analysis of utilization management policies and procedures.
- Enhance enrollees’ rights to appeal a Medicare Advantage Plan’s decision to terminate coverage for non-hospital provider services.
- Increasing the percentage of dually eligible managed care enrollees who receive Medicare and Medicaid services from the same organization.
- For D-SNP PPOs, limit out-of-network cost sharing.
- Contracting standards for dual eligible special needs plan look-alikes.
- Standardize the Medicare Advantage Risk Adjustment Data Validation (RADV) appeals process.
- More flexibility to more quickly substitute lower cost biosimilar biological products for their reference products.
- Medicare Part D Medication Therapy Management (MTM) program.
CMS also finalized the Medicare Part D drug benefit for CY 2025 improvements resulting in lower drug costs for millions of Medicare members within the Final CY 2025 Part D Redesign Program Instructions Fact Sheet, released by CMS on 4/1/2024. The updates include the following:
- A newly defined standard Part D benefit design consisting of three phases: annual deductible, initial coverage, and catastrophic coverage.
- A lower annual out-of-pocket (OOP) threshold of $2,000.
- The sunset of the Coverage Gap Discount Program (CGDP) and establishment of the Manufacturer Discount Program (Discount Program).
- Changes to the liability of enrollees, Part D sponsors, manufacturers, and CMS in the newly defined standard Part D benefit design
- Policy updates, including:
- Costs Counted Toward True Out-of-Pocket Costs (TrOOP)
- Creditable Coverage
- Policy for Drugs Not Subject to Defined Standard Deductible
- Government Reinsurance Methodology
- EGWP Prospective Reinsurance Amount
- Definition of EA Benefit Design
With all this newly released CMS activity, Garnet River can support you in identifying all your operational impacts. We understand your likely budget constraints and ongoing challenges, that’s why we pride ourselves on doing more with less. Our customized approach delivers superior results with expert guidance and support.
We would love to hear from you. Let’s talk!
Courtney Seypura is practice lead for Garnet River Healthcare. She has more than 20 years of experience in Medicare and Medicaid operations and project management. Garnet River Healthcare helps health plans, administrators, hospitals, and providers improve patient experience and program performance through system and process optimization. Courtney can be reached at cseypura@garnetriver.com or 518-605-0216.
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