Recently, the United States Centers for Medicare and Medicaid Services (CMS) released the Calendar Year (CY) 2025 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Advance Notice). CMS is required to update the MA payment rates on an annual basis and periodically conduct technical updates to risk adjustment to keep MA payments up-to-date and accurate.
The expected impact of the proposed policy changes on MA plan payments relative to last year are as follows: a 2.44% effective growth rate; a -0.15% change in star ratings, no change in MA coding pattern adjustment, a -2.45% change in risk model revision and fee-for-service normalization, and a 3.86% increase in MA risk score trend. All of those changes are expected to result in a 3.70% average change in revenue, for a more than $16 billion increase in expected MA payments for 2025. Of course, there will be variation among plans in terms of their plan-specific impacts, with some plans seeing a larger impact year over year and other plans seeing a smaller impact.
CMS also notes that if the proposal is finalized, it is likely that premiums and benefits would remain stable for CY 2025, similar to CY 2024. In CY 2024, CMS notes that the MA average monthly plan premium had an increase of less than one dollar on average, with plan choice and average supplemental benefit offerings increasing across plans.
AMGA Concerns
AMGA has spoken out about concerns with the proposed rate cut in the 2025 MA rate notice, noting that the cut will “adversely affect medical groups and health systems, who are already absorbing payment cuts in traditional Medicare at the same time they are facing increased costs.” AMGA goes on to note that the Advance Notice proposes a reduction in the benchmark rate while continuing the phase-in of a modification to the risk adjustment model, which would result in a 0.16% decrease benchmark rate. While AMGA notes that such a decrease is not significant by itself, when combined with increased costs and higher demands, it has the potential to have a significant impact.
In speaking about its concerns, AMGA continued to reiterate its support for the MA program, noting recent endorsements and supportive statements surrounding other CMS proposals. AMGA believes that MA will “play a significant role in the transition to value-based care and in achieving CMS’ goal of having 100% of traditional Medicare beneficiaries in a value-based arrangement.”
“On paper, it may appear that Medicare Advantage plans can afford a little belt tightening,” said AMGA President and CEO Jerry Penso, MD, MBA. “But the providers they contract with already are facing cuts of more than 3% on the fee-for-service side. In addition, there are potential impacts to patient care, such as decreased access, a reduction in available services, and decreased programs that address social drivers of health. I think CMS is underestimating the ramifications of further payment reductions for providers and their patients.”
Rate Announcement Expected by April 1, 2024
CMS accepted comments on the CY 2025 Advance Notice through 6:00 PM ET on March 1, 2024, and will publish the final Rate Announcement by April 1, 2024.
For greater details and to see the Advance Notice in its entirety, click here. A Fact Sheet and FAQ document can be found here.