CMS Proposal Projects 3.7 Percent Payment Increase for Medicare Advantage

The Centers for Medicare and Medicaid Services (CMS) recently issued 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). While the proposal would reduce base payments to MA plans by 0.2 percent, CMS projects that increases in the expected growth in risk scores would result in a net average increase of 3.7 percent, a projected $16 billion add. Among other things, the Notice proposes to continue the three-year phase-in of an updated Part C risk adjustment model, Part C and Part D Star Rating updates, continued incorporation of Part D benefit-related provisions of the Inflation Reduction Act (IRA) of 2022, as well as changes to the Part D risk model to reflect these benefit changes. IRA pharmacy benefit changes include elimination of the coverage gap phase and a cap on out-of-pocket costs at $2,000 for CY 2025. Other previously implemented IRA benefits will continue, including no cost sharing for enrollees in the catastrophic phase, a $35 monthly cap on enrollee cost sharing for each covered insulin product, and no cost sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices covered under Part D.

CMS will accept comments on the CY 2025 Advance Notice through 6 p.m. ET on Fri., March 1, 2024, before publishing the final Rate Announcement on or before Mon., April 1, 2024. The CMS Fact Sheet that includes a lengthy set of Frequently Asked Questions on the proposal, rate adjustment process, and potential impacts is available here. The Advance Notice itself is here, and the fact sheet on Part D redesign is here.

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841