Last week, the 2025 payment rates for Medicare Advantage (MA) and Part D plans were announced by the Centers for Medicare and Medicaid Services (CMS). These final policies largely follow the proposals laid out in the Advance Notice and are expected to increase Medicare payments to MA plans by 3.7%, equating to more than $16 billion by next year.
The Medicare Rights Center has positively assessed the completion of the provisions that would help curb the growing and unnecessary costs of MA. However, he continues to urge the implementation of additional and comprehensive reforms in this area. The research by independent experts is clear: Medicare pays MA plans too much, adding up to billions of dollars each year. This situation negatively affects Medicare’s finances, while increasing Part B premiums and costs for taxpayers.
Expectations of an Increase in Medicare Advantage Payments During 2025
According to projections by the Medicare Payment Advisory Commission (MedPAC) by 2024, MA plans are expected to receive payments equivalent to 123% of Original Medicare costs, inflating Part B premiums by $13 billion. It is urgent to address this problem, as overpayments will continue to increase with the increase in enrollment and the number of MA plans.
Faced with these realities, policymakers must respond effectively to concerns about rising Medicare costs, the future of the program, and the need for concrete solutions. In our comments on the 2025 Advance Notice, the CMS is urged to take action on this.
Experts applaud the agency’s responsiveness through the continued introduction of planned changes to the MA risk adjustment model, which will improve the accuracy of the plan’s payments.
However, the same experts say that CMS will maintain the legal minimum coding intensity adjustment of 5.9% by 2025, instead of applying a higher and more effective rate. Since 2018, this minimum amount has not kept pace with the coding intensity and the resulting excess plan payments. By 2020, the risk scores of MA enrollees were already 13% higher than expected, generating $16 billion in overpayments.
By 2022, these additional scores and payments increased to 18% and $37 billion, respectively. It is expected that by 2024, the intensity of MA coding will be 20% higher than that of Original Medicare, which will imply an additional $54 billion. CMS must intervene meaningfully and without delay to address this situation.
Senior to Be Affected by Medicare Advantage Cuts: What to Know
Medicare Advantage plans will see a slight decrease in the base payment of 0.16% next year, which has raised concerns about possible reductions in supplemental benefits for seniors.
Critics such as Florida Senator Rick Scott argue that this decision could result in tangible reductions in health care coverage for those who rely on these plans. Reductions equivalent to $33 per month or $396 per year per beneficiary are projected.
In a press release issued by Scott on Wednesday, it is mentioned: This cut in Medicare Advantage benefits will mean that the 2.8 million seniors in Florida currently enrolled in Medicare Advantage, many of whom are on fixed incomes, will see their supplemental security income benefits reduced by $33 a month, or $396 a year.
