Each year at this time, the Centers for Medicare & Medicaid Services (CMS) proposes policies impacting the coverage and care of Medicare Advantage beneficiaries for the following year and often future years as well. This is a critically important exercise for the health care system as Medicare Advantage now serves more than 32 million seniors and people with disabilities.
This population is both more diverse and lower income than enrollees in fee-for-service Medicare. In fact, 38% of Medicare Advantage enrollees have annual incomes of less than $25,000, compared to only 23% of enrollees with fee-for-service Medicare.
The facts show these seniors have chosen Medicare Advantage for compelling reasons:
- Affordability: Medicare Advantage enrollees save an average of $2,400 annually compared to fee-for-service Medicare.
- Benefits: Seniors in Medicare Advantage have access to important benefits such as dental, vision and hearing, in-home services and programs addressing social determinants of health such as nutrition and transportation to medical appointments.
- Quality: Medicare Advantage helps seniors stay healthy. For example, Medicare Advantage outperforms fee-for-service Medicare on 10 out of 11 preventive care measures, and Medicare seniors experience 70% fewer hospital readmissions and 25% fewer preventable inpatient admissions.
- Consumer Experience: Surveys consistently show Medicare Advantage beneficiaries are highly satisfied with their coverage, choice of providers, and care.
This combination of better care at lower costs has made Medicare Advantage an increasingly popular choice. As Medicare Advantage has grown in popularity, policymakers’ interest in this part of Medicare has grown as well.
Over the past three years, the Administration has made a series of fundamental changes to Medicare Advantage, including revising the Star Ratings system, finalizing new rules on how plan payments are audited, restricting and modernizing the prior authorization process, and issuing strong new marketing regulations. This year, CMS began to phase in a new Medicare Advantage risk model, removing 2,000 diagnosis codes over a three-year period, and reducing funding. Taken together, the program is in the midst of the most significant reforms since passage of the Affordable Care Act.
Further, CMS is now implementing very significant changes to the Part D benefit for 2025, including a new benefit and subsidy structure, an updated risk model, and a new program enabling seniors to spread their prescription drug out-of-pocket costs over the course of a calendar year. These changes meaningfully impact Medicare Advantage because nearly all Medicare Advantage beneficiaries are in plans providing Part D prescription drug coverage as part of their integrated benefits package.
In addition to these far-reaching policy changes, recent months have seen a clear spike in seniors’ care utilization that is widely expected to continue into 2025. Reports indicate that the return of elective procedures deferred during the pandemic has been one key driver. Moreover, the Medicare Trustees recently reported they expect Medicare costs on a per capita basis to grow 5.8% for 2025.
It is against that backdrop that the Medicare Advantage policies recently proposed by CMS for 2025 must be evaluated.
Numerous media outlets and independent analysts are in agreement this proposal will result in reduced Medicare Advantage funding for 2025. In fact, Medicare Advantage plans that publicly report their financials have made official filings declaring these proposed rates represent a real reduction in funding for Medicare Advantage in 2025. This is not a reduction in the projected rate of growth of funding, it is an actual reduction – meaning less resources will be available at a time when seniors are utilizing more care.
Scores of stakeholders – including organizations representing seniors, physicians and health equity advocates – have called for stability in Medicare Advantage for 2025. A rare bipartisan super-majority of U.S. Senators and a group of U.S. House members representing diverse constituencies recently wrote CMS urging stability in funding for Medicare Advantage beneficiaries in 2025.
Given the far-reaching reforms to Medicare Advantage still being implemented, the complex changes to seniors’ prescription drug coverage going into effect next year, and growing evidence that seniors will have elevated care needs in 2025, it is essential that funding keep pace to ensure stability and prevent erosion in the benefits and affordability seniors count on in Medicare Advantage.
We look forward to working with CMS and Congress on the shared goals of access and affordability for beneficiaries and to sharing additional data-driven insights during this Advance Notice period.
Mike Tuffin is President & CEO, AHIP