Healthcare payer executives are expressing dissatisfaction with the Centers for Medicare & Medicaid Services’ (CMS) proposed Medicare Advantage rates for 2025. CVS Health CEO Karen Lynch and Centene’s CFO Drew Asher highlighted concerns over the proposed rates during investor calls, citing inadequacies in addressing current medical cost trends and the disproportionate impact on certain membership segments. Despite industry pushback, CMS defended its proposal, emphasizing its commitment to maintaining stability and accuracy in payment allocations. The industry now awaits further dialogue and potential adjustments before the final rates are announced.
Healthcare payer executives are expressing significant concern over the Centers for Medicare & Medicaid Services’ (CMS) proposed Medicare Advantage rates for 2025. CVS Health CEO Karen Lynch voiced dissatisfaction with the rates during an investor call on February 7, indicating that the company believes they fail to adequately cover current medical cost trends. Despite this, Lynch noted that the proposed rates were anticipated by CVS Health, although they are deemed insufficient to address the evolving cost dynamics within Medicare Advantage plans. Lynch emphasized the complexity surrounding the risk model and hinted at adjustments to their bidding strategies for 2025.
Published on January 31, CMS released its proposed Medicare Advantage rates for 2025, indicating a slight reduction of 0.2% in benchmark payments. However, CMS projected an overall revenue increase of 3.7% for insurers, attributing it to a 3.86% rise in the MA risk score trend, which offsets revisions in the risk model and a predicted decrease in star rating bonuses. CMS Administrator Chiquita Brooks-LaSure defended the proposal, highlighting its commitment to providing robust options for Medicare beneficiaries while ensuring accurate allocation of taxpayer funds.
CMS plans to gradually implement coding adjustment changes between 2024 and 2026, aiming for a smoother transition following industry resistance. This phased approach was chosen in response to concerns raised by stakeholders.
Executives at Centene echoed similar sentiments, expressing disappointment with the proposed rates during an investor briefing on February 6. Centene’s CFO Drew Asher emphasized the disproportionate impact of phase-in rates on dual-eligible members, who constitute a significant portion of Centene’s membership base. Asher outlined Centene’s focus on enhancing margins in its Medicare business rather than solely concentrating on membership growth. However, he acknowledged that adjustments to bidding strategies might result in less attractive offerings for seniors if final rates remain unfavorable.
Humana, in a regulatory filing on February 5, stated that while the proposed rate notice was lower than anticipated, it did not alter the company’s earnings guidance. This suggests that Humana is maintaining its financial projections despite the potential impact of the proposed rates.
The healthcare payer industry has mobilized in response to the proposed rates, launching a substantial lobbying campaign, reportedly the largest in years, following the announcement of rates for 2024. Industry association AHIP, represented by CEO Mike Tuffin, issued a statement on January 31, indicating a careful review of the proposed notice. Tuffin emphasized the critical role of Medicare Advantage plans in supporting seniors, particularly as they seek deferred care and resume normal medical service utilization amidst rising healthcare costs. With significant reforms to Part D and escalating drug costs, Tuffin stressed the importance of ensuring stable access to high-quality, affordable drug coverage for enrollees.
Stakeholders have until March 1 to submit comments on the proposed notice, with CMS scheduled to release the final rate announcement on or before April 1. This timeline provides an opportunity for further dialogue and potential adjustments to address industry concerns before the rates are finalized.
The discourse surrounding CMS’ proposed Medicare Advantage rates for 2025 underscores the complexity and significance of payment allocations within the healthcare industry. While payer executives express apprehension over the proposed rates’ adequacy, CMS remains steadfast in its commitment to upholding stability and accuracy. As stakeholders engage in dialogue and submit comments, the industry awaits further developments leading up to the final rate announcement. This period of deliberation represents an opportunity for collaboration and refinement, ensuring that Medicare Advantage plans continue to provide high-quality, affordable coverage for beneficiaries.
