The Centers for Medicare & Medicaid Services (CMS) issued its annual Advance Notice for the Medicare Advantage and Medicare Part D programs (CMS-0006-P) (and fact sheet) on January 31, proposing a net 3.7% increase to rates applicable in CY 2025. Some argue it is still a cut to MA plans, as the increase is roughly the average of the past nine years—but far less than the 8.5% increase the MA plans received in CY 2023.

Like provider rates, MA rates have several adjusters applied to the final rate. The CY 2025 proposed MA rate includes several negative rate adjustments with the final rate being less than the average increase in MA risk scores. MedPAC and others have raised concerns about plans coding intensity leading to higher risk scores, resulting in “overpayments.” The CMS proposal is an average rate increase and plan-specific increases will vary—meaning all plans may see an increase for 2025. CMS does not anticipate impacts to beneficiary premiums resulting from the proposed changes and believes the market is stable.

The notice includes proposed improvements to the Part D drug benefit that ties to Part D Redesign program proposals in its previously-released CY 2025 proposed MA policy and technical rule (issued December 2023). The combined policy and structural improvements are expected to result in lower costs for Medicare beneficiaries, according to CMS.

It remains to be seen if MA plans not satisfied with the proposal will seek remedy from Congress, especially after 61 U.S. senators showed their support late last week in a letter to CMS Administrator Chiquita Brooks-LaSure. It is likely this letter was sent in anticipation of this notice being released.

The annual notice is where CMS outlines updates to payment policies for MA and Part D programs for the coming year. Comments on the notice will be accepted on the rule through March 1, 2024, at 6 p.m. ET, and a final rate notice will soon follow on or before April 1, which is common practice for this annual notice.

LeadingAge will evaluate the notice to determine if there are areas upon which it would be appropriate for us to comment.