MA Payment Reductions May Impact Value of Healthcare for Beneficiaries

The proposed 2025 Medicare Advantage Advance Notice would impact the value of healthcare for beneficiaries, resulting in higher costs, according to an analysis from the Berkeley Research Group (BRG).

CMS estimated that the policies in the Advance Notice will increase Medicare Advantage plan revenues by 3.70 percent but reduce the 2025 benchmark rate by 0.16 percent compared to current policies.

BRG projected that Medicare Advantage medical cost inflation will increase by 4 to 6 percent in 2025, and plans will need to increase payments for medical costs by at least 2 percent to cover a portion of this growth.

The expected Medicare Advantage inflation outpaces the 2.4 percent growth factor CMS included in the Advance Notice, making the proposed payment update insufficient.

The increase in medical inflation and the proposed payment reduction will likely impact beneficiaries and their care, according to BRG’s data. The analysis explored how the 2.9 percent reduction in net risk scores, 0.5 percent decrease in payments due to star rating changes, and the 2.4 percent growth factor will affect the value of healthcare for beneficiaries.

The value of supplemental benefits or reductions to premiums and cost-sharing could fall by $33 per beneficiary per month on average. Consequently, beneficiaries would face higher healthcare costs. The impact on beneficiaries fully eligible for Medicare and Medicaid could be reduced by $50 per beneficiary per month.

The higher costs may vary significantly by state due to changes in the risk score impact on the phased-in new model and star ratings, the analysis noted. Nevada, Texas, Kansas, and Nebraska will see the greatest estimated impact, with the value of supplemental benefits or reductions to premiums and cost-sharing falling by $60 or more per beneficiary per month.

The value of benefits could fall by $20 or more in around half of states, increase by $15 in seven states, and increase by $30 or more in Wyoming and Delaware.

Beneficiaries dually eligible for Medicare and Medicaid would likely experience more significant impacts, BRG estimated. The value of supplemental benefits in Nevada, Texas, Kansas, Nebraska, and Indiana could fall by $90 or more per beneficiary per month. The value of benefits could drop by $50 or more in 20 states, while Arkansas, Idaho, South Carolina, Wyoming, and Delaware could see increases in value.