Payers react to 2025 Medicare Advantage, Part D Final Rates

Payer trade organizations responded negatively to the 2025 Medicare Advantage and Part D Final Rate Notice, citing rising healthcare costs.

“The CMS Final Rate Notice failed to address the concerns of influential bipartisan Members of Congress, thousands of Medicare Advantage beneficiaries, and more than one hundred organizations serving beneficiaries,” Mary Beth Donahue, president and chief executive officer of Better Medicare Alliance (BMA), said in a statement. “The proposal did not fully account for rising health care costs and a sharp increase in seniors’ use of care impacting patients and providers, putting at risk the stability of care for the program’s more than 32 million beneficiaries.”

The BMA leader pointed to 16 sources that say healthcare utilization is increasing in the US and that Medicare Advantage seniors are increasing their use of preventive healthcare services. She argued that the changes may cause disruptions to benefits or premiums during enrollment season later in the year.

Donahue added that these changes come on the heels of a separate final rule notice, one that made significant changes involving the new risk adjustment model, Medicare Advantage Value-Based Insurance Design supplemental benefits, and Medicare Part D. The rule was the biggest Medicare Advantage overhaul since the ACA went into effect.

AHIP’s president and chief executive officer Mike Tuffin echoed these sentiments. In AHIP’s comment letter on the proposed rule, the organization noted that the 2.44 percent growth rate would not be enough to cover the needs of the Medicare Advantage population.

In the final rate notice, the percent growth rate dropped to 2.33 percent. CMS expected a 0.11 percent decrease in star ratings as a result of the policy changes. Average Medicare Advantage risk scores are expected to rise 3.86 percent.

Despite the growth rate decline, CMS projected a 3.7 percent increase in Medicare Advantage revenue. The agency expected to pay Medicare Advantage plans more than $16 billion in 2025.

The new rate was lower than the previous year. In 2023, CMS announced a 3.32 percent increase in Medicare Advantage payments for fiscal year 2024.