CMS Finalizes 2025 Medicare Advantage and Part D Payment and Policy Changes

Healthcare News

The Centers for Medicare & Medicaid Services have made some important changes for the upcoming year that begins in 2025. As it is responsible for overseeing and implementing healthcare programs that include Medicaid, Medicare, and CHIP, and ensuring compliance within these programs, the following changes are regulatory requirements and will affect Part D of the drug benefit program. 

Takeaways include:

1. Medicare Advantage Payment Rate Adjustments

  • Rate changes: The CMS has finalized a slight decrease of 0.16% in the Medicare Advantage (MA) benchmark rate for 2025. This marks the second consecutive year of reductions
  • Overall revenue increase: Despite the rate cut, MA plans will see an average revenue increase of 3.7% from 2024 to 2025 due to other adjustments in the payment structure​ 
  • The impact on providers: Providers are concerned that lower benchmark rates might lead to reduced reimbursements and increased financial pressure on healthcare organizations.

2. Regulatory and Reporting Requirements

  • Outreach to beneficiaries: MA plans are now required to send mid-year notifications to enrollees about unused supplemental benefits, aiming to improve awareness and utilization of these benefits​ 
  • Supplemental benefits for the chronically ill: New standards have been set for supplemental benefits under the Special Supplemental Benefits for the chronically ill.

3. Quality Measures and Star Ratings

  • Updates to Star Ratings: The CMS is streamlining quality measures, aligning them with the Universal Foundation of core quality measures. Changes include adding new measures and modifying existing ones to better reflect health outcomes and equity​.
  • Health Equity Focus: Utilization management committees in MA plans must now include a member with expertise in health equity and conduct annual assessments on the impact of their practices on low-income and dual-eligible beneficiaries.

4. Medicare Part D Changes

  • An out-of-pocket cost cap: For 2025, there will be a cap on annual out-of-pocket costs for Medicare Part D at $2,000, as mandated by the Inflation Reduction Act of 2022. This is aimed at making medications more affordable for beneficiaries.
  • Formulary changes: Part D plans will be allowed to substitute biosimilars for reference biologic products during the plan year, potentially reducing costs and increasing access to these medications.