Medicare Advantage (MA) plans, which are privately administered alternatives to traditional Medicare, will see transformative regulatory updates in 2025. These changes are being implemented by the Centers for Medicare & Medicaid Services (CMS) to improve health equity, simplify plan structures, reduce out-of-pocket costs, and better support beneficiaries, especially those with chronic conditions or dual eligibility for Medicare and Medicaid.
1. Part D Prescription Drug Cost Cap
One of the most significant changes is the introduction of a $2,000 annual cap on out-of-pocket prescription drug costs under Medicare Part D. This cap, part of the Inflation Reduction Act, is designed to alleviate the financial burden for beneficiaries with high medication expenses. Millions are expected to benefit from this cost-saving measure.
2. Improved Supplemental Benefits Notification
Medicare Advantage plans have increasingly offered supplemental benefits such as vision, dental, hearing, and services addressing social determinants of health (e.g., transportation, home meal delivery). However, many beneficiaries remain unaware of these benefits or underutilize them. Starting in 2025, MA plans will be required to issue personalized mid-year notifications to enrollees, informing them of unused supplemental benefits and providing guidance on accessing them.
3. Health Equity Measures
CMS is emphasizing health equity through annual evaluations of utilization management (UM) practices. MA plans must:
- Include health equity experts in UM committees.
- Analyze the impact of UM policies on underserved populations.
- Publish these findings to enhance transparency and address disparities in care access for low-income or dually eligible individuals.
4. Enhanced Support for Chronically Ill Beneficiaries
Special Supplemental Benefits for the Chronically Ill (SSBCI) will face stricter evidence-based requirements. Plans must demonstrate that benefits improve or maintain health for enrollees with chronic conditions. This ensures targeted, meaningful support while curbing misleading marketing practices.
5. Integration for Dually Eligible Individuals
To simplify care for individuals eligible for both Medicare and Medicaid, CMS is expanding integrated care options:
- Dually eligible enrollees will have monthly opportunities to switch to integrated Dual Eligible Special Needs Plans (D-SNPs).
- Plans will reduce the number of non-integrated options to streamline choices and improve coordination of services.
6. Star Ratings and Quality Measures
The MA Star Ratings system will see updates to align with CMS’s Universal Foundation of quality measures. Changes include:
- Adjusting measures to prioritize health outcomes over patient satisfaction.
- Introducing a health equity index for performance evaluation.
7. Adjustments to Plan Payments and Risk Models
Payment methodologies for Medicare Advantage and Part D plans will incorporate new risk adjustment models and fee-for-service payment data. These updates aim to improve payment accuracy and maintain stability in plan offerings.
8. Cost-Control Measures
- Biosimilars Substitution: Part D plans will have greater flexibility to substitute lower-cost biosimilars for reference biologics, reducing medication costs.
- Agent Compensation Rules: Stricter rules will curb anti-competitive practices in agent and broker compensation.
These reforms reflect CMS’s ongoing efforts to make Medicare Advantage plans more equitable and accessible, while ensuring beneficiaries receive better value and care. As these changes roll out, beneficiaries should review their plans carefully during open enrollment to make informed decisions about their healthcare coverage.
For more detailed information, visit CMS’s updates on Medicare Advantage or refer to HHS’s press release.
