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US Government plans to spend $9.2 tn on Medicare Advantage payments

US Government plans to spend $9.2 tn on Medicare Advantage payments

The US Government plans to spend $9.2 tn on Medicare Advantage (MA) payments over the next decade, with $1.3 tn allocated for MA rebates.

The Centers for Medicare & Medicaid Services (CMS) has proposed a 2.2% increase in MA benchmark payments for 2026, reversing a 0.2% decline from the previous year.

This adjustment would raise payments by more than $21 bn, or 4.33% on average, impacting insurers’ premiums, benefits, and profitability margins. MA plans, provided by private insurers, are an alternative to Original Medicare. Key companies preparing MA bids for 2026 include UnitedHealth, Humana, Elevance, and CVS’ Aetna.

The proposed payment rise aligns with CMS’ ongoing efforts to improve the MA risk adjustment model and growth rate calculations, including costs related to medical education. CMS launched a three-year phase-in plan in 2023 to ensure a smooth transition and predictability for providers and plans.

CMS Administrator Chiquita Brooks-LaSure said CMS remains committed to ensuring Medicare Advantage and Part D beneficiaries have access to stable, affordable care while responsibly managing taxpayer funds.

CMS has worked to ensure that people with Medicare Advantage and Medicare Part D have access to stable and affordable offerings. Today’s Advance Notice continues CMS’ efforts to provide access to affordable, high-quality care in Medicare Advantage while being a good steward of taxpayer dollars.

Chiquita Brooks-LaSure, CMS Administrator

For 2025, MA offerings remain stable, with consistent premiums, supplemental benefits, and coverage options. MA rebates have averaged over $2,400 per person annually, indicating sufficient payment rates during the phase-in.

Public feedback on the proposed rates is open until February 10. The final rates will be announced by April 7, 2025.

In 2025, Medicare Advantage (MA) plans will experience several significant changes impacting payments and enrollee benefits. The Centers for Medicare & Medicaid Services (CMS) has finalized a 3.7% increase in payments to MA plans, translating to over $16 billion in additional funding compared to 2024. This adjustment aims to maintain the stability and strength of the MA program.

A notable enhancement for beneficiaries is the introduction of a $2,000 annual cap on out-of-pocket expenses for prescription drugs under Medicare Part D. This change is designed to alleviate the financial burden of medication costs for enrollees.

Additionally, MA plans will be required to provide mid-year notifications to members regarding any unused supplemental benefits. This initiative ensures that enrollees are fully informed about the benefits available to them, promoting better utilization of plan offerings.

These developments reflect CMS’s commitment to enhancing the Medicare Advantage program, ensuring it remains a robust and affordable option for beneficiaries.