The Biden-Harris Administration is committed to protecting and strengthening Medicare. While Congressional Republicans support measures to put Medicare on the chopping block and roll back reductions in drug prices offered through the Inflation Reduction Act, the Administration’s commitment to the more than 65 million Americans with Medicare, and to future beneficiaries, remains unwavering. This includes making sure Traditional Medicare and Medicare Advantage are both strong and stable.
The Administration is continuing on a stable path to support Medicare Advantage private insurance plans in delivering quality health care for seniors and people with disabilities. Actions include ensuring payments are accurate, cracking down on predatory marketing, preventing inappropriate care denials due to prior authorization, and more. For 2025, the Administration is proposing to increase Medicare Advantage payments by 3.7% overall, which amounts to a roughly $16 billion increase. These actions build on the Administration’s ongoing commitments to promote competition in health care markets and lower health care costs for American families.
Medicare Advantage is robust and stable, and plan offerings and enrollment are strong for beneficiaries in 2024, including premiums, supplemental benefits, and choice.
The Medicare Advantage average monthly plan premium remains stable in 2024, with an increase of less than one dollar on average. In addition, enrollee access to supplemental benefits, such as vision, dental, and over-the-counter items, increased. Medicare Advantage rebate dollars, which is the money plans can keep if they bid below the benchmark and put towards supplemental benefits, have more than doubled from 2018 to 2024, including an increase from $206 to $209 per member per month from 2023 to 2024 on average for all plans.
Growth in Medicare Advantage enrollment and increasing plan options suggest strong financial health for private insurance companies. About 99% of eligible Medicare beneficiaries have access to at least one Medicare Advantage plan. From 2023 to 2024, enrollment is projected to increase by 7% for Medicare Advantage plans and by 13.5% for Special Needs Plans (SNPs), which predominantly serve individuals dually eligible for Medicare and Medicaid.
The Biden-Harris Administration is taking actions to protect beneficiaries. The Administration has finalized bold actions and recentlyproposed policies to strengthen Medicare Advantage and hold health insurance companies offering Medicare Advantage plans to higher standards by:
- Establishing new guardrails to address predatory Medicare Advantage marketing, including removing misleading TV ads;
- Proposing new standards for plan compensation to agents and brokers to prevent steerage of patients to plans based on compensation, rather than on the patients’ best interests;
- Stopping prior authorization practices that prevent seniors and people with disabilities from accessing the care they are entitled to;
- Giving Medicare enrollees more accurate, timely, and personalized information about their plan’s supplemental benefits; and
- Making it easier for seniors and people with disabilities to access vital behavioral health care nationwide.
To bolster these and other efforts, the Biden-Harris Administration recently released a public Request for Information to strengthen data transparency and collection in Medicare Advantage. This will inform policymaking going forward and foster continued competition in Medicare.
The Biden-Harris Administration is lowering drug costs in Medicare. The Administration’s commitment to strengthening Medicare Advantage is reinforced by the Inflation Reduction Act. Because of the President’s lower cost prescription drug law, people with Medicare can now access recommended, preventive vaccines for free in Part D; costs are capped at $35 for a month’s supply of each covered insulin product in Part B and Part D; and annual out-of-pocket prescription drug costs are capped in Part D. In 2024, some beneficiaries’ prescription drug costs will be capped at about $3,500, and, in 2025, people with Medicare Part D will benefit from a $2,000 cap on out-of-pocket drug costs. Congressional Republicans have already proposed legislation to undo the Inflation Reduction Act, which would increase health care costs for Americans – and also increase the federal deficit.
Taken together, the Administration’s actions will make the Medicare program stronger.
Additional Background: 2025 Medicare Advantage Advance Notice
The Centers for Medicare & Medicaid Services (CMS) contracts with private insurance companies to offer health care benefits as an option for Medicare-eligible seniors and people with disabilities; this option is known as Medicare Advantage. Every year, CMS is required by law to update how payments are calculated for insurance companies that offer Medicare Advantage, and every year, CMS updates payments based on current costs and trends. Through this process, CMS ensures that payments to insurance companies accurately reflect what it costs to provide services and benefits to Medicare beneficiaries.
On January 31, 2024, CMS released its annual proposed Medicare Advantage payment update, which included a projected overall increase in payments to the private companies that offer Medicare Advantage for 2025. This proposal is called the Advance Notice and the final release is called the Rate Announcement and will be released no later than April 1, 2024. The proposals in the 2025 Advance Notice include routine technical updates to improve payment accuracy and continued phase-in of the technical adjustments finalized in last year’s payment update. The Biden-Harris Administration projects that the proposals in the Advance Notice would result in an increase in payment to insurance companies offering Medicare Advantage of 3.7% on average, which amounts to a roughly $16 billion increase for 2025.
Increasing payments
- CMS finalized anincrease in overall payment to private companies offering Medicare Advantage plans for 2024 and for 2023.
- CMS is also proposing an increase for 2025; Medicare Advantage plans are expected to see a 3.70% year-to-year overall increase in Medicare Advantage payment on average from 2024 to 2025; from 2023 to 2024, private insurance companies offering Medicare Advantage received an overall 3.32% increase on average.
Ensuring accurate payments
Medicare Trustees project the share of spending on Medicare Advantage will continue growing to about 62% of Medicare Parts A & B spending in 2025. The growth in Medicare Advantage spending is not only due to steady enrollment growth in Medicare Advantage plans, but also due to higher per person spending in Medicare Advantage than in Traditional Medicare. This makes it critical that Medicare Advantage health insurance companies are paid accurately and payments are updated as CMS proposes.
Risk Adjustment Model
As required by law, CMS adjusts its payments to insurance companies offering Medicare Advantage to reflect the expected health care costs of their enrollees based on disease factors and demographic characteristics through a process known as “risk adjustment.” CMS periodically makes updates to the Medicare Advantage risk adjustment model, used to set Medicare Advantage payment rates, to reflect more recent utilization and cost patterns and pay accurately for sick patients.CMS is continuing to phase in a more accurate risk adjustment model.
- The updated Medicare Advantage risk adjustment model will continue to be used to pay private insurance plans in Medicare.
- While risk adjustment models in other programs (such as the Affordable Care Act market and Medicare Part D) have been updated to use the ICD-10 system, the previous Medicare Advantage model was based on the ICD-9 coding system, which is not currently used by health care providers.
- CMS is proposing to continue to phase in the updated Medicare Advantage model to ensure the payment models are using more up-to-date data—bringing Medicare Advantage payments in line with current health care practices.
- This will help ensure CMS pays plans more when they enroll sicker beneficiaries, which reduces incentives to cherry-pick healthy beneficiaries and discriminate against sicker patients.
How the Biden-Harris Administration has Strengthened Medicare Advantage
Cracking Down on Misleading Marketing: Through the CY2024 Medicare Advantage Final Rule, the Administration took critical steps to protect people with Medicare from confusing and potentially misleading marketing while also ensuring they have accurate and necessary information to make coverage choices that best meet their needs. Specifically, the Administration prohibited marketing ads that do not mention a specific Medicare Advantage organization or marketing name as well as strengthening existing prohibitions on misleading or confusing advertising, by specifically prohibiting the misleading use of the Medicare name, CMS logo, or products or information issued by the Federal Government.
In the CY2025 Medicare Advantage Proposed Rule, the Administration also proposed new regulations designed to prevent misleading marketing related to special supplemental benefits for the chronically ill that make it appear that the benefits are available to everyone.
Creating Guardrails for Plans Compensation to Agents and Brokers: In the CY2025 Medicare Advantage Proposed Rule, the Administration proposed new regulations to address anti-competitive and anti-consumer steering incentives for plan agents and brokers that have in the past interfered with the ability of agents or brokers to assist an enrollee in finding the plan that is best suited to their needs. In particular, the Proposed Rule would redefine “compensation” to set a clear, fixed amount that agents and brokers can be paid regardless of the plan the beneficiary enrolls in, removing incentives for steering a beneficiary to a plan that is not right for them.
Streamlining Prior Authorization Processes: The Administration is committed to providing important protections that ensure that Medicare Advantage enrollees receive the same access to medically necessary care that they would receive in Traditional Medicare. The CY2024 Medicare Advantage Final Rule achieves this goal by requiring that Medicare Advantage plans comply with coverage determinations and general coverage and benefit conditions in place under Traditional Medicare. The rule also requires that a prior authorization approval be valid for as long as medically necessary to avoid disruptions in care, requires Medicare Advantage plans to annually review utilization management policies, and requires denials of coverage be based on medical necessity and permissible coverage criteria.
The Administration also finalized the Interoperability and Prior Authorization Final Rule to further streamline the prior authorization process. This rule focuses on efforts to improve prior authorization processes through policies and technology, to help ensure that patients remain at the center of their own care. The final rule also addresses decision timeframes for prior authorization requests, requires any prior authorization denial provide a specific reason for the denial to the provider as well as the enrollee, and requires Medicare Advantage plans and other payers to publicly report certain prior authorization metrics.
Increasing Access to Behavioral Health: The Administration understands the importance of building strong Medicare Advantage behavioral health provider networks that improve timely access to services. The CY2025 Medicare Advantage Proposed Rule proposes to update network adequacy standards to include an outpatient behavioral health standard that would encompass a range of providers including marriage and family therapists, mental health counselors and Opioid Treatment Program providers.
Additionally, the CY2024 Medicare Advantage Final Rule added Clinical Psychologists and Licensed Clinical Social Workers as specialty types to the network adequacy standards to help improve access to these providers. It also codified standards for appointment wait times for primary care and behavioral health services to enable individuals to receive the care they need.
Promoting Better Transparency: As part of the Biden-Harris Administration’s efforts to promote competition in health care, the Administration released a Request for Information (RFI) on Medicare Advantage data. The RFI seeks input on access to care including prior authorization, provider directories, and networks; denials of care and appeals; supplemental benefits; marketing; care quality and outcomes; value-based care arrangements and equity; and healthy competition in the market, including the effects of vertical integration.
Advancing More Equitable Care: In the CY2024 Medicare Advantage Final Rule, the Administration finalized a health equity index reward, beginning with the 2027 Star Ratings, to further encourage Medicare Advantage and Part D plans to improve care for enrollees with certain social risk factors. It also clarified rules to ensure that Medicare Advantage plans provide services in a culturally competent manner to individuals with limited English proficiency or reading skills; of ethnic, cultural, racial, or religious minorities; and with disabilities, among other historically underserved and marginalized communities.
