Medicare Advantage extras on the chopping block in 2025

Medicare Advantage insurers are planning to pare down their plan offerings in 2025. 

Facing lower reimbursement rates from CMS and higher medical costs, many plan executives said they will prioritize margins over growing their membership numbers. 

Brian Kane, CEO of Aetna, told investors May 1 that the company will prioritize "margins over membership" in 2025. The company will exit counties where it believes it can't be profitable, Mr. Kane said.  

"It's hard to say right now that we won't have a meaningful decrease in membership," Mr. Kane said. "It's certainly possible." 

Aetna's competitors will be faced with the same choices, Mr. Kane said. 

Humana executives also said the company is eyeing market exits in 2025. Susan Diamond, Humana's CFO, said the company is expecting a net decline in its MA membership next year. 

"Whether that is incrementally larger or smaller based on the other plans will be very dependent on what we see across the competitive landscape," Ms. Diamond said April 24. 

On first-quarter earnings calls, payer executives told investors they are disappointed in CMS' 2025 rate notice. The notice will decrease benchmark payments, which insurers say amounts to a cut in funding for the program. 

Medical costs are also on the rise in Medicare Advantage. CVS Health told its investors that Medicare Advantage costs keep climbing, partly driven by seasonal inpatient admissions. Outpatient services, including mental health and pharmacy, and dental spending also increased costs, CVS said. 

In its final rate notice published April 1, CMS said it was aware Medicare Advantage organizations were reporting rising costs but was "not aware of all of the specific drivers accounting for the experience of these MA organizations. We have reviewed incomplete fourth quarter 2023 Medicare FFS incurred experience and it is consistent with our projections." 

Payers have also said they will cut back on supplemental benefits to account for lower rates. 

CVS Health CEO Karen Lynch said it wil adjust plan-level benefits in 2025. The company led the industry in growth in 2024 but was a "notable outlier" compared to its peers in adding on supplemental benefits to entice members, The Wall Street Journal reported May 1.

Some Aetna plans offer a fitness reimbursement, according to The Wall Street Journal. Members could cash in the benefit for pickleball paddles, golf clubs and other sports equipment — but these extras could be a thing of the past in a tougher rate environment. 

While every payer criticized CMS's proposed rates, some executives said they would hold off on discussing their specific strategy until final bids are due. Insurers must send their MA plan proposals for 2025 to CMS by early June. 

"It's too early to provide specifics for the 2025 bid at this stage," Elevance Health CEO Gail Boudreaux told investors. "I'm going to repeat, we're looking to really balance growth and margins." 

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