Medicare Advantage members could see $396 benefit cut in 2025

Medicare Advantage beneficiaries could see their supplemental benefits reduced or cost-sharing increase by $33 a month on average in 2025, according to an analysis from the Berkeley Research Group. 

The analysis, published Feb. 26, was commissioned by the Better Medicare Alliance, a pro-MA group backed by insurers. 

CMS' proposed rates for Medicare Advantage plans in 2025 will not offset rising medical costs, the research group found. Every major insurer has indicated medical costs in the program are on the rise. 

The analysis projected medical costs will rise between 4% and 6% in 2025. CMS' proposal would cut benchmark payments to plans by 0.16%, according to the agency's estimates. 

Plans could offset some of the difference between CMS' payments and rising medical costs through various measures, including administrative savings, analysts wrote. 

"However, there are limits to a plan's ability to control costs and thus the expected increase in medical inflation will likely impact beneficiaries," BRG analysts wrote in the report. 

On average, Medicare Advantage beneficiaries will see a $33 reduction in benefits each month in 2025, BRG estimated. This average cut varies by state, with beneficiaries in Nevada seeing an estimated $90 per month reduction in benefits, while beneficiaries in Wyoming will pick up an estimated $34 in additional benefits per month. 

Dual-eligible beneficiaries will see higher reductions in benefits, at an estimated $50 per month, according to BRG. 

Some payer executives said they will consider cutting supplemental benefits in plans to offset lower payments from CMS. 

"We'll just adjust the bids accordingly, and the products may be a little bit less attractive for seniors from an industry standpoint if we don't make a lot of progress on the final rates," Centene CFO Drew Asher said on a Feb. 6 call with investors. 

Executives and industry groups have decried the proposed rates, which they say do not account for the rising medical cost trend in the program. 

Better Medicare Alliance President and CEO Mary Beth Donahue said in a Feb. 15 news release the rate notice should be adjusted to ensure stability in the program. 

"There has been a notable increase in seniors using health care services from their doctors and providers, which makes sense given an increasingly aging population and the pent-up demand after the COVID-19 pandemic," Ms. Donahue said. 

In its proposed rate notice, CMS said the cut in benchmark payments will be offset by rising levels of risk adjustment payments. 

"CMS continues to ensure that Medicare Advantage and Part D prescription drug plans remain strong, stable, and affordable offerings," CMS Administrator Chiquita Brooks-LaSure said in January. "The Advance Notice upholds robust and stable options for people with Medicare while strengthening payment accuracy so that taxpayer dollars are appropriately spent." 

See the full report here. 

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