Payer executives are not happy with CMS' proposed Medicare Advantage rates for 2025.
On a Feb. 7 call with investors, CVS Health CEO Karen Lynch said the company believes the rates are "not sufficient to cover current medical cost trends."
Though CVS Health believes the rate notice is insufficient, it was in line with the company's expectations, Ms. Lynch said.
"However, we do not believe it covers overall cost trends that have been emerging in Medicare Advantage," Ms. Lynch said. "We also know that there's complexity around the risk model, so we'll be contemplating that as we think about our [2025] bids.
The agency published its proposed Medicare Advantage rates for 2025 on Jan. 31. The proposal would cut benchmark payments by 0.2%. CMS said insurers should expect to see 3.7% higher revenue overall, with an MA risk score trend of 3.86% — the average increase in risk adjustment payments year over year — offsetting risk model revisions and a projected decline in star rating bonuses.
"The Advance Notice upholds robust and stable options for people with Medicare while strengthening payment accuracy so that taxpayer dollars are appropriately spent," CMS Administrator Chiquita Brooks-LaSure said in a Jan. 31 statement.
In 2025, the agency will continue phasing in coding adjustment changes, which will be implemented between 2024 and 2026. CMS chose to phase-in the adjustments over three years instead of one in response to pushback from the industry.
Executives with Centene told investors Feb. 6 they also viewed the notice as insufficient. CFO Drew Asher said the phase-in rates have a disproportionate impact on dual-eligible members, a large share of Centene's membership.
Centene is focused on improving margins in its Medicare business rather than growing membership, Mr. Asher said, though plans could be less attractive to seniors with lower benchmark funding.
"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," he said.
In a Feb. 5 regulatory filing, Humana said the rate notice was lower than the company expected, but it did not change its earning guidance because of the proposed rate.
Payers launched the industry's largest lobbying campaign in years in response to the proposed 2024 rates, The New York Times reported in March.
In a Jan. 31 statement, Mike Tuffin, CEO of industry association AHIP, said the group is "carefully reviewing" the rate notice.
"We know that in the post-pandemic environment, MA plans are supporting seniors as they access deferred care and resume normal utilization of medical services at a time of rising medical costs," Mr. Tuffin said. "As significant reforms to Part D are implemented and drug costs continue to rise, it is also critical to ensure enrollees continue to have stable access to high-quality, affordable drug coverage."
The proposed notice is open for comment until March 1. CMS will publish its final rate announcement on or before April 1.