On April 1, 2024, the Centers for Medicare & Medicaid Services (CMS) finalized the Calendar Year (CY) 2025 Rate Announcement for the Medicare Advantage (MA) and Medicare Part D Prescription Drug (Part D) Programs that updates payment policies for these programs and ensures payment accuracy. The Rate Announcement complements policies in the CY 2025 MA and Part D proposed rule that would strengthen protections for the millions of people who rely on MA and Medicare Part D prescription drug coverage, which will be finalized in the coming days. Under this CY 2025 Rate Announcement, payments from the government to MA plans are expected to increase on average by 3.70 percent, or over $16 billion, from 2024 to 2025. The federal government is projected to pay between $500 and $600 billion in Medicare Advantage payments to private health plans in 2025.
CMS is also finalizing improvements to the structure of the Medicare Part D drug benefit for CY 2025 that will result in lower drug costs for millions of people with Medicare through the concurrent release of the Final CY 2025 Part D Redesign Program Instructions. Thanks to the Inflation Reduction Act, President Biden’s lower-cost prescription drug law, annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D in 2025, leading to even more savings for people with Medicare Part D in CY 2025.
“Thanks to the President’s lower cost prescription drug law, the Inflation Reduction Act, millions of people with Medicare Part D will see even lower costs next year. Your out-of-pocket costs for prescription drugs will be limited to no more than $2,000, keeping more of your money in your pocket,” said HHS Secretary Xavier Becerra. “In addition to improving the Part D drug benefit, we are updating payments to Medicare managed care plans for people who rely on these plans. The Biden-Harris Administration will continue to work on lowering health care costs for all Americans, fulfilling a promise the President made.”
“CMS continues to take steps to maintain the stability of the Medicare Advantage and Part D prescription drug programs,” said CMS Administrator Chiquita Brooks-LaSure. “The finalized policies in the Rate Announcement and the Part D Redesign Program Instructions will make improvements to keep Medicare Advantage payments up-to-date and accurate, lower prescription drug costs, and ensure that people with Medicare have access to robust and affordable health care options.”
The Rate Announcement finalizes annual updates to MA payment growth rates and changes to the MA and Part D payment methodologies to improve payment accuracy. The finalized CY 2025 Rate Announcement incorporates the most recent available fee-for-service payment data through quarter 4 of 2023 and includes the continued phase-in of the updated MA risk adjustment model that was first implemented in 2024 and continued phase-in of updates to the calculation of growth rates related to medical education costs, as well as other technical improvements. Last year, CMS finalized CY 2024 technical and clinical updates to the MA risk adjustment model to keep it up-to-date and improve payment accuracy, as well as updates to the calculation of growth rates to better account for medical education costs. For 2024, MA offerings for people with Medicare remained stable—including premiums, supplemental benefits, and choice.
“We are also pleased to finalize guidance on the new $2,000 out-of-pocket cap for prescription drugs under Medicare Part D in 2025, which was enacted in the President’s prescription drug law. This new provision will provide meaningful additional cost savings and relief to enrollees who have been facing high and rising drug costs,” said CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani, MD, Ph.D.
The finalized CY 2025 Rate Announcement may be viewed by going to: https://www.cms.gov/medicare/payment/medicare-advantage-rates-statistics/announcements-and-documents/2025
A fact sheet discussing the provisions of the finalized CY 2025 Rate Announcement, as well as frequently asked questions, can be viewed here: https://www.cms.gov/newsroom/fact-sheets/2025-medicare-advantage-and-part-d-rate-announcement
The final CY 2025 Part D Redesign Program Instructions can be found at: https://www.cms.gov/files/document/final-cy-2025-part-d-redesign-program-instructions.pdf
A fact sheet discussing the provisions of the Final CY 2025 Part D Redesign Program Instructions can be viewed here: https://www.cms.gov/files/document/fact-sheet-final-cy-2025-part-d-redesign-program-instructions.pdf
On February 6, 2024, CMS released an FAQ memo clarifying how a new Medicare rule (Final Rule) and the Affordable Care Act impact the use of AI and algorithms by MA organizations in making Medicare Advantage coverage determinations. The final rule (CMS Final Rule, CMS-4201-F) became applicable to coverage beginning January 1, 2024.
The 2024 Medicare Advantage and Part D Final Rule (CMS-4201-F), issued by the Centers for Medicare & Medicaid Services (CMS), introduces significant changes to enhance the Medicare Advantage (MA) and Medicare Part D programs. Let’s delve into the key provisions:
For more details, you can refer to the official CMS fact sheet. The changes aim to improve healthcare delivery and ensure better outcomes for Medicare beneficiaries.
March 14: A new CMS blog titled “Update on the Medicare Value-Based Care Strategy: Alignment, Growth, Equity” provides a progress report on accomplishments and a look toward the future for CMS’ Value-Based Care Strategy. It also covers CMS’ strategy to move toward value-based payment, a focus on alignment across payers, growth in accountable care, and promoting equity. Among other topics, CMS aims to scale model learnings, support primary care providers in value-based care, improve quality measurement, and improve the flexibility of practitioners to work with community-based organizations to address social needs, while also emphasizing the importance of value-based data transparency and fostering competition within Medicare Advantage.
Updates on Medicare value-based care strategy typically focus on various key components aimed at improving healthcare quality, reducing costs, and enhancing patient outcomes. Some of these key components include:
These key components represent the multifaceted approach that Medicare takes to advance value-based care and drive meaningful improvements in the healthcare system.
Biden-Harris Administration Announces New Initiative to Increase Investments in Person-Centered Primary Care
ACO Primary Care Flex Model aims to improve access to high-quality primary care for underserved Medicare populations
Today, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), announced a new voluntary model that empowers primary care providers in eligible Accountable Care Organizations (ACOs) to treat people with Medicare using innovative, team-based, person-centered proactive care. A key part of the Biden-Harris Administration’s efforts to further promote competition in health care, the ACO Primary Care Flex Model (ACO PC Flex Model) will provide a one-time advanced shared savings payment and monthly prospective primary care payments (PPCPs) to ACOs. The advanced shared savings payments provide ACOs with needed resources and flexibility to cover costs associated with forming an ACO (where relevant) and administrative costs for required model activities. PPCPs will be distributed by ACOs to primary care practices, giving them improved resources and flexibility to provide care that best suits individuals’ needs.
The model is the latest example of the CMS Innovation Center’s investment in strengthening the primary care system. The Innovation Center was established by the Affordable Care Act to identify ways to improve healthcare quality — improve health outcomes for individuals — and reduce costs in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).
“We continue our work to improve the quality of care for people with Medicare by encouraging more primary care providers to participate in the ACO Primary Care Flex Model,” said HHS Secretary Xavier Becerra. “Incentivizing greater investments in primary care will promote competition among health care providers and enable more people to receive coordinated, high-quality preventive care to keep them healthy – regardless of where they live. HHS will continue building on the Affordable Care Act, which not only brought more people coverage, but allowed us to develop innovative models that foster quality care, improve outcomes, reduce costs, expand access to services, and advance health equity.”
“People whose primary care provider participates in the ACO PC Flex Model may get care in more convenient ways, like care based at home or through virtual means, extra help managing chronic diseases, and more preventive health services to keep them healthy,” said CMS Administrator Chiquita Brooks-LaSure. “Not only will people with Medicare receive more coordinated, seamless care that addresses their unique needs, but CMS is supporting primary care clinicians and giving them more flexibility to provide person-centered care.”
As part of the HHS initiative to strengthen primary care, the ACO PC Flex Model is designed to incorporate health equity and address health disparities in primary care. The model enhances primary care funding and incentivizes team-based care approaches to medical and social needs, which will create total cost of care savings while preserving or enhancing the quality of care. Rates for the PPCP will be derived from county-average spending to more accurately reflect the cost of providing comprehensive primary care to underserved populations.
“By giving ACOs more flexibility and additional funding and support to deliver high-value primary care, the ACO PC Flex Model can help providers identify and address people’s unmet health-related needs,” said Liz Fowler, CMS Deputy Administrator and Director of the CMS Innovation Center. “This model strengthens incentives for more providers to form ACOs and meet CMS’ goal of increasing the number of people with Medicare who are in an accountable care relationship.”
The CMS Innovation Center will test this new model within the Medicare Shared Savings Program. The model will focus on and invest in low revenue ACOs, which tend to be smaller and mainly made up of physicians. Low revenue ACOs have historically performed better in the Shared Savings Program, demonstrating more savings and stronger potential to improve the quality and efficiency of care delivery. The ACO PC Flex Model’s payment structure also promotes competition by providing a pathway for low revenue ACOs, which often have fewer resources, to continue serving people with Medicare while providing an alternative for physicians to stay independent.
The ACO PC Flex Model is a five-year voluntary model that will begin on January 1, 2025. CMS is planning to select approximately 130 ACOs to participate in the model. Organizations interested in participating must first apply — either as new ACOs or renewing ACOs — to the Shared Savings Program. Shared Savings Program Applications are open May 20, 2024 – June 17, 2024. The ACO PC Flex Model Request for Applications (RFA) is planned to be released in the second quarter of 2024.
For Frequently Asked Questions about the Primary Care Flex Model, please visit: https://www.cms.gov/priorities/innovation/innovation-models/aco-primary-care-flex-model/faqs.
For a fact sheet on the model, please visit: https://www.cms.gov/files/document/aco-pc-flex-fs.pdf.
At the height of the COVID-19 pandemic, when all 50 states and the federal government declared public health emergencies, telehealth became a lifeline for Americans. Now, to patients’ dismay, most states have rolled back telehealth access—disrupting care and putting lives at risk.
Telehealth, or telemedicine, allows patients to have virtual appointments with doctors across the country. Before the pandemic, telehealth was strictly regulated everywhere: State laws required doctors to be licensed in the state to practice medicine, even via telehealth. A New Jersey patient couldn’t have a video appointment with a renowned Boston specialist unless that specialist got licensed in New Jersey—an intensive three-month process that requires renewal and continuing education to maintain.
In 2020, that changed overnight: Every state issued a waiver and/or developed expedited telehealth licenses, allowing residents to meet virtually with doctors. By April 2020, over a third of all doctors’ appointments in the country were conducted via
telehealth. Telehealth allowed contagious COVID patients to receive care without leaving their homes. It also meant that for the first time, state borders weren’t a barrier for patients seeking life-saving care from faraway specialists.
“Telemedicine has improved health-care access,” a Washington Post columnist declared in 2022. “Let’s keep it.”
But state legislators and medical boards didn’t keep it: In state after state, starting as early as 2021, legislators and medical boards began rolling back telehealth access, ending waivers and—in most states—reverting to pre-pandemic restrictions.
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