Fortende Health
Q2 2024 Newsletter
2025 Looks Like a Tough Year for Drug and Advantage Plans
June 1, 2024
Wes Chapman
Good News/Bad News: Medicare Drug Plans 2025
Drug benefit improves in 2025 – maximum out-of-pocket capped at $2,000. Increases in costs and reductions in formulary anticipated.
In 2025, there will be significant changes to drug benefits, most notably the implementation of a $2,000 cap on maximum out-of-pocket expenses. This change is part of a broader effort to make prescription medications more affordable and accessible to individuals, especially those with high prescription drug costs.
However, while this cap on out-of-pocket expenses is a significant improvement, there are some anticipated challenges and changes that may accompany it:
- Increases in Costs:
- Premiums: To offset the financial impact of the out-of-pocket cap, insurance companies might increase premiums. This would spread the cost across all policyholders.
- Cost-sharing: There could be higher co-pays or coinsurance for certain medications as insurers try to manage their costs.
- Reductions in Formulary:
- Narrower Formularies: Insurers might limit the list of covered drugs, known as the formulary, to control costs. This could mean that some medications previously covered may no longer be included, or alternatives might be preferred.
- Prior Authorization and Step Therapy: There might be an increase in the use of prior authorization and step therapy protocols, where patients must try and fail cheaper alternatives before the insurer approves the more expensive drug.
2025 Looks Like a Tough Year for Drug and Advantage Plans
Implications for Medicare beneficiaries:
- Financial Relief: Patients with high drug costs will benefit from the out-of-pocket cap, providing significant financial relief.
- Access Challenges: Patients may face challenges if their required medications are no longer on the formulary or if they must navigate more complex approval processes.
- Increased Planning: Patients and their healthcare providers may need to engage in more detailed planning to understand which drugs are covered and the associated costs.
Strategies for Patients:
- Review Plan Options: Carefully review different insurance plans during open enrollment periods to select one that best fits your medication needs and financial situation. Give us a call in October when plan details are released.
- Consult Healthcare Providers: Work with doctors to identify covered medications and understand any new requirements for obtaining them.
- Financial Assistance Programs: Explore pharmaceutical assistance programs, manufacturer discounts, or other financial aid options to help cover costs.
Overall, while the cap on out-of-pocket expenses is a positive step, patients should be prepared for potential changes in how their medications are covered and might need to adjust their approach to managing their prescriptions accordingly. Please speak with us in October – we will help figure out what it all means for you.
Medicare Advantage Updates for 2025: Navigating Changes Amidst Medicaid Membership Declines and “Excess” Utilization
The landscape of Medicare Advantage (MA) is set for significant changes in 2025, driven by declines in Medicaid membership and issues related to excess utilization. These changes reflect the ongoing adjustments by the Centers for Medicare & Medicaid Services (CMS) to ensure sustainability and efficiency in the program.
Medicaid Membership Declines The reduction in Medicaid enrollment has a direct impact on Medicare Advantage plans. With fewer beneficiaries transitioning from Medicaid to Medicare, there is a projected decrease in dual-eligible members who typically have higher healthcare needs. This shift necessitates adjustments in how MA plans are funded and managed to maintain balance and sustainability (AHIP) .
Excess Utilization Concerns Excess utilization, where services are used more frequently than projected by the carriers, has been a persistent issue within Medicare Advantage. Covid dramatically curtailed the use of discretionary health services (like joint replacements), but this trend reversed itself in the last two years, with beneficiaries playing “catch-up’. And carriers spending above planned levels.
Payment and Rate Updates Every year, CMS updates the payment rates for Medicare Advantage plans through a meticulous process involving advance notices and public comments. For 2025, these updates will likely include recalibrations to the risk adjustment model, adjustments for coding patterns, and updates to the fee-for-service (FFS) benchmarks that set the maximum amounts paid to MA plans (Home).
Impact on Plan Design for 2025 The upcoming changes will necessitate several adaptations in Medicare Advantage plan design:
- Benefit Adjustments: With spending up and membership down (via Medicaid dual eligibles) carriers will increase co-payments and cut benefits for next year for many plans.
- Cost-Sharing Structures: There may be revisions in premiums, deductibles, and co-pays to balance the financial impact of decreased Medicaid support and to manage the costs associated with excess utilization.
- Care Coordination Enhancements: To address excess utilization, MA plans will emphasize better care coordination, including the integration of advanced technologies like telehealth to reduce unnecessary in-person visits and hospital admissions.
- Provider Network Changes: Plans might limit their provider networks to ensure they include high-performing providers who can deliver efficient and effective care, thereby reducing unnecessary utilization.
The 2025 changes in Medicare Advantage reflect a shift towards more sustainable healthcare delivery, addressing both the financial impacts of declining Medicaid membership and the need to curb utilization and reduce costs. By adapting plan designs accordingly, MA plans aim to continue providing high-quality care while maintaining financial viability. But it will mean higher costs, benefits, and potentially reduced plan availability. Please speak with us in October – we will help figure out what it all means for you.
For more detailed information on the updates and their implications, please refer to the following sources:
- AHIP Analysis of Proposed Rate Notice
- Commonwealth Fund Explainer on Medicare Advantage Policy
- Commonwealth Fund Explainer on Payment Rate Updates
- MedPAC Report to Congress
- Wall Street Journal on the Medicare Bubble
- CMS 2025 Rate Announcement
We have moved! Our new address is
Fortende Health & Life
72 Foreside Rd.
Falmouthm ME 04105
Best regards,
Wes Chapman
wes@fortendehealth.com
800 984 2102
