While every new year brings change, when it comes to Medicare Advantage, 2025 promises to be especially transformational.
Some of the Centers for Medicare and Medicaid Services (CMS) changes represent a paradigm shift away from tradition, including new caps on out-of-pocket spend and sweeping health equity mandates. The good news is, these changes broaden opportunity for health plans, providers and patients alike – especially those who proactively embrace the shift toward preventative, value-based care.
To help get ahead, plans can invest in valuable and engaging personalized outreach measures that improve care quality and the member experience across care coordination, care management, and member engagement. Below, we outline the five biggest Medicare Advantage inflection points plans can prepare for to help meet or exceed CMS standards in 2025—and beyond.
Inflection #1 | Shooting Stars – Reversing the Current Ratings Trajectory
To underscore the utmost importance of care quality, CMS has been continually raising the bar on performance measures. Higher thresholds, intended to encourage improvements on key measures – such as medication adherence, preventative care, and patient experience – have changed the bar for health plans.
In fact, the average Star Ratings for Medicare Advantage and Medicare Part D prescription drug plans has been on a decline for two consecutive years, falling to 4.04 and 3.11, respectively. Some plans are seeing a dramatic decrease in their quality scores, including a handful of health insurers suing the agency for what they perceive as “abrupt” changes to the rubrics guiding the ratings.
To help reverse the downward trajectory, health plans, especially those with sizable high-risk populations, should focus on quality care and member engagement measures. Perceptions of care, including ease of care access, satisfaction with care experience, and overall quality of services received, all factor into member experience sentiment and scores. Hyper-personalized technology that makes it simple for plans to securely harness location, medication schedules, patient history, preferences, needs, and more, can help address a host of concurrent challenges. When feeling supported and engaged in care journeys, member engagement and satisfaction improves, helping to boost key metrics integral to improved Star Ratings.
Inflection #2 | Budgeting for Plans – Addressing Utilization and the Cost of Care
The United States’ healthcare spend is unparalleled, and an estimated 90% of these costs are accrued from managing high-risk patients with one or more chronic conditions. Higher-cost emergency care is too often utilized for members who need to be seen urgently, often due to preventable gaps in care coordination or management. In many cases, these members are disengaged, have let appointments and screenings lapse, or fail to adhere to medication or care protocols.
Such costly care episodes could be avoided with higher-touch care coordination, care management, and member engagement protocols like Precision Nudging. With CMS’s enhanced emphasis on value-based care and ACO incentives, health plans can take action to embrace preventative care and care management measures that help prioritize engagement with high-risk members through regular check-ins, remote monitoring, or personalized health coaching.
Inflection #3 | Business of Healthcare – Improving Revenue on the Decline
CMS shifts add pressure to health plans’ profitability and revenue growth in myriad new and unforeseen ways. The inflection points referenced above, including rising costs of care, more competitive benchmarks, and pressure on reimbursement rates all have the potential to undercut revenue for plans in 2025 and beyond, if changes are not embraced quickly.
Most notably, the changes to Star Ratings are likely to impact reimbursement and quality bonuses over time, which has a high potential of decreasing revenue for many plans. In confluence with other market factors, including inflation, and administrative costs like employment, these challenges will cause additional stress on plans’ budgets.
To help staunch the impact, plans need to think more strategically about changes they can make at a structural level that will help them thrive in the newly competitive and preventative landscape. By embracing a member-centric approach that prioritizes engagement, close management of care needs, and enhancement of the member experience, plans can leverage their resources more efficiently to counteract market pressures and even boost revenue.
Inflection #4 | New Rules – Embracing the Part D Redesign
In 2025, the Inflation Reduction Act enforces a new $2,000 cap on out-of-pocket spending for Medicare Part D drugs, along with a new insulin cost cap at $35 per month. These changes are designed to reduce members’ spend, but may mean additional spending for Medicare Advantage and Part D plan sponsors who will need to account for the new shift in financial responsibility. While some plans are likely to increase premiums and pass along costs to their members, forward-thinking plans have an opportunity to think differently by embracing the changes to support their members.
For one, plans can begin to roll-out personalized communications that proactively outline these benefits for members, and share in the good-will halo that results from lowering costs. This can help plans build member satisfaction and loyalty that has become an important part of Star Ratings. Cost comparison and transparency tools that allow members to take care into their own hands and explore differences in prices, out-of-pocket costs, and the choices they ultimately make.
On the backend, plans can work to proactively integrate Medicare’s newly negotiated prices to ensure their members have affordable options for all medications covered. By concurrently expanding and building new partnerships with preferred pharmacies, plans can prioritize competitive pricing that helps reduce their overall drug spending, while supporting their member populations through the changes. In addition, embracing technology that supports members’ medication adherence can ultimately save plans in the long run. It’s estimated that morbidity and mortality associated with poor medication adherence costs $528.4 billion annually.
Inflection #5 | Adjusting Risk – Learning the New Adjustment Changes
The spate of changes means that health plans will need to review their existing models and adjust their forecasted risk. In order to continue operating efficiently and profitably in the new order, it’ll be of the utmost importance for plans to reevaluate the cost dynamics, risk models, and spending projections they had previously relied on.
Some of these measures will rely on high levels of member engagement and retention, as accuracy of diagnosis, up-to-date screenings, and coding will be essential to ensuring optimal risk adjustment for each plans’ populations within CMS’s updated models. Predictive modeling for high-risk members and those most impacted by social determinants of health (SDOH) will become more important to help mitigate risk, better manage populations and outcomes, and adhere to new CMS standards that prioritize health and non-health related barriers to care.
However, merely adjusting risk is just one side of the coin. Acting on these new models requires transparent, highly personalized, and well-timed communications that ensure these efforts effectively engage members in their own care journeys, and move the needle on preventative care efforts.
How plans can embrace change to win in 2025—and beyond
While the slew of CMS changes are enough to make any leader’s head spin, these five inflection points are all deeply rooted in bettering communications and relationships with members. Plans that take action today to embrace technology that supports member engagement, satisfaction, and overall health outcomes can adapt to these changes—and even learn to thrive.
Reach for the Stars
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