Finalization of 2025 Policies: Major Changes Coming To Medicare Advantage and Part D

Just recently, the Centers for Medicare and Medicaid Services (CMS) finalized two important notices and rules impacting CY 2025: the 2025 annual rate-setting and policy notice as well as the draft 2025 Medicare Advantage and Part D rule. In this blog, I will write about both the 2025 final rule as well as the policy changes in the 2025 final notice.

In my blog on April 4, 2024, I discussed the rate-setting components of the annual rate-setting and policy notice.  That blog is here: https://www.healthcarelabyrinth.com/final-2025-rates-for-medicare-advantage-remain-as-proposed/ . In addition, my February 1, 2024 blog on the draft notice is here and has more details: https://www.healthcarelabyrinth.com/2025-rates-for-medicare-advantage-plans-look-tight/ . They should be read together due to a few changes.

In addition to the below, you can see my November 13, 2023 blog on the 2025 Medicare Advantage and Part D rule when it was first announced.  This has additional details but also should be read together with this blog: https://www.healthcarelabyrinth.com/major-changes-in-medicare-advantage-oversight/ .

So, strap yourself in – here are the major policy changes from both the final rule and final notice – and there are a lot of them!

2025 Medicare Advantage and Part D Final Rule:

 Here are the major new rules related to Medicare Advantage and Part D in the 2025 final rule.

Marketing/broker compensation

Rightfully, CMS is taking reasonable steps to stop steerage of Medicare beneficiaries to plans based on compensation and not the best interest of individuals. Historically plans got around agent compensation by paying third-party marketing organizations (TPMOs, large broker-like organizations) volume-based bonuses to encourage enrollment in their plans.  This is banned under the rule.

CMS redefines overall compensation for agents and brokers to set a fixed amount that agents and brokers can be compensated by MA plans, regardless of the plan a beneficiary enrolls in. This closes loopholes that allowed additional broker/agency compensation from plans. CMS did increase the final fixed amount for initial enrollment by an additional $100, compared to the original proposal in the rule of an additional $31. It also bars steerage language in broker entity contracts with agents.

More important, personal data collected by a TPMO can only be shared with prior written consent.

Behavioral health network changes

CMS is adding behavioral network adequacy evaluation standard for a new facility-specialty provider category of “Outpatient Behavioral Health.” It will include a number of specific providers of mental health and addiction issues. Additional changes in this area are added to promote better network adequacy.

Supplemental benefits

MA plans must engage in disclosure and outreach on supplemental benefits in a plan benefit package including issuing a mid-year notice to members that informs them of supplemental benefits in their plan that have not been used.

If applicable, MA plans also must disclose during marketing if given supplemental benefits are restricted to chronically ill enrollees or those with certain diagnoses. As well, MA plans must prove to CMS that benefits to this group must have a reasonable expectation of improving or maintaining health or overall function of the enrollee.

CMS has major concerns that the utilization of such benefits is low and does not meet what MA plans are putting in annual bids.

Utilization management

CMS built on the 2024 prior authorization rule with additional changes. MA plans must ensure that their utilization management (UM) policies and procedures take into account health equity. At least one member of the UM committee must have expertise in health equity.  MA plans must also conduct an annual health equity analysis of their prior authorization policies.

Outside review of outpatient services

Independent contractors will review untimely fast-track appeals of an MA plan’s decision to terminate services in a skilled nursing facility, outpatient rehab facility, and home health services. This is currently only available to MA enrollees for inpatient hospital but the more comprehensive review is available to traditional program enrollees.

Dual Eligible and related changes

There are a number of changes impacting dual eligibles and related groups:

• The rule changes the special enrollment period for dual eligibles and low-income subsidy eligibles. The quarterly special enrollment period (SEP) will move to monthly for enrollment in a standalone Part D (PDP) only.
• A new SEP is created to allow duals to enroll in an integrated dual eligible special needs plan (D-SNP) when the individual also receives Medicaid services through an affiliated managed care plan. This parallels other reforms governing such plans to go into effect in 2025 as well.  These both are meant to promote more integration of Medicaid and Medicare. 
• New limits will exist for enrollment in certain D–SNPs to those individuals who are also enrolled in an affiliated Medicaid managed care plan.
• Limits are placed on the number of D-SNP benefit packages an MA plan can have.  This extends to the sponsor and affiliated plans in the same market.
• The rule lowers the D-SNP look-alike threshold from 80% to 70% in 2025 and to 60% in 2026. This prevents plans from having many “shadow” plans that look like SNPs but do not have to meet the requirements.
• The rule limits out-of-network cost sharing for D-SNP preferred provider organizations (PPOs) for specific services beginning in 2026. This stops the cost-shift to Medicaid.

Risk Adjustment audit processes

MA plans will be limited in how much information they can request from CMS when appealing findings for a risk adjustment data validation (RADV) audit at any one time. They cannot request both a medical record review determination appeal and a payment error calculation appeal at the same time. The overall RADV rule is currently being challenged in court and could be decided this year.

Biosimilar adoption/uptake

MA plans will have more ability to substitute biosimilars for brand biologics.  Right now, flexibility to make automatic formulary changes is limited to interchangeable biosimilars.  This is an extra step plans can take through the Food and Drug Administration (FDA).  The rule allows the substitution to occur on the formulary for a biosimilar whether or not it is classified as interchangeable. In addition, plans can even more quickly adopt interchangeable biosimilars as well.

Medication Therapy Management (MTM) changes

The rule changes targeting criteria for the Medicare Part D MTM program and makes other technical changes. Among the policy changes is the addition of HIV/AIDS to the list of core chronic diseases and requiring all ten conditions to be in targeting criteria.

Star Changes – Both 2025 Final Notice and 2025 Rule:

Numerous Star rating and measure announcements are made in the final notice.  This table is the best way for me to note the most important of them over a time horizon. It is very important to understand the fact that the Reward Factor will go away in favor of the new Health Equity Index (HEI) in for the 2027. Star year. The truth is baseline performance for the first HEI factor is Measure Years 2024 and 2025.

#medicareadvantage #medicare #partc #partd #audits #cms #2025rule #marketing #agents #tmos #behavioralhealth #supplementalbenefits #dualeligibles #healthequity #qio #dsnp #snp #radv #dsnplookalikes #biosimilars #utilizationmanagement #riskadjustment #mtm #stars

Note: While I like to read each MA and Part D rule each year as well as each Advanced Notice and Final Notice, the Star changes are especially complex and may even change from year to year. So I like to check in with other experts to know what they are saying and that my interpretations are right. Two of the finest are Dwight Pattison and Melissa Newton Smith. Check out their LinkedIns as well as their company websites. Thanks for their work over the years as well as all the analysis they do.

— Marc S. Ryan