2025rule

Health plans have plotted a comeback and so far it is working Q1 offered a cautiously encouraging picture for the U.S. health insurance sector. After a bruising couple of years marked by elevated utilization, Medicare Advantage (MA) margin compression, and policy disruption, most large plans are reporting improved financial performance. Stocks soared as a result. So, is plan financial health back? Well, not so fast. The positive financial performance is more a result of low expectations and plans are still, like Sisyphus, pushing a huge boulder up a hill. And given trends, it could very well come rolling back down. There was a literal financial meltdown at some plans beginning as early as 2024. Some of this was caused by external factors. But a great deal of it, too, was due to a lack of discipline by plans in multiple areas – finance, quality, and operations. It was an embarrassment

Market forces and politicians are undermining Part D For the past few years, seniors may have noticed that their Part D retail drug benefits have gotten skimpier even as cost-sharing has been capped for some. Overall, most recipients are seeing more costs not less. This relates in part to a move by the former Biden administration supposedly to lighten the load. When politically motivated administration officials and lawmakers get involved, the public and taxpayers usually get the shaft. The Medicare Part D program has always been something of a paradox: a privately administered benefit built on deliberately thin margins, sustained not by profitability alone but by a carefully engineered system of federal subsidies and risk-sharing. Created under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) in 2003, Part D was designed to attract plan participation while protecting both beneficiaries and insurers from extreme financial volatility. For much of its

Despite voluntary actions, CMS continues with PA reforms The Centers for Medicare and Medicaid Services (CMS) has been active in reining in prior authorization at health plans and the reforms continue. In 2024, CMS proposed and finalized a rule that put major restrictions on the ability of Medicare Advantage (MA) plans to use PA for inpatient procedures and post-discharge care. The rule mandates that providers have the call as to whether a patient needs inpatient admission and what after-care is required. Upon returning to office, the Trump administration called health plans to the table to “volunteer” to make PA reforms across business lines or they would face action by the federal government. So, they were in essence “voluntold” to make the reforms, which they obediently did. In a major announcement shortly after, a group health plans and the two main lobbies (representing 75% to 80% of covered Americans) said they

A stunner on Capitol Hill shows payment changes could be coming Of all the segments of the healthcare system out there, hospitals over the years have weathered the rate and payment reforms the best. Health plans had the minimum medical loss ratio (MLR) reforms implemented, which has constrained overall margins for most plans, save for how some very large conglomerates are able to move regulated money to unregulated areas of sister companies. And for sure, the poor primary care physicians have seen their real pay over decades shrink dramatically. That has caused an existential crisis in America for primary care. While they have not always been happy, hospitals, however, have always been relatively insulated from political storms. After all, they have built a formidable bipartisan lobby that has kept most lawmakers sympathetic to hospitals’ positions. But could things be changing for hospitals? We are now seeing some high-profile calls for

An affordability czar comes too late for midterms, but could help plot a course There was a clear sign recently that the Trump administration is worried about the impact of the lack of healthcare affordability. It created a top-level healthcare position that will be a de facto affordability czar. Health and Human Services Secretary Robert F. Kennedy, Jr. has named Casey Mulligan as chief economist and chief regulatory officer of the agency. He’ll advise Kennedy and other agency leaders on affordability issues. Mulligan was on the Council of Economic Advisers during the first Trump administration and was most recently the U.S. Small Business Administration’s chief counsel for advocacy. That same week, healthcare policy group KFF issued a briefer on Americans’ views of healthcare. Just under half of U.S. adults say it is difficult to afford healthcare costs, and about three in ten say they or a family member in their

Despite its good intentions, CMS is getting some cautionary signals from health plans and providers on reform models There is little question that reforming the antiquated Medicare fee-for-service (FFS) system is important. The Centers for Medicare and Medicaid Services (CMS), with its Center for Medicare and Medicaid Innovation (CMMI), has been very active under the Trump administration in announcing reform models at a fever’s pitch. A number of policy wonks, including me, have been critical in the past of the plethora of models introduced by CMS’ CMMI. Providers were confused by the multiple reforms and quality and savings benchmarks. Populations they served overlapped across models. Many urged paring down the models and focusing on a set of quality and cost benchmarks. But as noted, the Trump administration has gone the opposite direction. The acronym-ridden healthcare system has dozens of new labels that have been added to the alphabet soup of

The other side of the story The headlines are ripping Medicare Advantage (MA) apart due to supposed huge overpayments compared with traditional Medicare fee-for-service (FFS). Critic MedPAC and aligned academics and researchers have argued MA abuses risk adjustment coding and somehow has favorable selection. We know that any risk adjustment abuse was largely that of larger players and that the new v28 risk adjustment payment model has reduced most overscoring incentives. As well, the Centers for Medicare and Medicaid Services (CMS) has just barred scoring of unlinked medical charts (those that do not have accompanying encounters) with one exception. But MedPAC and others will continue to cite major overpayments because of faulty or misleading analysis regarding favorable selection in the program. I have made the case over the years that many studies show that MA attracts a more diverse and lower income population. Within this population are individuals who are

April enrollment tails off In a February 16 blog, I detailed the growth in Medicare Advantage (MA) from February 2025 to February 2026 after a delay from the Centers for Medicare and Medicaid Services (CMS) in posting the annual data. As I noted, the January enrollment statistics in both years seemed off so many analysts are comparing February to February each year. On March 30, I updated my blog site with results for March 2026. Now, we have April results. For those who may have missed the earlier blogs, I am refreshing on some of the annual and February results. The annual statistics show some of the financial struggles the industry continues to have. Growth is way down compared with prior years in the 2020s due to major geographic contractions as well as plan benefit reductions by major MA players the past few years. As the chart below shows, February

NOTE: Co-published in partnership with Lilac Software. See more on Lilac at the end of the blog. 2027 Final Announcement makes no changes on Stars from the Advance Notice While the Medicare Advantage (MA) industry is facing major upheaval through Star Year 2029 due to the finalization of the MA and Part D 2027 rule, the coming year’s Final Announcement of rates and policies is very status quo from a Stars perspective. I have gone back to compare the Advance Notice and Final Announcement and here remains the all-important updates for Star Year 2027 and technical changes or proposals for future years. Go to my February 2, 2026 blog here for more details: https://www.healthcarelabyrinth.com/stars-changes-in-2027-advance-notice/ Deadline Calendar/Reminders for Star Year (SY) 2027 and SY 2028 For Measure Years (MY) 2025/SY 2027: For MY/2026/SY 2028: Note that these data review deadlines are before PDE and Appeals (at least for Reopens) have final

CMS moves a little on rate hike for plans given troubled finances and beneficiary impacts The Centers for Medicare and Medicaid Services (CMS) has released its Final Announcement for calendar year (CY) 2027 rates and policies for Medicare Advantage (MA) and Part D. I wrote about the Advance Notice back on January 29. I will not repeat much of the technical explanations again here, but please go back to that blog for in-depth explanations of various rate-setting terms. Proposed rates tend to increase each year between the Advance Notice and Final Announcement as more data is updated from the fee-for-service (FFS) program. The plan benchmarks are based on both FFS and MA costs. Based on past history, I had predicted that rates would end up between 2% and 3% as the Effective Growth Rate (EGR) would increase markedly between the advance and final notices. In the end, the EGR actually