Today, the Centers for Medicare & Medicaid Services (CMS) announced the finalization of the Calendar Year (CY) 2025 Rate Announcement for Medicare Advantage (MA) and Medicare Part D Prescription Drug programs. These updates ensure payment accuracy and introduce improvements expected to benefit millions of Medicare beneficiaries.
Under the CY 2025 Rate Announcement, government payments to MA plans will increase by an average of 3.70%, totaling over $16 billion from 2024 to 2025. This increase supports continued access and affordability in Medicare Advantage, where payments are projected to reach between $500 and $600 billion in 2025.
CMS has also finalized enhancements to the Medicare Part D drug benefit for 2025, including a cap on out-of-pocket costs at $2,000 per year due to the Inflation Reduction Act. This measure is anticipated to significantly reduce prescription drug expenses for Medicare Part D enrollees.
HHS Secretary Xavier Becerra highlighted these changes: “The Inflation Reduction Act will lower prescription drug costs for Medicare Part D beneficiaries, capping annual out-of-pocket expenses at $2,000. This reform keeps more money in beneficiaries’ pockets while enhancing the Part D drug benefit and ensuring robust healthcare options.”
CMS Administrator Chiquita Brooks-LaSure underscored CMS’s commitment to program stability: “The finalized policies in the Rate Announcement and Part D Redesign Program Instructions improve Medicare Advantage payments and lower prescription drug costs, ensuring Medicare beneficiaries have access to affordable healthcare.”
The CY 2025 Rate Announcement incorporates updates to MA payment growth rates and methodologies to enhance payment accuracy, reflecting the latest fee-for-service data and improvements to the MA risk adjustment model.
Dr. Meena Seshamani, CMS Deputy Administrator, emphasized the new out-of-pocket cap: “The $2,000 cap on prescription drug costs under Medicare Part D in 2025 will deliver meaningful savings, addressing the burden of rising drug expenses for enrollees.”
These measures represent a significant step towards fulfilling President Biden’s commitment to reducing healthcare costs and enhancing Medicare benefits for older Americans. As CMS continues to refine and improve Medicare programs, beneficiaries can expect continued stability and affordability in their healthcare coverage.
~ S. Green
