CMS has finalized policies aimed at bolstering the stability and effectiveness of Medicare Advantage and Medicare Part D programs. The Calendar Year (CY) 2025 Rate Announcement for these programs, released today, updates payment policies to ensure accuracy and enhance protection for beneficiaries. This complements the proposed rule for CY 2025, set to be finalized soon, which strengthens safeguards for millions relying on these programs. Payments to Medicare Advantage plans are expected to increase by an average of 3.70 percent, surpassing $16 billion from 2024 to 2025. The federal government anticipates paying between $500 and $600 billion in Medicare Advantage payments to private health plans in 2025.

Additionally, CMS is implementing improvements to the Medicare Part D drug benefit for CY 2025, leading to reduced drug costs for many beneficiaries. The Final CY 2025 Part D Redesign Program Instructions, released concurrently, will cap annual out-of-pocket costs at $2,000 for Medicare Part D recipients, thanks to the Inflation Reduction Act. This law, signed by President Biden, promises significant savings for Medicare Part D beneficiaries in CY 2025.

HHS Secretary Xavier Becerra highlighted the impact of the Inflation Reduction Act, emphasizing the law’s role in lowering prescription drug costs for Medicare Part D beneficiaries. CMS Administrator Chiquita Brooks-LaSure echoed this sentiment, emphasizing CMS’s commitment to maintaining stability and affordability in Medicare Advantage and Part D programs. The finalized policies in the Rate Announcement and Part D Redesign Program Instructions aim to enhance payment accuracy, lower prescription drug costs, and ensure access to comprehensive healthcare options for Medicare beneficiaries.

The finalized CY 2025 Rate Announcement includes updates to MA payment growth rates and methodologies, incorporating the latest fee-for-service payment data and continuing the phase-in of the updated MA risk adjustment model. Furthermore, guidance on the new $2,000 out-of-pocket cap for prescription drugs under Medicare Part D in 2025 provides additional relief to beneficiaries facing high and escalating drug costs.


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