CVS Health and Centene executives say newly proposed Medicare Advantage rates for 2025 aren’t “sufficient” and hinted they could cut benefits if the federal government finalizes the rates as is.
Why it matters: More than half of Medicare enrollees are in private Medicare Advantage plans. The specter of potential cuts to seniors’ health care benefits in an election year could put pressure on the Biden administration.
Catch up quick: Medicare last week proposed cutting base payments to MA plans by 0.16% next year.
- Medicare officials said the plans would still receive $16 billion more next year once payments are risk-adjusted to account for the health of their customers.
- The officials said they expect beneficiary benefits and premiums to stay stable based on the proposed rates.
Yes, but: CVS Health, which owns Aetna, and other insurers like Centene and Humana said they’re expecting a deeper net cut, especially as they face rising medical costs.
- “The funding level was broadly consistent with our expectation, which we do not believe is sufficient to cover current medical cost trends,” CVS Health CEO Karen Lynch said during an earnings call Wednesday.
- The company cut its earnings outlook for 2024 based on the increased use of medical services experienced across the industry.
- Lynch also raised concern that changes coming to Medicare Part D under the Inflation Reduction Act, which includes caps on seniors’ drug expenses, will require “additional funding to cover the comprehensive member benefits provided and the increased risk that plans are assuming.”
Between the lines: CVS and Centene executives this week said they would “adjust” their plans to account for the proposed rates.
- “The products may be a little bit less attractive for seniors from an industry standpoint if we don’t make a lot of progress on the final rates,” said Centene CFO Drew Asher on the company’s Tuesday earnings call.
What we’re watching: Final MA rates for 2025 are expected to be released by early April.
- Centers for Medicare and Medicaid Services officials have said Medicare will incorporate updated information about health care use into the final rate, which could mean a bump to the base payment rate.