HealthCare Roundtable e-News – February 5, 2024


Top News

CMS Releases 2025 Medicare Advantage and Part D Advance Notice

The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2025 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Advance Notice). CMS will accept comments on the CY 2025 Advance Notice through March 1, 2024, before publishing the final Rate Announcement by April 1, 2024. Key proposals are summarized below.

  • MA Plan Payment Impacts and Risk Adjustment Changes
    • CMS continues to implement the phase-in of the significant risk adjustment model changes finalized in the 2024 Final Rate Notice. For CY 2025, CMS is proposing to calculate risk scores as a blend of 33% of the 2020 CMS-HCC risk adjustment model and 67% of the 2024 CMS HCC risk adjustment model. As a reminder, the CY 2024 risk adjustment model restructured condition categories using ICD-10 instead of ICD-9, updated underlying FFS data years (from 2014 diagnoses and 2015 expenditures to 2018 diagnoses and 2019 expenditures), and removed certain diagnoses that CMS identified as being more subject to coding variation.
    • CMS proposed the following percent changes to MA plan payments in 2025. For comparison, in parentheses are the finalized percent changes to MA plan payments in 2024. Of note, CMS did not propose a change to the MA coding pattern adjustment, which stays at the statutory minimum of 5.9%. The 67% phase in of the CY 2024 risk adjustment model in 2025 means a negative higher risk score revision percentage and lower MA risk score trend compared to 2024.
      • Effective Growth Rate: 2.44% (2.28% in 2024)
      • Change in Star Ratings: – 0.15% (-1.24% in 2024)
      • MA Coding Pattern Adjustment: 0.00% (0% in 2024)
      • Risk Model Revision and Normalization: -2.45% (-2.16% in 2024)
      • MA risk score trend: 3.86% (4.44% in 2024)
      • Expected Average Change in Revenue: 3.70% (3.32% in 2024)

      CMS is also considering a more sophisticated calculation methodology for the FFS normalization factor that more accurately addresses the impacts of the COVID-19 pandemic without deleting data years. The FFS normalization factor is an adjustment to risk scores calculated using the models for CY 2025 payment to account for the expected growth in the average FFS risk score over time.

  • Inflation Reduction Act of 2022 Updates for 2024
    • The Advance Notice describes several IRA updates that will be in place for CY 2025, including the elimination of the coverage gap phase to affect a three-phase benefit (deductible, initial coverage, and catastrophic), the cap of out-of-pocket costs at $2,000, the sunset of the Coverage Gap Discount Program (CGDP) and establishment of the Manufacturer Discount Program (Discount Program), and changes to the liability of enrollees, sponsors, manufacturers, and CMS in the new standard Part D benefit design.
  • Part D Risk Adjustment
    • CMS proposed updates to the Part D risk adjustment model given the Inflation Reduction Act’s redesign of the Part D benefit. CMS notes that they have modified the risk adjustment model accordingly to reflect the increased plan liability that stems from these changes. CMS has also updated the base data that it is drawing from to calibrate the risk adjustment model and is using data from 2021 diagnoses and 2022 expenditures. They argue that unlike the medical risk adjustment model, the Part D model appears to be less impacted by COVID and that the benefits of using more recent data outweigh the risks of a COVID bias on 21/22 data. More information on the Part D Benefit Redesign changes can be found here.
  • Employer Group Waiver Plan (EGWP) Specific Changes
    • Because the Part D redesign reduces the reinsurance percentage in CY 2025, using the existing methodology for Part D Calendar Year, EGWP prospective reinsurance payments would result in CMS prospectively paying significantly more than necessary for CY 2025. To avoid the need to recover sizable funds from EGWPs during the reconciliation process, CMS proposes to update methodology to ensure that Part D Calendar Year EGWPs are paid a more appropriate prospective reinsurance amount in CY 2025.
  • Puerto Rico
    • To provide further stability to the MA program in Puerto Rico, CMS proposes basing the MA county rates in Puerto Rico on the relatively higher costs of individuals in FFS who have both Medicare Parts A and B and applying an adjustment regarding the propensity of individuals with zero claims. CMS also seeks comment on alternate adjustment approaches that may be appropriate in Puerto Rico.
  • Part C and D Star Ratings
    • CMS continues to demonstrate progress towards a “Universal Foundation” of quality measures which will comprise a core set of measured aligned across its quality rating and value-based care programs. To align with these core measures, CMS will be adding Depression Screening and Follow-Up for Adolescents and Adults (Part C) and Adult Immunization Status (Part C) to the 2026 display page based on the 2024 measurement year. CMS also submitted the Initiation and Engagement of Substance Use Disorder Treatment (Part C) measure for review by the Measure Application Partnership.CMS also proposes or is considering changes to the following Star Ratings measures:
      • Breast Cancer Screening (Part C)
      • Diabetes Care – Eye Exam (Part C)
      • Statin Therapy for Patients with Cardiovascular Disease (Part C)
      • Plan Makes Timely Decisions about Appeals and Reviewing Appeals Decisions (Part C)
      • Cross-cutting: Identifying Chronic Conditions (Part C)
      • Cross-cutting: Gender-Affirming Quality Measurement in HEDIS (Part C)
      • Care Coordination (Part C)
      • Initial Opioid Prescribing for Long Duration (IOP-LD) (Part D)
      • Medication Adherence for Diabetes Medications/Medication Adherence for Hypertension (RAS Antagonists)/Medication Adherence for Cholesterol (Statins)/ Statin Use in Persons with Diabetes (SUPD)/ Medication Therapy Management (MTM) Program Completion Rate for CMR (Part D)
      • Members Choosing to Leave the Plan (Part C & D)


      New measure concepts CMS is considering include:

      • Health Outcomes Survey (Part C): CMS is currently seeking OMB approval to conduct a field test to evaluate the measurement properties of potential new survey items, the effects of revised survey content, and the addition of a web-based survey mode to the existing mixed mode protocol (mail with telephone follow up for mail non-respondents).
      • Blood Pressure Control for Patients with Hypertension (Part C): NCQA is exploring the development of a new blood pressure control measure that utilizes the capabilities of digital quality measures and leverages standardized electronic clinical data.
      • Breast Cancer Screening Follow-Up (Part C): NCQA is exploring the development of a new measure to assess documentation and follow-up of abnormal mammogram results.
      • Social Connection Screening and Intervention (Part C): NCQA is developing a new measure for measurement year 2025 that assesses the percentage of members aged 65 and older who were screened, using prespecified instruments, at least once during the measurement year for social isolation, loneliness, or inadequate social support and received a corresponding intervention if they screened positive.
      • Tobacco Use Screening and Cessation and Lung Cancer Screening and Follow-Up (Part C): NCQA is exploring the development of two new measures related to tobacco use screening and lung cancer screening.
      • Functional Status Assessment Follow-Up (Part C): NCQA is exploring the development of a new measure to assess follow-up after a Functional Status Assessment.
      • Medicare Plan Finder Drug Pricing Measure (Part D): CMS is considering a new measure to evaluate the accuracy of sponsors’ pricing data displayed on the Medicare Plan Finder (MPF) tool.


CMS Sends Initial Offers for Negotiation of First 10 Prescription Drugs in Medicare Drug Price Negotiation Program

The Centers for Medicare and Medicaid Services (CMS) initiated the negotiation process for the first 10 prescription drugs under the Medicare Drug Price Negotiation Program. Enabled by the Inflation Reduction Act (IRA), Medicare now has the authority to directly negotiate drug prices with pharmaceutical companies, aiming to curb exorbitant costs. U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra expressed confidence in achieving lower prices, highlighting the Biden-Harris Administration’s commitment to reducing prescription drug costs. CMS Administrator Chiquita Brooks-LaSure emphasized the program’s dedication to improving access, fostering competition, and promoting innovation. Negotiations are set to conclude by August 1, 2024, with agreed-upon prices taking effect in Medicare from 2026. In an effort to enhance awareness and accessibility of prescription drug savings under the IRA, HHS has introduced This user-friendly website serves as a comprehensive resource hub, offering informational materials in plain language such as key messaging, fact sheets, toolkits, social media graphics, and videos. The platform is designed to be a one-stop-shop for information related to the drug pricing provisions of the IRA, providing resources for Medicare beneficiaries and other interested parties.

Executive Action

The Biden-Harris Administration launched a pilot of the National AI Research Resource – which will mark the first step toward a national infrastructure for delivering computing power, data, software, and access to open and proprietary AI models to researchers and students. The fact sheet released today comes with Deputy Chief of Staff Bruce Reed convening the White House AI council for the first time following the 90-day window given by President Biden to complete preliminary actions following the Executive Order. The pilot comes after President Biden’s landmark Executive Order that directed sweeping action across federal agencies to manage the risk of artificial intelligence and capitalize on its potential promise for the American people. Following the release of the Executive Order, agencies were tasked with managing risks to safety and security while simultaneously innovating the technology for good. In mitigating the potential security risks of AI, the Biden-Harris Administration has used the Defense Production Act to compel developers of AI systems to report vital information concerning AI. With the hopes of innovating AI, the Administration launched a pilot of the National AI Research Resource – which will mark the first step toward a national infrastructure for delivering computing power, data, software, and access to open and proprietary AI models to researchers and students.

Congressional Action

The House Energy & Commerce Committee Subcommittee on Health convened a hearing titled, “Health Care Spending in the United States: Unsustainable for Patients, Employers, and Taxpayers.” The hearing focused on increased healthcare spending and solutions to lowering costs such as increased price transparency. Many committee members highlighted the strengths of the Lower Costs, More Transparency Act. The committee heard from expert witnesses about needs for site-neutral payment policies, healthcare claims data access, and lowered prices for hospital and physician services. Discussion focused on the challenges of physician-owned hospitals, reforming Medicare Advantage, and prescription drug price transparency efforts. Overall, the witnesses emphasized a need for price transparency across the system to unveil factors driving low-quality and high-priced healthcare. Healthsperien covered the hearing and full comprehensive notes can be found here.


  • The Medicare Payment Advisory Commission (MedPAC) held its January Public Meeting to discuss several issues related to Medicare payment policy. Specifically, the Commission held sessions on; assessing payment adequacy and updating payments: physician and other health professional services, assessing payment adequacy and updating payments: hospital inpatient and outpatient services, assessing payment adequacy and updating payments: outpatient dialysis services; hospice services; skilled nursing facility services; and home health agency services, assessing payment adequacy and updating payments: Inpatient rehabilitation facility services and improving the accuracy of payments in the IRF prospective payment system, the Medicare Advantage program: status report, and standardized benefits in Medicare Advantage plans: policy options.. Click here to access Healthsperien’s comprehensive summary of the January Public Meeting.
  • The Centers for Medicare and Medicaid Services (CMS) recently announced increased participation in CMS’ accountable care organization (ACO) initiatives in 2024, which will increase the quality of care for more people with Medicare. CMS announced that 19 newly formed ACOs are participating in a new permanent payment option that enables these ACOs to receive more than $20 million in advance investment payments (AIPs) for caring for underserved populations. With an additional 50 ACOs joining the program in 2024, 480 ACOs are now participating in the Shared Savings Programs – making it the largest ACO program in the country. ACOs that receive AIPs are compelled to invest in health care infrastructure, staffing and providing accountable care for underserved beneficiaries. CMS also reported that three ACO initiatives, the Shared Savings Program, the ACO REACH Model, and the Kidney Care Choices model, all continue to see significant growth in 2024. In 2024, there are approximately 13.7 million people with Traditional Medicare aligned to an ACO – meaning that ACOs now serve nearly half of all people with Traditional Medicare.


  • A report from the Peterson-KFF Health System Tracker draws attention to recent life expectancy trends in the US compared to other similar Organization for Economic Co-operation and Development (OECD) countries. Based on 2022 data, the US exhibits the lowest life expectancy rates for both males and females, along with the widest gap between these two groups, compared to peer countries. Overall, life expectancy in the US and peer countries trended upwards from 1980 to 2019, then decreased in 2020 due to COVID-19. From 2021 to 2022, the US, compared to other countries, had higher rates of excess mortality per capita and a larger increase in premature mortality due to COVID-19. It is estimated that COVID-19 reversed life expectancy progress of around two decades in the US. The differences between the US and peer countries in terms of overall life expectancy becomes more prominent as people age. Relative to similar large and wealthy countries, the US spends nearly double on per capita healthcare expenditures and has the lowest life expectancy at around 77.5 years. Over the last few decades, life expectancy in the US has grown slower while healthcare spending has grown faster. In 2022, the US experienced a slight rebound in life expectancy from COVID-19, but still had the overall lowest life expectancy and greatest healthcare spending compared to its peers.
  • The Bipartisan Policy Center (BPC) recently released a brief on improving collaboration and coordination between the U.S. Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS). The brief argues that as the nation’s two chief regulatory agencies responsible for the approval of drugs for marketplace and authorizing payment for them, that there is significant potential for increased collaboration. The policy brief further notes that both entities share an inherent connection to each other as they are both agencies within the Department of Health and Human Services (HHS). Various recommendations were prescribed to strengthen the partnership, a majority of which do not require Congress to modify the existing statutes that govern the agencies. Some of recommendations include that Congress should provide additional funds, up to $10 million, to the Coverage and Analysis Group at CMS to expand its capacity and that CMS and FDA should create cross-agency training programs to foster a deeper understanding of each agency’s functions and processes.

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