Late Monday, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2025 Rate Announcement for Medicare Advantage and the Medicare Prescription Drug Program (Part D) as well as the CY25 Part D Redesign Program Instructions.

I was about to get on an airplane and instead of watching a movie, I figured what sounds like a great way to end a vacation would be to dig into some policy. Downloaded the rules and did a skim. Honestly, from a pharmaceutical perspective, I found it sort of boring. But in a good way. We’ve had a lot going on so boring is nice. If you’re a plan, this is not a summary for you. I bet you’re into the actuarial details. I am not.

The Rate Announcement is an annual release. The draft usually comes out in late January and the final the first Monday in April. The big thing it contains is the Medicare Advantage payment rates for the following year. As you might have heard, Medicare Advantage plans were not pleased with the announcement. Personally I think we’re in for an eventually showdown with Medicare Advantage plans. Their payment has been discussed for years with the idea that they get paid more than Original Medicare (fee-for-service) and there are questions about marketing, networks, etc. Of course, over time enrollment in Medicare Advantage has increased dramatically so they hold more sway than they might have before…

Moving on. The Rate Announcement also includes the benefit parameters for Medicare Part D and other updates (quality measures, specialty tier, formulary updates, etc.) The draft was pretty dull and my skim of the final was too. I’m going to reread it today to see if I missed anything but given that I’ve seen no news coverage of it, I’m guessing I didn’t. If I catch anything, I’ll include it in Friday’s Caught my Eye.

This year, with the Inflation Reduction Act’s changes to the Part D benefit, we had a new release – the redesign program instructions. Was it interesting? No, not really. There is a certain logic to CMS policy and once you’ve read enough of it, you can usually predict what the policy will be. I found that to be the case here.

Example – If a plan is a non-defined standard benefit plan and offers a deductible lower than the standard benefit deductible, the plan is responsible for the manufacturer portion until the beneficiary hits the defined standard benefit deductible amount.

A couple of other highlights –

• The redesign instructions show the challenge for employers in adding Part D redesign to their plans for retirees, especially if they need to have equity with their employee plans.
• There were a lot of comments about the formulary review process and how CMS might need to step up its game because plan liability has increased. CMS said, “CMS maintains, and will continue to maintain, a robust clinical review process…” I will say that the formulary review process has always seemed like black box. We’re supposed to trust the process but don’t know what it is. Maybe 18 years ago I saw a presentation that dove into what exactly happens and I could never find it again. I spent hours searching for the presentation but never found it.
• It will be difficult to create differentiation between plans if the out-of-pocket is $2,000 – CMS is keeping the meaningful difference between basic and enhanced alternative plans at 15% of the out-of-pocket cost model.
• CMS confirmed that for $35 insulin, only that copay amount is eligible to count toward the True Out-of-Pocket (TrOOP) cost – that’s the amount that counts toward the $2,000 cap.

See? Meh. If I catch anything in the news, I’ll post it. I don’t like to be first with the news because it’s nice to check and make sure I’m not out there alone on the field but figured I scanned it, maybe you don’t have to.