MA Plans Praise Trump Administration for Bumping Up MA Rate, Pulling Back On Obesity Drug Coverage

While other parts of U.S. healthcare sector are reeling from funding cutbacks or fighting against them, Medicare Advantage plans are racking up wins under the Trump administration.

Today CMS announced that payments to Medicare Advantage and Part D Prescription Plans would increase by 5.06% next year compared with the 2.23% increase that CMS had proposed under the Biden administration.

On Friday, the CMS announced that it was pulling back a CMS decision made late in the Biden administration that would have led to Medicare and Medicaid covering obesity drugs, including the glucagon-like peptide 1 (GLP-1) drugs. The rule issued Friday also did not include proposals by the Biden administration that would have tightened regulation of prior authorization, provider directories and advertising by Medicare Advantage plans.

But included in the news release today about the rate hike was an announcement that CMS would continue to phase in changes promulgated by the Biden administration that tightened up risk adjustment rules. The HHS Office of Inspector General, The Wall Street Journal and others have documented questionable risk adjustment practices used by some Medicare Advantage plans to boost their payment from the federal government.

Trade groups representing Medicare Advantage plans issued statements praising the Trump administration’s Medicare Advantage policies. President and CEO Ceci Connolly, president and COE of the Alliance of Community Health Plans said in a prepared statement today that her organization commends the Trump administration for setting rates that “reflect higher care delivery costs and for taking another step toward reining in aggressive risk adjustment to boost competition.” Her group represents nonprofit regional health plans, such as Geisinger Health Plan in Danville, Pennsylvania; UPMC Health Plan in Pittsburgh; and CDPHP in Albany, New York, some of which are affiliated with large health systems. Connolly’s statement says that her group “has long supported the new MA [Medicare Advantage] risk adjustment model and is pleased that CMS will finally complete the transition.“

Connolly also issued a statement on Friday praising the Trump administration CMS for canceling the proposed coverage of obesity drugs, which would have included Wegovy (semaglutide) and Zepbound (tirzepatide).

“While these drugs offer hope for many, the excessive costs carry enormous consequences for consumers, taxpayers and employers,” said Connolly’s statement, adding that it would have been “irresponsible without further long-term efficacy and safety studies and economic analysis.” The statement from Connolly continued, “It’s time for policymakers to break the Big Pharma stranglehold and get to realistic pricing for consumers, taxpayers and employers.

The Better Medicare Alliance, which lobbies for Medicare Advantage plans on behalf of large insurers, such as United Health Group, and other groups,also praised the Trump administration’s Medicare Advantage rules and rates, although it did not call out the continuation of the risk adjustment rules like Alliance of Community Health Plans did.

“We applaud the Trump Administration for protecting seniors and fully funding Medicare Advantage,” said Mary Beth Donahue, the group’s president and CEO, in a prepared statement. “After two years of Medicare Advantage cuts, this payment rate will provide stability for millions of beneficiaries who have faced plan closures, higher costs, and reduced benefits.”

After the rules announcement on Friday, the prepared statement from Donahue was guarded but also laudatory. “As we continue to review the final rule, we are encouraged that the Administration took a measured approach and declined to make major changes at this time.”

Study in the Annals of Internal Medicine

More than half (54%) of Medicare beneficiaries are enrolled in Medicare Advantage plans, which argue that members’ healthcare is managed more effectively than people who stay in so-called traditional Medicare. But questions about whether the federal government overpays Medicare Advantage plans have swirled around the plans as the number of enrollees has steadily increased. Last year, the Medicare Payment Advisory Commission estimated that Medicare pays 22% more for Medicare beneficiaries in Medicare Advantage plans than it would spend if those beneficiaries were enrolled in traditional Medicare , a difference that the commission translates into a projected $83 billion in 2024. The commission, which advises Congress, acknowledged that some portion of the extra spending goes to cover extra benefits that are not available to beneficiaries in traditional Medicare.

Risk adjustment has also been a contentious issue with plans defending their practices in response to findings by government watchdogs, media outlets and others that they say “upcode” to increase payment.

Richard Kronick, Ph.D.,

A study published today in the Annals of Internal Medicine found that in 2021, the average Medicare Advantage risk score was 1.26 compared with 1.07 for a comparable group in traditional Medicare. Richard Kronick, Ph.D., of the University of California, San Diego Herbert Wertheim School of Public Health and Longevity Science, and his colleagues found that the average risk score at UnitedHealth Group was 0.28 higher than it would have been if its plans had coded identically to traditional Medicare, whereas Kaiser Permanente's coding of its members was only slightly higher. They calculated that Medicare Advantage plans received an estimated $33 billion in additional payment in 2021 because of the coding difference and that UnitedHealth received $13.9 billion, or 42%, of that amount. Kronick and his co-authors noted in their limitations section that their estimates may have been affected by differences in the demographic characteristics or health status of beneficiaries between Medicare Advantage and traditional Medicare.