Navigating Medicare Advantage in 2025: Strategies for Success Amid Uncertainty

Luke Hansen, M.D., M.H.S.

2024 may go down as the high-water mark for Medicare Advantage. While the Medicare Advantage program continues to grow, the forces that drove that growth are under increasing scrutiny, with financial and regulatory pressures forcing payers to rethink their strategies. Last year, contract disputes over reimbursement rates led some healthcare providers to drop Medicare Advantage plans altogether. Meanwhile, changes to risk adjustment rules (i.e., V28) and Star Ratings thresholds (i.e., cut points) pose challenges for payers.

Historically, payers have attracted beneficiaries with generous benefits and broad provider networks, but tightening margins and regulatory headwinds may mean the days of freewheeling growth are over. These shifts signal a need for a more disciplined, data-driven approach to grow revenue, control costs and, ultimately, to sustain successful MA programs.

How to build the foundation for success in Medicare Advantage

Success in MA depends on a payer’s ability to balance enrollment growth with financial stability. As regulatory changes and competitive pressures reshape the industry, payers need to rethink their strategies. This starts with performance-driven provider networks, thoughtful plan design that engages members, and accurate risk assessment. By focusing on these foundational levers, payers can ensure they are well-positioned to grow responsibly while navigating a more constrained financial environment.

Optimize network performance

Provider networks are no longer just about adequacy — they’re about performance. The best-performing providers deliver high-quality care at lower costs. They support closing care gaps, improving member outcomes, and risk adjustment efforts by documenting conditions. Payers need a clear understanding of which providers excel. They can then leverage this information to guide contracting and network development decisions.

Effective network optimization can reduce total cost of care while ensuring that members receive the right care in the right settings.

Optimize plan design and contracts

As plans face tighter margins, many are reconsidering supplemental benefits like dental care, vision coverage, or gym stipends, which could impact enrollment and member mix.

Plans must design offerings and networks that address performance variation and support members in using higher performing providers. Narrower, performance-driven networks are likely to emerge as a solution to improve network profitability, emphasizing quality and cost-effectiveness over broad access.

Accurately capture risk and quality

It’s become both more difficult and more urgent for payers to lessen the difference between observed and expected cost performance. While the V28 model has restructured the relationship between the severity of a diagnosis and expected cost calculations, one fact in particular remains true: capturing full complexity in coding is foundational to MA success.

But in a moment with reduced revenue available to plans, historic reliance on risk-adjusted revenue is no longer sufficient for performance in value-based care arrangements. Plans must now incorporate a broader view of complexity, including higher utilization rates and the unique needs of an aging population. Risk assessment must support thoughtful, proactive case and condition management.

Payers who excel in risk management — rather than strictly risk documentation — will succeed in coordinating care for high-complexity members. This requires tools that integrate payer and provider insights to align all stakeholders in delivering effective, efficient care.

Controlling costs to maximize performance under Medicare Advantage contracts

MA success is more than just growing membership in a high-performance network — it’s about continuously improving outcomes at a lower total cost of care for a growing cohort of members. Health plans must address the root causes of healthcare spending by simultaneously improving provider performance, supporting whole-person care, and managing chronic disease. These strategies not only control costs but also enhance the value delivered to members, ensuring the long-term success of MA plans.

Enhance specialty network performance

Specialists drive a significant portion of healthcare costs, and this makes their integration into performance networks critical. By leveraging detailed benchmarks and data-driven insights, payers can identify specialists with the highest potential for cost savings and quality improvements. However, specialty access constraints are a challenge in many communities, and readily accessible, high-performance specialty providers may be difficult to recruit. In these areas, partnership is a key strategy for specialist performance improvement. While quality improvement initiatives have historically focused on the primary care community, health plans should increase their attention on programs that incentivize specialty value-based care performance.

This dynamic will likely be reflected in new mandatory models, shadow bundles and carve-out programs that provide innovative ways to share performance risk and drive accountability among specialists.

Deliver whole person care

Success in Medicare Advantage requires considering care plan barriers outside the clinic. Whole-person care — integrating services like behavioral health, social work, and care management — is essential to addressing the full spectrum of needs that arise from complex chronic illness.

Social determinants of healt are a key component of this strategy. By addressing barriers like transportation, housing, and food insecurity, plans can improve outcomes and reduce long-term costs. Payers can unlock tailored, efficient care management by assessing nontraditional health-related factors. Aggregating patient-reported metrics and providing these to clinicians via real-time data feeds and interoperable tools are two vital ways to enable these interventions, from classifying food deserts or areas without adequate public transportation to the timely identification of an individual patient’s deterioration.

Manage utilization

Utilization management in Medicare Advantae cannot be about limiting access; it’s about ensuring members receive the best care in the best setting. Advanced analytics help payers identify member needs, deliver proactive care, and manage diseases better to reduce avoidable expenses.

By focusing on episodes of care and referral patterns, payers can reduce unnecessary utilization without sacrificing quality or member satisfaction.

Data-enabled providers: The keys to sustainable success in Medicare Advantage

Medicare Advantage plans that succeed in the coming years will do so by focusing on two pillars: data analytics and provider enablement.

Advanced analytics tools provide the insights needed to:

• Optimize provider networks by identifying and rewarding high performers.
• Ensure accurate risk identification and quality measurement.
• Guide utilization management to reduce unnecessary costs while improving outcomes.

Payers must prioritize tools that consolidate diverse data sources into actionable insights, enabling real-time decisions and long-term strategic planning.

Providers play an equally important role in achieving plan objectives. They are the frontline of care delivery, and they need real-time insights to align their work with payer objectives. Timely, actionable insights that draw data on risk, quality, and performance help providers improve quality metrics and manage high-cost members, raising performance and experience for all stakeholders.

Investing in provider-facing tools — performance dashboards, point-of-care digital insights, and real-time alerts —mensures that providers can deliver the best care.

The path forward

Together, data analytics and provider enablement will shape the next chapter of Medicare Advantage. By addressing both provider performance variation and individual member risk, plans can adapt to today’s challenges and position themselves for sustainable growth. Health plans that leverage their data assets to inform decisions and collaborate with providers will lead this evolution, delivering high-value care that meets the needs of members and stakeholders alike.

Luke Hansen is the chief medical officer of Arcadia, a healthcare data analytics company