Health Plan Weekly

Industry analysts reacted with a shrug on Jan. 31 when CMS released the much-anticipated 2025 Advance Notice of Medicare Advantage and Part D payment changes, which said that health plans can expect to receive a 3.7% average increase in risk-adjusted revenue next year.  

The 3.7% figure factors in a 2.45% revenue decline related to fee-for-service normalization and a major risk adjustment model revision that CMS is phasing in over three years, as well as an effective growth rate of 2.44% and a Star Ratings bonus impact of -0.15%. CMS estimated the revenue change from the combination of those proposed policies is -0.16%. After also factoring in an average risk score increase of 3.86%, CMS arrived at its net expected revenue change of 3.7%.  

As health care costs continue to rise, Congress may take up site-neutral payment reform or other cost control measures in coming years, if a Jan. 31 House of Representatives hearing is any indication. The House recently passed a bill, the Lower Costs, More Transparency Act (LCMTA), that includes limited site neutrality and PBM reforms, but some Congress members floated more aggressive cost-control interventions in the health care system — including tougher scrutiny on Medicare Advantage plans. 

During the Jan. 31 hearing, the leaders of the House Energy & Commerce’s Health subcommittee  — chairman Rep. Brett Guthrie (R-Ky.) and ranking member Rep. Anna Eshoo (D-Calif.) — both said that the LCMTA didn’t go far enough to control costs. 

As plan beneficiaries and lawyers gain access to newly released price transparency data, health plans and plan sponsors must take proactive steps to limit their legal risk of violating health plan fiduciary standards under the Employee Retirement Income Security Act (ERISA), according to experts from the law firm Faegre Drinker. Experienced plaintiffs' attorneys are actively looking for cases that could establish a cottage legal industry around ERISA plan fiduciary suits, the experts say. 

“There is an ever-increasing likelihood that some action or omission by health plan fiduciaries will be scrutinized either by the Department of Labor, or in a class action lawsuit brought by plaintiffs lawyers representing plan participants,” said Kendra Roberson, partner at Faegre Drinker, during a Jan. 25 presentation on ERISA health plan fiduciary legal risk. “These lawsuits would be similar to those that have been brought against retirement plan fiduciaries challenging 401(k) and 403(b) plan fees and costs.” 

Black Medicaid enrollees were more likely to be hospitalized for preventable reasons than white enrollees, regardless of whether they were enrolled in the Supplemental Security Income (SSI) program, according to an Urban Institute study.

Using data from CMS, the analysis studied preventable hospitalization rates across 21 states and among Medicaid enrollees ages 19 to 64 for the three most common types of preventable conditions: asthma/chronic obstructive pulmonary disease (COPD), diabetes, and heart failure. For all three conditions, preventable hospitalization rates were significantly higher for people enrolled in Medicaid through the SSI program — meaning they have a qualifying disability — compared with those who enrolled through other pathways.

CMS on Feb. 1 sent initial price offers to the manufacturers of the 10 medications that were selected for the Medicare drug price negotiation program, which goes into effect in 2026. The agency announced the 10 medications in August 2023 and said they accounted for about 20% of total Part D gross covered prescription drug costs from June 1, 2022, to May 31, 2023. The drug companies have 30 days to respond by either accepting the offer or providing a counteroffer. The negotiation period ends on Aug. 1. The drug price negotiation program was implemented as part of the Inflation Reduction Act.  

In 2023, 79 health care companies filed for Chapter 11 bankruptcy, according to Gibbins Advisors, a health care restructuring advisory firm. That was up from 46 filings in 2022 and the highest number of Chapter 11 filings in the past five years; the next-highest was 51 in 2019. Gibbins noted that most of the filings involved pharmaceutical and senior care companies. The firm added that 12 hospitals filed for Chapter 11 bankruptcy in 2023, which compares to 11 total between 2020 and 2022. Gibbins analyzes bankruptcies for debtors with at least $10 million in liabilities.