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February 13, 2025 – A few weeks ago, Regs & Eggs provided insights into Medicare Advantage (MA), the private insurance option under Medicare, and explored both short- and long-term actions that the Trump administration could take to modify MA payment rates and policies. I am extremely happy to announce that since then, McDermott+ has welcomed a new team member, Lynn Nonnemaker, who has extensive experience working on the MA program. Prior to joining McDermott+, Lynn spent more than a decade working with MA organizations as a policy and advocacy professional, including most recently at AHIP, the national association for health insurers, where she was vice president for Medicare policy. She also served as senior director of Medicare policy for Cigna, where she led policy strategy on a broad range of Medicare issues, including MA, Part D, dual-eligible programs, and alternative payment models focused on value. Earlier in her career, Lynn spent several years in government service, working at the US Department of Health and Human Services and the US Government Accountability Office. To learn more about Lynn, listen to this week’s episode of our Health Policy Breakroom podcast.
Since MA could become a hot topic under this administration, I wanted to get Lynn’s perspective on where the program has been, where it is now, and where it could go under the Trump administration. So, without further ado, here is my “interview” with Lynn:
Jeffrey Davis: Enrollment in MA and other private health plans accounts has grown significantly over the past few years, now accounting for more than 50% of total Medicare enrollment. What factors or policies do you think have led to that?
Lynn Nonnemaker: First, thanks for having me, Jeff! I am happy to be here and talk (or in this case, write) about my favorite subject.
I think a couple of factors are responsible for the tremendous growth in MA enrollment. Certainly, the fact that MA offers enrollees low-cost plans that typically combine medical and prescription drug coverage (often at $0 premium), protection from high out-of-pocket costs, and added benefits such as vision and dental coverage, transportation, and in-home support services, has made MA a very attractive option for many. Among the groups that have migrated to MA in really large numbers are individuals who are dually eligible for Medicaid and Medicare benefits, especially those who are eligible for partial Medicaid benefits. For low-income individuals, MA offers a value proposition that’s hard to beat.
What lies behind the low premiums and extra benefits is the work that payers have put in to become more efficient relative to the fee-for-service Medicare program. That efficiency comes from competition, from managing utilization, and from working with providers to improve quality and reduce waste. For example, MA has consistently outpaced other payer sectors in the adoption of alternative payment models for value-based care.
Davis: The Biden administration instituted several MA policies, and MA plans have expressed concerns about some of them. For example, in the 2025 Final Rate Notice, issued on April 1, 2024, the Centers for Medicare & Medicaid Services (CMS) finalized a 0.16% reduction to MA plans’ base payments for 2025 that some plans warned would cause them to stop providing certain supplemental benefits to their enrollees.
What do you think is the overall status of the program now? How are MA plans generally “feeling”?
Nonnemaker: As you note, the last two years have been difficult for MA plans. Partly this has to do with the numbers – two years of payment cuts after years of payment increases. But more broadly, the tremendous growth we just mentioned has brought with it more scrutiny of the program: scrutiny from members of Congress, who now have more constituents enrolled in the program; from CMS, which is responsible for the roughly $550 billion in payments to MA plans this year; and from providers, who must adapt to a growing share of MA enrollees in their patient populations.
MA plans, like everyone else in the health care space, are also adjusting to our new post-COVID-19 reality. Plans have seen utilization increase in recent years, perhaps as a result of deferred care during the pandemic. And regulations finalized during the Biden administration have placed new restrictions on marketing and utilization management.
Bottom line: it’s a challenging time to be an MA plan.
Davis: In the last months of the Biden administration, CMS released two significant proposed regulatory documents: the 2026 MA and Part D proposed reg and the 2026 advance notice. The Trump administration will need to act quickly to issue the final notice and perhaps the final reg as well. Comments on the advance notice were due earlier this week on February 10, 2025, and the final notice must be released by April 7, 2025. MA bids for 2026 are due on June 2, 2025.
What are the major policies in these regs? What big decisions will the Trump administration need to make, and what policies do you think the administration will wind up finalizing, modifying, or ignoring?
Nonnemaker: With respect to the proposed rule, it is important to note that the new administration does not need to issue a final rule – there is no statutory requirement. Many plan stakeholders have urged CMS to limit any final rule to “must do” items, mainly related to implementing the Inflation Reduction Act (IRA). Congress gave CMS some leeway to implement provisions through sub-regulatory guidance in the first few years following the IRA’s enactment, but that guidance should start shifting to regulation in 2026. CMS also needs to make changes to the Medicare Stars quality rating system to keep the measures up to date. Beyond that, there isn’t much CMS has to do, and the agency could choose to finalize a limited rule that leaves many provisions out, giving the agency more time to consider.
That said, if CMS does issue a final rule for 2026, the biggest policy in question is the proposal to allow for coverage of anti-obesity medications under Medicare Part D and Medicaid. Plans have expressed concerns about the proposal, but there are also voices of support, particularly from manufacturers. Assuming we do see a final rule in advance of the June bid deadline, one good possibility is that this proposal will not be mentioned. The proposed rule also includes provisions related to use of prior authorization, access to supplemental benefits, and reporting requirements.
With regard to the rate notice, there are several key issues to look for when CMS publishes the final notice on (or before) April 7. First, while the proposed growth rate of 5.93% is above what we’ve seen in recent years, many observers, including plans, say the growth rate should be even higher when CMS incorporates more recent claims data, which presumably will happen in time for the final notice. A second critical issue will be how the new administration moves forward with a very technical, but very important, adjustment known as the normalization factor, particularly as it relates to Part D. CMS proposed a method for calculating the Part D normalization factor that would mean big cuts in risk scores – and risk-adjusted payments – to plans that offer both MA and Part D benefits. Plans want CMS to change the way it calculates the normalization factor to lessen the cuts. However, if MA and Part D plans (MA-PD plans) gain, stand-alone Part D plans lose, and CMS has been trying to bolster the stand-alone Part D program since the implementation of the IRA. It will be interesting to see how the new administration addresses this issue.
Davis: The Trump administration may have its hands full deciding whether and how to address perceived issues with the MA program. Stakeholders have raised concerns about “overpayments” to MA plans compared to Medicare fee-for-service. Concerns also have been raised about MA plans’ use of prior authorization. Do you think that the Trump administration will focus on these or other issues?
Nonnemaker: I don’t think plans should expect much in the way of relief on these issues. Members of Congress from both sides of the aisle have pressed CMS to do more to address so-called “overpayments.” And remember that it was the first Trump administration that proposed big changes to the way audits of risk-adjusted payments work, which many expect will result in plans owing large sums to the government. Regarding prior authorization, I certainly don’t expect providers to soften their stance or lessen their criticism. It will be interesting to see how the new administration balances the voices of providers and plans on this important issue.
Davis: To me, it is unclear what general approach the Trump administration will take regarding MA. The Trump administration could decide to increase payments to MA plans and provide more flexibility for MA plans to offer additional benefits, or it could reduce payments and tighten other policies as part of its attempt to reign in federal spending. What long-term actions and overall strategy do you think the Trump administration will take?
Nonnemaker: As we saw during the first Trump administration, I think we can expect to see an emphasis on policies that maximize plan flexibility to innovate and compete, an effort to reduce administrative burden (i.e., less plan reporting to CMS absent a specific need), and continued scrutiny of payment. The next four years promise to be active ones for the MA industry!
As you can see from these responses, we are very fortunate to have Lynn on our team. And if you ever have an MA or managed care question, you know who to ask (I sure do)!
Until next week, this is Jeffrey (and Lynn) saying, enjoy reading regs with your eggs.
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