Medicare Faces Significant Changes This Fall

Medicare enrollment is set to be particularly complex this fall, as major insurers prepare to announce their Medicare Advantage programs for 2025 on October 1. The changes come amid adjustments to the federal reimbursement model and financial pressures on both insurers and healthcare systems. The updates to the Medicare reimbursement model, now in the second year of a three-year phase-in, are driving insurers to make various changes to their Medicare Advantage offerings.

Some plans may see reduced benefits or even discontinuation in certain areas. Sonja Pedersen-Green, an associate partner at McKinsey & Co. in Minneapolis, advises, “Consumers should take an extra look this year given that there might be more changes to plans than we’ve seen in the last couple of years.”

Surveys suggest that nearly half of the nation’s healthcare systems may drop one or more Medicare Advantage plans.

These systems are reporting delays in authorization for medical procedures and frequent disputes or denials of payments from insurers. UnitedHealth Group, based in Minnetonka and a major player in the Medicare Advantage market, is feeling the impact of these pressures. Adjustments to lower Medicare payments have led to higher expenditures for the company, with spending rising to 84 cents for every premium dollar received.

The new reimbursement model includes measures to curb overpayments to insurers due to practices like upcoding, where insurers add illness codes to receive larger payments. The Wall Street Journal reported that improper coding has inflated costs by billions of dollars in recent years. Minnesotans will be particularly affected by these changes.

Healthcare providers like Essentia Health have announced they will drop certain Medicare Advantage plans from their networks. This could force tens of thousands of Minnesota seniors to find a new insurer or care provider during the insurance renewal period from November 1 to December 7. With Medicare Advantage costing the federal government around $450 billion annually, the Centers for Medicare & Medicaid Services (CMS) are pushing for accurate, fair reimbursements and more sustainable program growth.

Scrutiny on upcoding and other cost-inflating practices is high. The appeal of Medicare Advantage going forward may depend on how insurers navigate these financial pressures while maintaining or enhancing the quality of care. Higher adoption rates in urban areas, facilitated by county-level cost assessments, may also influence insurers’ strategies.

For seniors in Minnesota, where nearly 60% are enrolled in a Medicare Advantage plan, the upcoming period is crucial. They will need to thoroughly review available plans to ensure they have coverage that meets their individual health needs and preferences. As the Open Enrollment Period approaches, Medicare beneficiaries should pay close attention to the Annual Notice of Changes (ANOC) letter.

Medicare’s evolving cost-sharing changes

This letter, which must be sent to all Part D plan members by September 30, contains crucial information about changes in drug coverage and costs for the coming year. The ANOC serves as a guide to understanding how your Part D drug plan, whether it’s a stand-alone plan or part of a Medicare Advantage plan, will change in 2025.

During the Open Enrollment Period from October 15 to December 7, you have the opportunity to review these changes and decide if your current plan is still the best option for you. The importance of this year’s Open Enrollment period is heightened by new measures, such as the $2,000 cap on out-of-pocket drug costs, which are expected to significantly impact Part D enrollees. While this cap will save nearly 19 million enrollees at least $400 next year, it may also bring changes in cost-sharing and coverage.

Many plans have already adjusted their cost-sharing structures, with some moving from fixed copayments to percentage-based coinsurance, potentially increasing out-of-pocket costs. Key sections to review in the ANOC include the Summary of Important Costs for 2025, Plan Continuity, Changes to the Pharmacy Network, Changes to Prescription Drug Coverage, and Cost-Sharing Changes. Reviewing the ANOC thoroughly is essential to avoid unexpected costs and coverage issues.

Tools like the Medicare Plan Finder can help you compare plans and determine the best one for your needs in 2025. Early October is when new plan details will start to appear, so consider starting your research then. If your current plan seems to be insufficient for 2025, use the Open Enrollment Period to switch plans.

The deadline for changes is December 7, but it’s advisable not to wait until the last minute due to potential complications. In 2025, Medicare will undergo some of the most significant changes in a generation. These changes include a $2,000 limit on out-of-pocket Part D drug costs, an opt-in payment plan, and potential broad changes in Medicare Advantage plans.

Most result from the ongoing evolution of the Medicare system, presenting both challenges and opportunities for beneficiaries. Key changes include the elimination of the Medicare “donut hole” and a limit on how much you’ll have to pay out of pocket for covered prescription drugs. There will also be a new payment plan to spread out medication costs.

Insurers are likely to change pricing and coverage for Medicare Advantage and Part D plans. Medicare Advantage beneficiaries will receive a letter in mid-2025 about unused benefits. Other changes impact the availability of mental health care, prior authorization use, and unpaid caregiver support for Medicare recipients with dementia.

These changes represent significant shifts in the Medicare landscape, aiming to balance financial protections for beneficiaries with the evolving costs and logistics of healthcare delivery. Beneficiaries need to stay informed and review their plans to adapt to these updates effectively.