On April 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Announcement of Calendar Year (CY) 2025 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the “Rate Announcement”). The Rate Announcement finalizes CMS’s updates to the Medicare Part D risk adjustment model. Prior information released regarding the 2025 changes were in proposed form only.
The 2025 revisions to the Medicare Part D risk adjustment model are more fully described in the Rate Announcement and include:
- A newly defined standard Part D benefit defined in three phases: annual deductible, initial coverage, and catastrophic coverage;
- A lower annual out-of-pocket threshold of $2,000 (down from $8,000 in 2024);
- An increased annual deductible of $590 (up from $545 in 2024); and
- The sunsetting of the current Coverage Gap Discount Program and creation of a Manufacturer Discount Program.
Why is this important to health plan sponsors? Health plan sponsors offering prescription benefits are required to provide Medicare Part D Notices to their eligible plan participants. A Medicare Part D Notice lets plan participants know whether their prescription coverage is considered “creditable.” Prescription benefits are considered “creditable” if the health plan’s prescription benefit is expected to pay (on average) as much as the standard Medicare prescription drug coverage in any given year. Information on a prescription plan’s creditability is important for plan members when enrolling in Medicare coverage (either due to age or disability).
To know whether your prescription benefits are creditable, the prescription benefits must be tested against the current year Medicare Part D benefit.
MedBen offers several services to help employers with prescription plans meet the regulatory requirements associated with Medicare Part D, including creditability testing, the annual notice disclosure to plan participants each year, and the required disclosure to CMS. If you want more information about these MedBen services, please contact your Account Management team.