RISE summarizes recent regulatory-related headlines.
MedPAC: Favorable selection and coding intensity will lead to $84B in MA overpayments in 2025
In its March 2025 report to Congress, the Medicare Payment Advisory Commission (MedPAC) estimates that Medicare will spend approximately 20 percent for Medicare Advantage (MA) enrollees than it would spend if those beneficiaries were enrolled in traditional Medicare. The difference translates into a projected $84 billion.
MedPAC said favorable selection and coding intensity are the reasons for higher payments to MA plans. Favorable selection occurs when beneficiaries with lower actual spending relative to their risk score tend to enroll in MA; it is the extent to which risk-standardized spending of MA enrollees would be lower than the fee-for-service (FFS) average without any intervention from MA plans. Coding intensity refers to the tendency of MA plans to record more diagnosis codes, which causes risk scores—and payments—for the same beneficiaries to be higher when they are enrolled in MA than they would be if they were in FFS Medicare.
The two factors lead to pricing errors that cause CMS’ risk-adjustment system to set the payment rate too high for a given MA enrollee, according to the report. “Higher payments to MA plans fund more generous benefits, but those higher payments increase Medicare spending and create an imbalance between the MA and FFS programs such that policymakers must weigh the added cost with the unmeasured value of the added benefits,” the report said.
CMS to end four innovation center models by end of 2025, drops plans for Medicare $2 drug list
The Centers for Medicare & Medicaid Services (CMS) Innovation Center announced it will end four models early, by December 31, 2025, to align with its statutory obligation and strategic goals. The programs include:
- Maryland Total Cost of Care (2019 – 2026)
- Primary Care First (2021 – 2026)
- ESRD Treatment Choices (2021 – 2027; will propose termination through rulemaking)
- Making Care Primary (2024 – 2034)
The Innovation Center also said it will no longer pursue two previously announced but not yet implemented models given the flexibility provided by President Trump’s rescission of Executive Order 14087 on January 20, 2025:
- Medicare $2 Drug List
- Accelerating Clinical Evidence
In addition, CMS said it is considering options to reduce the size of the Integrated Care for Kids (2020 – 2026) awards or make other changes to the model.
CMS said in an accompanying announcement that the agency will save almost $750,000 by ending the programs early. The Innovation Center will soon announce “a new strategy based on guiding principles to make Americans healthier by preventing disease through evidence-based practices, empowering people with information to make better decisions, and driving choice and competition.”
BMA ad urges Trump administration to protect Medicare Advantage
Meanwhile, Better Medicare Alliance (BMA) has launched a new video ad that urges the Trump administration to protect and strengthen Medicare Advantage for seniors. The ad features seniors from across the country directly appealing to President Trump to “do the right thing” and ”take care of the seniors.”
“This is a critical moment for Medicare Advantage,” said Rebecca Buck, senior vice president of communications for Better Medicare Alliance, in an announcement. “Millions of seniors depend on Medicare Advantage for affordable health care, and they are feeling squeezed after two years of cuts to the program. With important policy and funding conversations happening right now, seniors’ voices need to be heard and taken seriously—and that’s our goal with this campaign.”
Medicare Advantage is now the primary form of Medicare coverage in the United States, with 55 percent of Medicare beneficiaries choosing Medicare Advantage over traditional Medicare. More than 34 million seniors and people with disabilities are currently enrolled in Medicare Advantage.
The latest ad is part of an ongoing BMA campaign featuring unscripted testimonials by real seniors enrolled in Medicare Advantage. The seven-figure digital campaign will target Washington, D.C. and run through the spring. In the coming weeks, the Trump administration is expected to finalize annual funding for Medicare Advantage through the 2026 Medicare Advantage and Part D Final Rate Notice, along with other important policy changes. These decisions come as millions of beneficiaries continue to face higher costs and reduced benefits after two straight years of Medicare Advantage cuts.
Fired federal workers still waiting to return to work after judges’ order for reinstatement
Last week two federal judges ordered the Trump administration to reinstate approximately 25,000 probationary employees who were terminated from their federal agency jobs. But thousands of those employees remain out of work, according to Bloomberg Law. The Trump administration plans to appeal the decisions to block the terminations, the publication said.
In interviews with the New York Times, many fired workers described being in limbo. Some were reinstated but then immediately placed on administrative leave. MSN reports that several fired employees from the Centers for Disease Control and Prevention haven’t received any word on their employment status. Prior to the court rulings, the CDC placed 711 workers on indefinite administrative leave.
Reuters reports that seven U.S. Senate Democrats sent a letter to Robert F. Kennedy Jr., secretary of the Department of Health and Human Services, demanding the administration reinstate all the fired CDC workers. "While we are encouraged to learn that some recently fired CDC employees have since been reinstated, we urge you to immediately reverse all firings, to reinstate all CDC personnel who were unfairly and recklessly terminated, and to halt all additional mass terminations at the CDC," the Senators wrote in the letter, according to Reuters.