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CFO In The Know: The MA Increase

Analysis  |  By Marie DeFreitas  
   January 23, 2025

Here's how CFOs are currently feeling about Medicare Advantage.

Medicare Advantage payers are getting a rate increase, and providers feel the unease.

MA plans are set to receive a 4.33% payment increase from 2025 to 2026. Some plans could see a more than $21 billion pay increase in 2026 under a plan proposed by the Biden administration last week. Since a new administration jumped into office on Monday, plans could still change, and analysts expect the ultimate pay increase to be even higher under the Trump administration. Major MA payers like UnitedHealthcare, Cigna and Humana would all benefit from the increase.

Providers are seeing this increase as unfair, wondering why insurers are getting an increase as physicians get left behind, and while medical costs continue to rise. Prior authorization, the continuation of increased denials, and other administrative burdens have plagued providers in Medicare Advantage for years. MA enrollment has also been steadily increasing, which generally puts providers on the short end of the stick with lower margins. The increase suggests government reimbursement could be catching up with the increase in utilization among the Medicare population, putting minor stress on payers' earnings.

Late last year, the Department of Health and Human Services Office of Inspector General released a report finding MA insurers pocketed $7.5 billion from risk-adjusted payments in 2023.

Politico released a list of spending reform options which includes Medicaid, site-neutral payments, and the Affordable Care Act. MA and pharmacy benefits managers are not on the list. Providers will need to pay close attention as the new administration swiftly lays out new policies and reversals.

Who’s Saying What

The American Medical Association (AMA) emphasized how physicians treating Medicare patients are seeing cuts for the fifth straight year. Outrage is setting in, although it may have never left.

"It's unbelievable they're giving insurance companies that had record profits an increase while at the same time cutting payment to physician practices that are struggling to survive," said AMA President Bruce Scott, M.D., in a statement. "This contrast highlights the urgent need for Congress to prioritize linking payment to physician practices to the cost of providing care."

Mary Beth Donahue, CEO of lobbying group Better Medicare Alliance, said the following in a statement last week:

"President Trump can immediately deliver on his promise to protect Medicare for seniors by examining these policies, including ensuring the rates keep up with increasing medical costs and that the final rate notice provides much needed stability for seniors."

The CFO To Do List

Many CFOs are, unsurprisingly, fed up with MA and the constant hurdles from payers.

Generally, MA has faced criticism from both sides, for denials and overpayments. This goes without saying, but CFOs must ensure they go over contracts carefully. Stay on top of payers' tactics as much as possible, especially as the country and economy shift under the Trump administration.

To go a step further, CFOs should ensure they are communicating with their senators about these policies and the effects they have, especially for major health system CFOs that serve large populations.

As more hurdles and policy changes come about, CFOs will have to conjure their fighting spirit to protect the fiscal health of their organizations and staff.

Marie DeFreitas is the CFO editor for HealthLeaders.


KEY TAKEAWAYS

Medicare Advantage insurers are getting a pay increase of 4.33% from 2025-2026.

Providers have had it with Medicare Advantage hurdles, and the insurer pay increase feels like yet another blow.

CFOs will need to stay on top of policies, payer tactics and communication with their local and federal leaders.


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