The US Department of Health and Human Services announced a significant increase in federal payments for private Medicare plans, totaling over 5% more than the proposed rate in January. The updated payment rates are largely due to new health spending data, which was not available at the time of the proposal.
The decision is a win for major insurers such as UnitedHealth Group, Humana, and CVS Health, as well as other smaller companies like Elevance. Analysts have expressed surprise at the magnitude of the increase, which far exceeds the historical average.
While some industry experts welcome the boost, others have raised concerns about the potential impact on Medicare Advantage’s sustainability. The Trump administration has implemented changes aimed at making payments more accurate, despite lobbying efforts to delay them.
Newly confirmed CMS administrator Mehmet Oz, a former TV host and Republican senator, had pledged during his confirmation hearing to scrutinize insurer overpayments and address prior authorization issues. However, his characterization of the Medicare Advantage system as “upside down” has raised questions about his stance on the program.
The decision highlights the ongoing debate over Medicare Advantage’s role in federal spending, with potential billions of dollars in savings available for reform. As lawmakers hunt for ways to pare costs without alienating insurers or sparking controversy, it remains to be seen whether Oz will prioritize these efforts as CMS administrator.
Source: https://www.axios.com/2025/04/08/trump-medicare-advantage-big-pay-increase