On Monday, April 1, 2024, CMS released the 2025 Medicare Advantage and Part D Rate Announcement. The headline number is a 3.7 percent average increase in payments to plans for 2025, about $16 billion, almost identical to the figure in the Advance Notice published on January 31. Plan stocks fell on Tuesday because investors had expected CMS to sweeten the final number, as it did last year. It did not.
Most of the coverage this week is about insurers. We want to write about the other end of the pipe. When Medicare Advantage plans feel squeezed, the pressure travels down to the practices that see their members, and it shows up in three specific places: documentation and coding requests, utilization management, and contract negotiations. The same week, for the record, the April 1 ICD-10-CM update took effect with no new diagnosis codes, only index, tabular and guideline revisions, so coders have one fewer thing to absorb this quarter.
Key takeaways
- CMS finalized a 3.7 percent average payment increase for Medicare Advantage plans in 2025, unchanged from the January Advance Notice. Plans wanted more and did not get it.
- 2025 is year two of the three-year move to the 2024 CMS-HCC risk model (V28): 67 percent new model, 33 percent old. Fewer diagnoses map to payment and several require more specific codes.
- Expect more chart requests, more "suspect condition" lists and more coding education from plans over the next twelve months. Document what you assess and code what you document; nothing else.
- Fee schedule contracts are largely insulated. Capitated, shared savings and quality bonus arrangements are not, because the plan's revenue sets the pool.
- Utilization management tightens when margins do. Log every MA authorization with its number and attach it to the claim.
What the announcement actually contains
| Component | 2025 final | Why it matters downstream |
|---|---|---|
| Effective growth rate (the underlying trend in Medicare fee-for-service costs) | About 2.3 percent | Lower than plans lobbied for; this is the basis of the "cut" argument |
| Risk adjustment model | Second year of the three-year phase-in of the 2024 CMS-HCC model (often called V28): 67 percent new model, 33 percent old model for 2025 | Fewer diagnosis codes map to payment categories; plans will ask practices for more specific documentation |
| Average expected change in plan revenue | Plus 3.7 percent including the expected risk score trend | Plans say the real figure after the model change is negative for many of them |
| Part D | Redesign under the Inflation Reduction Act continues; the $2,000 annual out-of-pocket cap for enrollees begins in 2025 | Patients with high drug costs will have very different cost sharing next year |
For context, MedPAC's March 2024 report to Congress estimated that Medicare will pay MA plans about 22 percent more in 2024 than it would have spent on the same beneficiaries in traditional Medicare, roughly $83 billion, with coding intensity and favorable selection as the main drivers. That estimate is the backdrop to every decision CMS has made about the risk model, and it is why we do not expect the pressure on plans, or on practices, to ease in 2025 or 2026.
What V28 changes in the exam room
The V28 model removed or consolidated a number of hierarchical condition categories and changed the coefficients for others. Some diagnoses that generated a risk adjustment payment under the old model no longer do, and several categories now require more specific codes to count. Three examples that have been discussed widely since the model was finalized in 2023: diabetes categories now carry the same coefficient whether or not complications are documented, so "diabetes with hyperglycemia" no longer pays more than uncomplicated diabetes; angina pectoris and atherosclerosis of the extremities with intermittent claudication no longer map to a payment category; and protein-calorie malnutrition was removed. Meanwhile, conditions that remain in the model still need specificity: chronic kidney disease has to carry a stage, heart failure a type, and major depression a severity and episode.
As the blend shifts to 67 percent new model for 2025, plans have a strong incentive to make sure every member's conditions are documented to the specificity the new model rewards. Expect more of the following in the next twelve months:
- Chart retrieval requests for risk adjustment data validation and for the plan's own coding reviews. These are permitted under most contracts and under HIPAA payment operations, but check your contract for any limit on volume and notice.
- "Suspect condition" lists sent to the practice before annual visits, asking the clinician to assess and document conditions the plan believes the member has.
- Requests to schedule annual wellness visits or in-home assessments for members who have not been seen this year.
- Coding education from plan representatives, some of it good and some of it aggressive.
Our position on this has not changed. Document what you assess, code what you document, and code it to the highest specificity the record supports. A plan suggesting a diagnosis is not a reason to add it. A plan pointing out that your note says "diabetes" when the patient has diabetes with chronic kidney disease, documented elsewhere in the same chart, is a reason to fix the note. The line is whether the clinician evaluated the condition at that visit.
A worked example
A 74-year-old Medicare Advantage patient comes in for a quarterly visit. The note lists "CKD, HF, DM2" in the problem list and the assessment reads "chronic conditions stable, continue meds." The claim goes out with N18.9 (chronic kidney disease, unspecified), I50.9 (heart failure, unspecified) and E11.9 (type 2 diabetes without complications). Under V28, unspecified CKD does not map to a payment category at all; the staged codes do. Unspecified heart failure maps, but the clinician's own record shows an echo from last year with reduced ejection fraction, which is a different and more specific code.
The fix is not a coder adding codes from the problem list. It is the clinician documenting, at the visit, what was assessed: "CKD stage 3b, eGFR 38 on March labs, stable; chronic systolic heart failure, euvolemic on current diuretic; type 2 diabetes, A1c 7.1, continue metformin." That note supports N18.32, I50.22 and E11.9, reflects real clinical work, and would survive a risk adjustment data validation audit. It also takes the clinician about 45 seconds longer than "stable, continue meds." That is the whole coding education a plan can legitimately offer, and it is the one we give.
Utilization management
Plans under margin pressure tighten authorization. The prior authorization final rule released in January will require covered plans to decide within seven days and to state a specific reason for denials, but not until 2026. For 2025, expect more services on prior authorization lists and more post-payment review of high-cost services. This is a good year to make sure every authorization is logged with its number and attached to the claim, and that denied authorizations are appealed with the clinical record rather than resubmitted with the same information.
Contracts
Many practice contracts with MA plans are written as a percentage of the Medicare fee schedule, and those are largely insulated from this announcement. Contracts with capitation, shared savings or quality bonuses are not: the plan's revenue per member sets the pool. If you are in a value-based arrangement with an MA plan, ask the plan how the 2025 rates change the benchmark and the bonus math before you sign a renewal. A plan that expects lower revenue per member in 2025 will try to recover it somewhere, and the quality bonus definition is the easiest place to do it quietly.
Plans will also try to reduce supplemental benefits and narrow networks for 2025. A plan that terminates a specialty from its network for 2025 will send notice in the summer; watch for it, and check the notice period in your contract now so a summer letter does not catch you with 60 days to react.
A note on what plans are saying
The insurance industry describes this announcement as a cut, and from the point of view of a plan that built its revenue on the old model's coding patterns, it is. From the point of view of the Medicare trust fund, it is a 3.7 percent increase on top of years of payments that MedPAC has repeatedly found exceed what traditional Medicare would have spent. We think practices should understand both arguments and not take either one personally. Your job is accurate documentation and clean claims, and those serve you under any rate.
Questions we hear
Will MA plans pay us less in 2025?
Fee schedule based contracts generally track Medicare's physician fee schedule, not the plan's capitation rate. Plans are more likely to respond by tightening authorization, narrowing networks and pushing risk-based contracts than by cutting fee schedules mid-contract. Depends on the plan, and it will be in the renewal, so read it.
Do we have to respond to a plan's suspect condition list?
Check the contract; most require cooperation with risk adjustment activities in general terms but do not require the clinician to address a plan-generated list. Our advice is to treat the list as one input to the pre-visit review, alongside the chart and the care gap report, and to let the clinician decide what to assess. Never let it drive the codes on the claim.
Should we take part in plan-sponsored coding programs?
Ask three questions: Who reviews the chart, what do they do with the findings, and does the program ever suggest a diagnosis not supported by an evaluation at the visit? If the answer to the third is anything but a clear no, decline. Our coding team reviews risk adjustment documentation as part of routine coding review, and our closing gaps in care service handles the annual visit outreach that plans are asking about, on the practice's terms rather than the plan's.
What to do this quarter
- Pull your payer mix. If Medicare Advantage is more than a quarter of visits, the items above deserve a standing agenda item.
- Review your MA contracts for chart retrieval, audit, notice and network termination terms. Know how much the plan can ask for and how fast.
- Give clinicians a short, specific refresher on documenting chronic conditions at the annual visit: status, treatment plan, and the specific code. Use the CKD, heart failure and diabetes example above; it covers most of primary care.
- Log every MA prior authorization with its number and attach it to the claim. This is also preparation for 2026 when denial metrics become public.
- Update your ICD-10-CM references for the April 1 index and tabular revisions; there are no new codes, but there are corrected instructional notes.
