Every year, the Centers for Medicare & Medicaid Services (CMS) requires Medicare Advantage Organizations (MAOs) and Prescription Drug Plans (PDP) (collectively “Sponsors”) to report their operational data to CMS in February; the reporting dates vary.1 CMS expects Sponsors to have an effective procedure to develop, compile, evaluate, and report information to CMS in the time and manner required. The reported data are subject to validation and verification by an independent contractor hired by the Sponsors.
Key Changes to Medicare Part C Reporting for CY 2024 (Impacting 2025 Submission)
For CY 2024, a new segment, Segment VIII Supplemental Benefit Utilization and Costs, has been added to Part C Reporting. Supplemental benefits are usually paid out of Part C rebates MAOs have earned from Medicare. MAOs earn rebates by submitting a bid that is lower than the benchmark set by Medicare, estimating that they will spend less on their enrollees than the standard amount; if the bid is lower, the MAO receives a rebate, which is a percentage of the difference between their bid and the benchmark, and must use this rebate to provide additional benefits to their members like lower cost-sharing or supplemental services. During contract year 2024, MAOs were required to remind their enrollees of utilization of the supplemental benefits to ensure optimization of usage as any unused balance will be retained by the offering MAO.
A recent change to Segment VIII was announced on February 10, 2025 when CMS sent out a notification via HPMS2 that the Plan Benefit Package (PBP) numbering in the Supplemental Benefit Utilization and Costs Reporting was inadvertently misaligned. CMS has updated these reporting requirements as of February 7, 2025, to ensure a match between the 2024 PBP and the reporting requirements. The updated CY 2024 Part C Technical Specifications_508_2042025 is attached to the aforementioned notification3. The Supplemental Benefit Utilization and Costs File Record Layout is available for download from HPMS as other file record layouts are.
Segment VIII has a long list of data elements to report – if and when the MA plan offers additional benefits above and beyond what is offered by Original Medicare, they have to be reported such as dental, vision, hearing, supplemental benefits for the chronically ill (SSBCIs), transportation, among others. The MA plan has to report the level of utilization by its enrollees, the total net amount incurred by the plan to offer the benefit and how the plan accounts for the cost of the benefit, including how the plan determines and measures administrative costs, costs to deliver, and any other costs the plan captures. According to CMS, the level of details:
“[This information] will inform future development of cost reporting data elements in these reporting requirements and may inform how CMS requires cost reporting in other contexts.”
Most of the segments required for Part C and D reporting are operational data stored in Sponsors’ system4, it would take time to extract and verify the data, create the files and validate the file format prior to submission. Since Segment VIII is new, it may even take longer to extract, calibrate and validate the data than organization determinations and reconsiderations (Segment II), enrollment and disenrollment (Segment IV), special needs plans care management (Segment V), rewards and incentives programs (Segment VI) and payments to providers (Segment VII).
Impact of the Inflation Reduction Act on Part D Reporting
Implementation of the Inflation Reduction Act for Contract Year 2025 also requires additional reporting in prescription drug event (PDE) submissions. CMS published some examples to illustrate the additional reporting requirements in PDE on December 9, 2024 for calculating and reporting claims submitted by Enhanced Alternative (EA) Plans and Employer Group Waiver Plans (EGWPs) that straddle from the defined standard (DS) Deductible Phase to Catastrophic Phase, and Miscellaneous Scenarios. These examples are helpful for prescription drug plans’ oversight of their pharmacy benefit managers (PBM) who are mostly responsible for PDE submissions.
PDE data are the foundation for Part D payments, prospective and in reconciliation, it is worth Sponsors’ time and resource investments to ensure their systems (and the PBMs’) produce correct data to be submitted in PDE and in a timely resolution of errors when occurred.
Partnering for Medicare Part C and D Success
Inovaare has published a blog article on Managing PDE and MDP5 in 2025 on the Inovaare website https://www.inovaare.com/blog/key-changes-to-pde-and-mdp-2025/. We encourage Sponsors to review this article to refresh their memory of PDE changes and the new MDP.
Managing data related to Part C or Part D for reporting and other purposes is a full-time job requiring knowledge of Medicare regulations and program structures, data analytical skills and acumen.
Inovaare has tools and human resources that can bring the above expertise to support Sponsors to scrub their Parts C and D data and delve into the root causes of rejected PDE. When Sponsors use Inovaare’s tools to manage data, they can focus on cost-effective medical and drug utilization management which can be a win-win approach with a high return on investment from Inovaare’s tools. If you have questions regarding how Inovaare can help amidst changes in Medicare requirements and Part D re-design, call us at 408.850.2235.