Medicare Advantage plans get a 3.32% increase in final payment rates

Photo: Kittiphan Teerawattanakul/Eye Em/Getty Images

The Centers for Medicare and Medicaid Services anticipates a payment increase for Medicare Advantage plans of 3.32% from 2023 to 2024, which is approximately a $13.8 billion increase in MA payments for next year, according to the 2024 Medicare Advantage and Part D Rate Announcement finalized payment policies released late Friday afternoon. 

This compares to the 1.03% increase in revenue under the proposed 2024 Advance Notice for the Medicare Advantage and Part D Prescription Drug Programs released by CMS in February.

The Rate Announcement finalizes updates to MA payment growth rates and changes to the MA and Part D payment methodologies. These include technical and clinical updates to the MA risk adjustment model to keep it up to date and improve payment accuracy. 

Two such changes are the transition to the Internal Classification of Diseases (ICD)-10 system, which is the coding classification system used throughout the U.S healthcare system since 2015, and updated data years.  

Modernizing the Medicare Advantage risk adjustment model by aligning it with the ICD-10 system will ensure the payment models are using more up-to-date data – bringing Medicare Advantage payments in line with current healthcare practices and making them consistent with other federal health care programs, CMS said. 

The finalized risk adjustment model also reflects revisions focused on conditions that are subject to more coding variation. As in past years, CMS is finalizing policies to address these inconsistencies in order to ensure the model more accurately predicts medical costs.
 
The changes in risk adjustment payment policies finalized as part of this rate announcement were developed in collaboration with expert clinicians to take into account how well different conditions predict costs. This reduces incentives to cherry-pick healthy beneficiaries and discriminate against sicker patients, CMS said. 

In addition, CMS will continue to pay more for someone who is dually eligible for Medicare and Medicaid than someone who is not when they have the same diagnoses.

To hold the industry more accountable, CMS said it would start recovering improper payments made to insurance companies in Medicare Advantage. Recovering these improper payments and returning this money to the Medicare Trust Funds will protect the fiscal sustainability of Medicare and allow the program to better serve seniors and people with disabilities, CMS said.

Proposed policies include:

• cracking down on abusive and confusing marketing schemes. 
• addressing problematic prior authorization practices that prevent timely access to needed care. 
• making it easier to access vital behavioral health care.
• raising the bar on quality and driving toward more equitable care.

CMS said it would phase in certain updates, and Updated Medicare Advantage and Part D policies ensure the overall Medicare program remains strong and stable for the 65 million beneficiaries today and future generations to come, payments to private insurance companies are accurate, and taxpayer dollars are well spent.

"This year's update strengthens Medicare for our seniors and Americans with disabilities," said HHS Secretary Xavier Becerra. "We are committed to ensuring private companies are holding up their end of the deal to provide quality care to beneficiaries and that payments to these companies are accurate. Together with President Biden's Budget, this update protects Medicare for beneficiaries today and beyond 2050."

"Medicare should be providing equitable, high-quality affordable care that will be available for our children and grandchildren," said CMS Administrator Chiquita Brooks-LaSure. "Paying Medicare Advantage plans more accurately for the care they provide is how we ensure that people enrolled in Medicare Advantage, especially populations with the highest health disparities and people in underserved communities, can continue to access the care they deserve."
 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org

Juan Nanez will offer more detail in the HIMSS23 session "How Care Provider Access to Regional Data Reduces Hospital Readmissions." It is scheduled for Tuesday, April 18 at 11 a.m. – 11:30 a.m. CT at the South Building, Level 1, room S104.