Medicare Advantage plans get a proposed 1.03% payment increase in 2024

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Medicare Advantage plans are expected to receive a 1.03% increase in revenue under the 2024 Advance Notice for the Medicare Advantage and Part D Prescription Drug Programs released by the Centers for Medicare and Medicaid Services on Wednesday. 

CMS is proposing technical updates to the MA risk adjustment model by fully transitioning to the Internal Classification of Diseases from ICD-9 to ICD-10. The latter has been in use since 2015. It also updates underlying fee-for-service data years from 2014 diagnoses and 2015 expenditures to 2018 diagnoses and 2019 expenditures.

Under the Advance Notice, the Risk Model Revision and Normalization is -3.12%.

The Advance Notice revised risk adjustment is tied to the Risk Adjustment Data Validation (RADV) final rule CMS released on Monday, according to Dr. Meena Seshamani, deputy administrator and director of the Center for Medicare.  

The RADV rule addresses issues in which there are no diagnoses supporting codes, Seshamani said during a press call on Wednesday. The Advance Notice includes revisions designed to reduce the sensitivity of the model to coding variation, according to CMS. 

The Advance Notice growth rate is 2.09% and is largely driven by Medicare fee-for-service per capita costs. It includes a proposed technical correction related to indirect and direct medical education costs associated with services furnished to MA enrollees, according to CMS.

The change in MA Star Ratings is -1.24% and the MA risk score trend is 3.3%.

Taken together, the expected average change to revenue is 1.03%.

WHY THIS MATTERS

Comments on the Advance Notice must be submitted by March 3. 

AHIP said it looks forward to providing comments.

AHIP CEO and president Matt Eyles said, "We are concerned with the potential adverse impact of the rate notice on seniors and people with disabilities, especially when taken together with the final risk adjustment data validation (RADV) rule and other policy changes proposed for next year. We will carefully review and analyze the details of the proposed notice and provide comprehensive, constructive feedback to CMS during the comment period to reinforce that CMS should not finalize payment policies that increase costs and/or reduce benefits for MA enrollees, especially when healthcare cost and inflationary pressures remain high.

"It is important to remember that 3 in 4 senior voters with MA are concerned about cuts to their benefits. And 4 in 5 senior voters say it is important for the federal government and the Biden Administration to protect funding for MA."

In addition, CMS is seeking comment on MA quality measurement under Part C Star Ratings as part of CMS's efforts to align quality measures across federal programs and with private payers.

The Advance Notice builds on a proposed rule that CMS released in December 2022 that would, if finalized, strengthen beneficiary protections in Medicare Advantage and Medicare Part D prescription drug coverage, CMS said.

In addition to the payment updates, the Advance Notice outlines several updates and improvements made by the Inflation Reduction Act to the Part D program that will go into effect or be in effect on January 1, 2024. 

These include the continuation of reduced cost-sharing for insulin and eliminated cost-sharing for recommended, preventive vaccines, as well as the elimination of cost-sharing for Part D prescription drugs in the catastrophic phase and expansion of eligibility for full cost-sharing and premium subsidies under the Low-Income Subsidy program.

Through these changes to the Part D program for 2024, the new drug law provides financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening the Medicare program, both now and in the long run, CMS said.

THE LARGER TREND

Earlier this week, CMS finalized risk adjustment policies in a final rule to prevent overpayments to Medicare Advantage Organizations.

Studies and audits done separately by CMS and the Health and Human Services Office of Inspector General have shown that Medicare Advantage enrollees' medical records do not always support the diagnoses reported by MAOs, which leads to billions of dollars in overpayments to plans and increased costs to the Medicare program, as well as taxpayers, CMS said in the final rule. 

AHIP president and CEO Matt Eyles called the rule "unlawful" and "fatally flawed," and said it should have been withdrawn instead of finalized. 
 
ON THE RECORD

"The commonsense proposals in the Advance Notice, coupled with the proposals in the MA and Part D rule released in December, ensure these important programs continue to meet the healthcare needs of all beneficiaries while improving the quality and long-term stability of the Medicare program," said CMS Deputy Administrator and Director of the Center for Medicare Dr. Meena Seshamani.
 
 
 

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