Medicare Advantage plans to get 8.5% revenue boost in 2023 

Photo: Kiyoshi Hijiki/Getty Images

Medicare Advantage plan payments are expected to get an 8.5% revenue increase for 2023. This is an increase over the 7.98% proposed in the February advance notice.

The 2023 growth rate is set at 4.88% in the rate announcement released today by the Centers for Medicare and Medicaid Services. This is compared to the proposed 4.75% in the 2023 Advance Notice.

CMS said it set the rates after considering all of the comments received from stakeholders. CMS solicited comments on a variety of topics, including promoting health equity in Medicare Advantage and Part D plans. 

"CMS's goals for Medicare Advantage and Part D mirror our vision for the agency's programs as a whole, which is to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program," CMS said.

WHY THIS MATTERS

Capitation rates for Medicare Advantage health plans are based on the growth percentage and the fee-for-service growth percentage.

Earlier this year, numerous legislators called upon Congress to keep MA rates stable. More than 60 senators wrote a letter to CMS urging the agency to protect MA and rates.

In January, the House of Representatives drafted its own letter to CMS.

The Medicare Payment Advisory Commission warned that, as MA costs the government more than original Medicare, MA could worsen Medicare's sustainability.

RISK ADJUSTMENT

For Part C risk adjustment, CMS will continue the 2022 policy to calculate 100% of the risk score using the 2020 CMS-HCC (Hierarchical Condition Categories) model, which was phased in from CY 2020 to CY 2022.

CMS is also continuing its policy of calculating risk scores for MA enrollees using diagnoses exclusively from MA encounter data submissions and fee-for-service claims.

CMS solicited and received comments on whether enhancements could be made to the CMS-HCC risk adjustment model to address the impacts of social determinants of health on beneficiary health status. The agency said it would consider all comments received on this topic for future policymaking.

DIAGNOSIS CODING

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and fee-for-service providers. 

For CY 2023, CMS is finalizing a coding pattern adjustment of 5.9%, which is the minimum adjustment for coding pattern differences required by statute. 

Comments included recommendations that CMS apply a higher coding pattern adjustment than the statutory minimum and that it consider approaches that took into account differences in coding patterns across MA plans.

NORMALIZATION FACTOR

CMS calculates normalization factors annually to keep the fee-for-service risk score at the same average level over time. 

The methodology typically used is to project the payment year risk score using a trend that is based on five historical years. However, CMS is removing the 2021 risk score due to concerns over the changing use of services in 2020 due to COVID-19.

Including the anomalous 2021 risk score would result in a projection that significantly underestimates what the 2023 risk score is likely to be, said CMS, so the agency is using the same years (2016 -2020) of fee-for-service risk scores that were used for 2022.

PART D RISK ADJUSTMENT

CMS is finalizing its proposal to implement an updated version of the RxHCC risk adjustment model to include a clinical update reflecting ICD-10-CM diagnosis codes rather than ICD-9-CM codes used in the prior models. 

PART C AND D STAR RATINGS

CMS solicited feedback on star ratings related to social risk factors. 

This included plans to:

• report stratified Part C and D Star ratings measures by social-risk factors.
• develop a Health Equity Index to summarize measure-level performance by social-risk factors in a single score.
• develop a measure to assess whether plans are screening their enrollees for health-related social needs such as food, housing and transportation.
• get to a determination of how MA organizations are transforming care and driving quality through value-based contracts.

CMS said it would take these comments into consideration.
 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com