CMS to raise Medicare Advantage pay rates by 3.3% in 2024; phase in risk adjustment changes

 The Biden administration finalized a proposal to raise Medicare Advantage payments by 3.32% in 2024, slightly above the 1% raise that it proposed. 

The final payment rule released Friday comes after an intense lobbying campaign from insurers who claimed that the original advance notice released in February would amount to a cut to plans. The agency also finalized changes to the MA risk adjustment model, but will instead phase the changes in over three years as opposed to implementation next year.

Administration officials said that the goal of the rule is to help ensure pay is accurate to plans in the popular program.

“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,” said CMS Administrator Chiquita Brooks-LaSure in a statement.

CMS will still transition the coding system from Internal Classification of Diseases (ICD)-9 to ICD-19 more commonly used by physicians.

The agency will still pull more than 2,000 diagnostic codes that are “focused on conditions that are subject to more coding variation,” according to a release.

The original rule proposed a 1% pay raise to plans, but insurers cited their own research that predicted a 2.27% cut. The insurers believed that CMS did not properly factor changes to star ratings calculations and alterations to the risk adjustment model. 

The insurance lobbying group Better Medicare Alliance has launched television ads amid a campaign to convince lawmakers to oppose the rule, claiming that the agency will cut the popular program. 

Opposition to the rule was not just relegated to insurers. Several provider groups claimed the removal of more than 2,000 diagnostic codes could shift resources away from dual eligible beneficiaries. 

Provider groups were also concerned about the short transition to risk adjustment changes.

The MA program has steadily gained popularity among seniors, with more than 30 million signing up this coverage year. But critics have claimed the program has not generated the savings it has expected for Medicare, as plan payments have outpaced traditional Medicare due in part to gaming of risk adjustment tactics. 

The payment rule and a final rule overhauling risk adjustment audits are part of a larger effort by CMS.

https://www.fiercehealthcare.com/payers/cms-raise-medicare-advantage-pay-rates-33-2024-phase-risk-adjustment-changes