Will Medicare Advantage and Park D plan payments increase? The Centers for Medicare & Medicaid Services (CMS) released the advance notice of methodological changes for Medicare Advantage(MA) capitation rates and payment policies for MA and Part D. The proposed rule implements several changes to the risk adjustment model, reports Fierce Healthcare’s recent article entitled “CMS proposes small hike to Medicare Advantage, Part D plan payments in 2024 amid risk adjustment changes.”
“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,” said CMS Deputy Administrator and Director of Medicare Meena Seshamani, M.D., Ph.D., in a statement.
In layman’s terms, CMS is likely to reduce benefits or increase premiums in order to accommodate the changes it plans to incorporate.
Here’s the more technical information on this subject:
CMS is anticipating an effective growth rate of 2.09% and a 3.3% increase based on the MA risk score trend, which is the average increase in plan risk scores. However, CMS has estimated a 3.12% decline in payments after taking in changes to the risk adjustment model.
“We’re really looking to make some technical updates to make sure that our payments are up to date and accurate,” said Seshamani during a call with reporters Wednesday.
One of the major changes in the proposed rule is to update the diagnosis classification system from ICD-9 to ICD-10, which is used by more doctors. “The proposed new risk adjustment model reflects more current costs associated with various diseases, conditions, and demographic characteristics,” according to CMS’ fact sheet on the advance notice.
CMS is attempting to update the fee-for-service data used in the risk adjustment model, moving from 2014-15 to 2018-19. They’re also reviewing where there may be discretionary coding and variation in the coding patterns to make risk adjustment more predictive. Risk adjustment refers to a point system which identifies each individual’s health level. A healthy adult may have a risk score of a 1, for example. Apparently, CMS has been using an older model.
Despite the changes, CMS has proposed to keep the risk adjustment coding intensity adjustment at 5.9% as it was for 2023 and the minimum identified under a federal statute. The adjustment lowers MA risk scores to reflect a difference in coding between MA and fee-for-service. CMS has also proposed a 1.24% drop in payments based on the plan performance in 2023 Star Ratings, which influences how much plans will get in quality bonus payments for 2024. The star ratings from 2023 are on average lower than the 2022 star ratings.
CMS has expected the 2023 star ratings to be lower after removing a disaster provision put in place to help plans weather the financial impact of the COVID-19 pandemic.
CMS will publish the final rate notice by April 3rd.
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Reference: Fierce Healthcare (Feb. 1, 2023) “CMS proposes small hike to Medicare Advantage, Part D plan payments in 2024 amid risk adjustment changes”