CMS Backtracks on 2024 MA Rate Notice and Part D Rule Changes

Published Friday, the rate notice includes a 3.32% overall pay raise which was up from the 1.03% in the proposed rule.

The Centers for Medicare and Medicaid Services (CMS) appears to have ceded to the demands of the insurance industry; the new pay rates translate to a $13.8 billion increase for insurers, according to Axios, CMS will also delay instituting changes to the risk adjustment model and instead phase them in over three years.

Inside Health Policy explains that the pay increase is the result of an effective growth rate of 2.28%, a change to the star ratings system which will result in a 1.24% cut, a revision to the risk model resulting in a 2.16% cut and a 4.44% increase due to increasing risk scores.

While the Better Medicare Alliance and the Blue Cross Blue Shield Association lamented any changes, some in the insurance industry supported the government’s decision to ease off of a fraud crackdown. America’s Health Insurance Plans (AHIP) thanked CMS for listening to industry concerns:

A large bipartisan group of Congressional champions and other stakeholders stepped forward to demonstrate their strong support for beneficiaries and this program, which consistently delivers affordable, high-quality care to millions of Americans. We applaud these leaders for standing up for seniors and people with disabilities.

The New York Times notes that in the short term, Medicare Advantage plans will still be able to receive inappropriate payments, but the system will eventually eliminate 2,000 diagnostic codes that insurers use to manipulate reimbursements. Nearly every large insurer participating in Medicare Advantage has settled or is facing a federal fraud lawsuit for the practice of upcoding or manipulating risk assessments for increased reimbursements.

The full fact sheet on the CY 2024 Medicare Advantage Capitation Rates and Part C and Part D payment Policies can be found at CMS.