CMS Proposes 8% Raise to Medicare Advantage Plans in 2023 Medicare Advantage and Part D Advance Notice

Last Wednesday, the Centers for Medicare and Medicaid Services (CMS) announced proposed payment policy changes for the Medicare Advantage and Part D programs for Calendar Year (CY) 2023. The proposal includes a 7.98% payment increase and health equity provisions for MA participation, for example in star ratings.

The advance notice was released for comment and includes a discussion of CY 2023 adjustments to the benefits parameters for the Medicare Part D defined standard benefit, according to a press release from the American Hospital Association. CMS will accept comments on the notice for 30 days and will solidify capitation rates and payment policies by April 4.

CMS is considering a single score to measure performance on social risk factors in star ratings and another to determine how well plans are screening members for social determinants of health, Healthcare Dive reports. The agency is also looking into value-based arrangements that plans have with providers.

Inside Health Policy notes that one of the provisions for in-home Health Risk Assessments has caused some controversy among stakeholders. According to the CMS Fact Sheet, 3.5% of the pay raise is projected to cover rising score trends in MA plans overall. A 2020 report from the HHS Office of Inspector General (OIG) found that MA plans were inappropriately using health risk assessments (HRAs) to increase reimbursements, particularly in-home HRAs.

OIG audits frequently produce this type of result. For example, an OIG audit published on February 3 showed that the SCAN Health Plan submitted diagnosis codes for use in the risk adjustment program that likely led to an overpayment of $54.3 million from the Federal Government.

Healthcare Finance News notes that the CMS Advance Notice follows the recent letter from 346 bipartisan members of Congress in which they voiced support for the MA program. A recent Morning Consult poll also showed that 94% of beneficiaries are satisfied with their coverage.

Industry stakeholders responded with overwhelming positivity to both the raise and the inclusion of health equity into participation guidance. From America’s Health Insurance Plans CEO Matt Eyles, via Fierce Healthcare:

We agree that MA plans play an essential role in improving health equity and addressing the social determinants of health that impact millions of seniors and people with disabilities. We support CMS soliciting input on ways to advance these goals.

Medicare Advantage is projected to have a 4.75% effective growth rate in 2020, the strongest since its first year. According to Modern Healthcare, the actual results could end up even higher, like in 2022 when the growth rate was projected for 4.55% and ended up being 5.59%.

Industry growth is also making waves for long-time MA participants. Due to the increased growth and interest in a piece of the pie from start-ups and venture capital, more players are entering the market and knocking off some of the revenue that would otherwise go to titans like UnitedHealthcare and Humana. Modern Healthcare reports that Humana cut nearly $1 billion from its business after it lost half the new MA members it expected to gain during open enrollment to smaller, newer insurers.

Of course, the Better Medicare Alliance was pleased with the payment change announcement from CMS. From President and CEO Mary Beth Donahue:

As we continue to review the Advance Notice in further detail, we appreciate that CMS has offered a thoughtful proposal that will help ensure stability for the millions of diverse seniors and individuals with disabilities who count on Medicare Advantage, The proposal additionally furthers our shared goal of improving health equity, recognizing progress made and more that needs to be done.

Read the full CMS press release.