Late last month, the Centers for Medicare and Medicaid Services (CMS) released coverage plans for the 2024 Medicare Advantage (MA) Capitation Rates as well as Part C and Part D Payment Policies.
The final notice includes a 1.12% cut to 2024 reimbursement rates for MA health insurers.
Weren’t there supposed to be higher cuts?
There were. Several weeks of public comment and industry criticism—including from the American Academy of Ophthalmology (AAO)—followed a proposed Advance Notice in February, which critics argued would have resulted in a 2.27% cut to the year-to-year payment change.
What exactly did the Advance Notice propose?
The Advance Notice from CMS included an overall 1.03% growth in revenue. However, commenters argued that “the MA risk score trend is not actually part of the MA payment methodology, and that if the risk score trend were not taken into account, the year-to-year change in payment would be a negative 2.27%, and not a positive 1.03%.”
So what changed?
For the final Rate Announcement, CMS updated the Effective Growth Rate from 2.09% to 2.28% and the Risk Model Revision and Normalization from -3.12% to -2.16%.
The MA risk score trend also increased from 3.30% to 4.44% following a blend of the 2024 risk adjustment model and the current model.
What about total payments?
Total payments for 2024 are expected to rise by 3.32% from this year based on the new model—a significant increase compared to the originally proposed 1.03% in the Advance Notice.
This amounts to a roughly $13.8 billion increase nationally in MA payment plans in 2024 compared to 2023.
Take away.
The Rate Announcement for MA and Part D was released in the context of a range of policies intended to strengthen Medicare and Medicaid and drive more accurate payments.
CMS plans to phase in further changes between 2023 and 2026.