Insurers urge CMS to reverse course on 'flawed' MA risk adjustment changes

Insurers are urging CMS not to implement proposed risk adjustment changes in Medicare Advantage, but some nonprofit payers say the changes could create a more level playing field for community plans. 

In a comment letter submitted to CMS March 6, AHIP, the trade association representing the health insurance industry, called the proposed changes "flawed," and said it had "grave concerns" the risk adjustment changes would result in a cut in payments for the program. 

In its comment letter, AHIP said the agency implemented an "inadequate" process for considering the change. 

"On balance, we believe the policies in the Advance Notice will threaten the stability of benefits for over 30 million seniors and individuals with disabilities, many of whom are low-income and have high healthcare needs," AHIP President and CEO Matt Eyles wrote in the letter. "Given these concerns and for the reasons noted above, we urge CMS to withdraw the proposed risk model changes." 

AHIP commissioned a study from consulting firm Wakely on the proposed rate adjustment, which found the proposed risk adjustments could cut payments for dual-eligible enrollees by 6.4 percent. 

Insurers and HHS have clashed over whether the risk adjustment changes constitute a cut in funding for the program. 

Risk adjustment is the system used by CMS to pay Medicare Advantage plans based on each beneficiary's health risk. The risk adjustment changes are part of a suite of changes — including shifting MA's diagnosis coding from ICD-9 to ICD-10 in 2024, which is used by more physicians, — the agency proposed in a notice issued Feb. 1. 

CMS said these changes will "keep the model up to date and improve payment accuracy." 

Insurers have said a decrease in risk adjustment payments will cut into money for beneficiaries, forcing payers to cut benefits or raise premiums. 

A Feb. 15 report from consulting firm Avalere Health, commissioned by the Better Medicare Alliance, a pro-MA group, found the proposed rule from CMS would result in a $45 per member per month decrease in payments to plans, or a $540 decrease in benefits per member per year. 

HHS has said the risk adjustments are "unequivocally not cuts" in response to insurers claims the changes will cut into MA members' benefits. CMS says the proposed changes will result in a 1.03 percent increase in payments to plans. 

In a comment letter submitted to  CMS March 6, the Alliance of Community Healthcare Plans, which represents non-profit health plans, said the alliance is supportive of the proposed risk-adjustment changes, which it said will "level the playing field." 

While many of its member plans are supportive of the risk-adjustment changes, the Alliance said it is requesting CMS delay implementing the changes for one year. 

In a letter to CMS shared with Becker's, 39 healthcare leaders, including former CMS administrators, wrote in support of the rule. 

Richard Gilfillan, MD, former deputy CMS administrator and former CEO of Trinity Health, said the proposed risk adjustment changes leave "ample funding" for plans to continue to provide appropriate benefits and care. 

"The CMS approach actually redistributes spending away from high coding plans with excessive profits towards community-based plans that serve lower income populations," Dr. Gilfillan said. 

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