CMS to phase in Medicare Advantage risk adjustment changes, bumping payments by 3%

CMS will move ahead with Medicare Advantage risk adjustment changes payers and some provider groups opposed, but the agency will phase in the model over three years. 

The agency published its 2024 rate announcement on March 31. Payers were against the coding adjustments, which industry groups said would amount to a cut in funding for the program. 

CMS will shift MA's diagnosing coding from ICD-9 to ICD-10 and remove certain codes from the Hierarchical Condition Categories model, in addition to other changes to risk adjustment payments.  

Some plans argued removing some codes related to vascular conditions, diabetes and depression will hurt plans serving dual-eligible members or those with chronic conditions. 

CMS has maintained the risk adjustment changes are not a funding cut but will slightly raise payments. Because the changes will be phased in over three years, the agency said Medicare Advantage plans will see an average payment increase of 3.32 percent between 2023 and 2024, up from 1.03 percent in the advance notice. 

"Paying Medicare Advantage plans more accurately for the care they provide is how we ensure that people enrolled in Medicare Advantage, especially populations with the highest health disparities and people in underserved communities, can continue to access the care they deserve," CMS Administrator Chiquita Brooks-LaSure said in a news release. 

Gen Gillespie, chief revenue officer at Belong Health, which consults with regional Medicare Advantage and dual-eligible plans, said some plans will likely cut benefits as a result of the rate notice, but the impact will vary greatly plan-by-plan. 

"The impact of this proposed rule is generally negative, but varies specifically positive or negative based on your geography, plan type and membership makeup," Mr. Gillespie told Becker's ahead of CMS' final decision. 

"So probably not all Medicare members are going to see a benefit cut, but some definitely will," he added. 

AHIP President Matt Eyles said the association appreciates that CMS will phase in risk adjustment changes over three years. 

“As the MA program continues to serve an increased share of Medicare-eligible Americans, it is essential for the public sector and the private market to work in partnership together, considering the perspective of all stakeholders and the impact of further changes to the Medicare Advantage program in a thoughtful, collaborative and timely manner," Mr. Eyles said. 

In a statement shared with Becker's, the Alliance of Community Health Plans, which represents nonprofit plans, said it will work with CMS to mitigate any impacts to consumers, including dual-eligible enrollees. 

"We support the risk-adjustment model changes to focus on delivering results for consumers and address underlying incentives to aggressively document," the alliance said. "CMS has taken a significant step towards the goal of aligning incentives for documenting diagnosis codes with those clinical conditions most predictive of future health care spending." 

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