Proposed 2024 Medicare Advantage rates could cut member benefits by $540 a year

Proposed changes to Medicare Advantage payments could cut benefits for members, according to a report commissioned by the Better Medicare Alliance. 

The Better Medicare Alliance is a pro-Medicare Advantage group funded by insurers. 

The Feb. 15 report from consulting firm Avalere Health found a 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. 

According to the analysis, plans would either have to decrease benefits or increase premiums to accommodate the changes. 

"Reducing the rebates reduces benefits, plain and simple," Better Medicare Alliance President Mary Beth Donahue said on a call with reporters Feb. 15. 

The proposed changes would affect some geographic areas more than others, according to Avalere's analysis. In Houston, rebates would decrease by 63 percent under CMS' proposed rule, Avalere found. 

In Los Angeles, this decrease would be 19 percent. 

In an advance notice published Feb. 1, the agency proposed a rate increase of 2.09 percent for MA and Part D plans next year, largely driven by increases in fee-for-service costs, and a MA risk score trend of 3.3 percent. 

The agency also signaled a 3.12 percent decline in payments based on proposed changes to the risk adjustment model, and a 1.24 percent decline in payments based on changes to the star ratings system — 2023 star ratings will impact quality bonus payments in 2024.

In addition, CMS proposed shifting MA's diagnosis coding from ICD-9 to ICD-10 in 2024 — the latter has been used since 2015 and by more physicians. 

Industry groups have called the proposal a cut, while CMS has said the proposal will lead to a small 1.03 percent revenue bump. 

"There is a lot of interest in the proposed increase in payments for Medicare Advantage insurance plans. CMS is proposing updates to pay insurers more accurately for the care of people with Medicare," CMS Administrator Chiquita Brooks-LaSure said in a tweet Feb. 16. 

Public comment on the proposed rule is open until March 3. 

Read the full report here.

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