Why payers are fretting over a proposed CMS Medicare Advantage rule: 7 things to know

 A proposed rule change coming from CMS is making payers nervous. 

CMS is expected to issue its final rule on risk adjustment data validation Feb. 1, a change that could have a big impact on Medicare Advantage plans. In 2018, the agency proposed eliminating the fee-for-service adjuster, which allows for a permissible number of payment errors in audits. 

Here's seven things to know about the proposed rule: 

  1. The rule was first proposed in 2018. The agency has proposed applying this adjustment retroactively, meaning payers could collectively be on the hook for up to $3 billion in repayments.

  2. Industry leaders have been critical of the rule. AHIP President Matt Eyles told Becker's the rule is "unlawful in terms of its construction" and relies on outdated data.

  3. Payers have signaled they are likely to sue if the final rule does not include a fee-for-service adjuster. Humana CFO Susan Diamond said if this is the case, payers will likely be "tied up" in litigation for a "number of years."

  4. Humana could stand to lose the most in potential clawbacks, according to Bloomberg.  As much as 17 percent of its 2023 earnings before interest, taxes, depreciation and amortization face scrutiny— or $900 million. Most other insurers could face penalties on 3 percent of their 2023 earnings.

  5. Risk adjustments are an important part of avoiding disincentives for caring for vulnerable enrollees, UnitedHealthcare Medicare CEO Tim Noel said. Mr. Eyles agreed, telling Becker's removing the fee-for-service adjuster could hinder health equity.

    "We know how critically important that focus on health equity is, especially when you look at the higher levels of enrollment by minority populations and low income Americans in Medicare Advantage plans," he said.

  1. The jury is still out on how much of the proposed rule CMS will follow through on. Analysts told Bloomberg they expect the final rule to be "relatively aggressive," while The Wall Street Journal reported the rule could be watered-down.

  2. CMS is expected to issue the final rule Feb. 1. 

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