The Centers for Medicare and Medicaid Services announced improvements to the system used to pay for Medicare Advantage plans on Friday.
CMS predicts that health insurance companies that pay Medicare Advantage enrollees will see net revenue from the plan grow by 3.32% in 2024, higher than the 1% expected in the projections. draft of the rate announcement, thanks to the three-year risk-adjusted program revision period. The base rate will drop by 1.12%, excluding how insurers code members’ health status. Insurers describe a repeat of the previous policy as a blow to the increasingly popular plan that will force them to reduce benefits.
The health insurance industry’s primary concern is CMS’s approach to the risk-adjusted program that carriers use to measure and report members’ health to the agency. Insurance companies that cover sick policyholders will receive higher payouts. Critics say this creates an incentive for Medicare Advantage plans to exaggerate the health status of policyholders and record as many risk codes as possible to increase payouts.
Some insurers have even argued that the risk-adjusted changes go beyond the statutory scope of CMS. CMS administrator Chiquita Brooks-LaSure asserted that the agency was within its legal jurisdiction and denied the new Medicare Advantage policies would result in benefit cuts. “We expect that the premiums and benefits of the plan will match what they had before,” Brooks-LaSure said in a press conference Friday. “Anything different are the choices the plans are making.”
While CMS describes the 2024 rate as a net gain, the insurance industry sees things differently. According to the industry, when combined with the consequences of a separate move to make star rating bonuses harder to earn, Medicare Advantage providers face a reduction in net payments next year. CMS is tightening its star rating program after a record number of insurers received bonuses during the COVID-19 pandemic last year, a trend that has reversed this year.
CMS will remove more than 2,200 risky codes that it considers most responsible for encryption. The agency will use a combination of the current risk-adjusted model and a third of the new model next year, then roll out the remainder of the revised risk-coding process over the next two years. In addition, CMS will consolidate codes related to certain medical conditions, such as diabetes and depression, while retaining only those that reliably predict future spending. .
“Clearly, CMS will still pay more for MA programs for beneficiaries who are more seriously ill and have more complex conditions,” said Medicare Center Director Dr. Meena Seshamani during the meeting. newspaper.
EvenSun Consulting’s Wesley Sanders, who was previously the chief financial officer of Alliant Health Plans, said insurers oppose the risk adjustment provisions and will lobby Congress to reverse them. But the health industry may encounter skeptical lawmakers amid ongoing lawsuits by the Justice Department accusing Medicare Advantage providers of overpayments and legal efforts. to curb inappropriate marketing tactics, he said. “Plans without the above type of support [Capitol] Hill that they used to have,” he said.
Sanders said giving insurers three years to adapt to the revised risk-adjusted policy gives them time to adjust their operations to maximize profits.
The health insurance trade group AHIP did not comment on the content of the rate notice. “We remain committed to working collaboratively with the administration, as well as with members of Congress, to continue to leverage the strengths of this program and ensure that it continues to deliver better services, better access to care and better value for seniors and taxpayers,” said President and CEO Matt Eyles in a press release. risk management policy, the coalition of insurers, providers and patient advocates said in a press release.
The Blue Cross Blue Shield Association expressed concern about insurers receiving “modest” standard payout increases and about risk-adjusted terms. David Merritt, senior vice president of policy and advocacy, said: “The right growth rates and measured risk-adjusted model changes are essential to ensuring a strong MA program. strong.
The Alliance of Public Health Plans, which represents nonprofit insurers, described the new risk adjustment policy as a positive development and called for CMS to be more transparent about its assumptions. his actuary on how insurers would code patient risk. “This information is important to show significant variation among MA plans that target aggressive behavior,” the trade group said in a press release.
Medicare Advantage insurers generated an estimated $17 billion in overpayments in 2021, according to the most recent data from the Medicare Payments Advisory Committee, the body that makes recommendations policy for Congress. CMS announced last month that it would recoup $4.7 billion over 10 years from Medicare Advantage insurers it concluded were overpaying. CMS also reduces the standard payment Medicare Advantage insurers receive by ending payment for indirect medical education costs.
