The Biden administration finalized a proposal to raise Medicare Advantage payments by 3.32% in 2024, slightly above the 1% raise that it proposed.
The final payment rule released Friday comes after an intense lobbying campaign from insurers who claimed that the original advance notice released in February would amount to a cut to plans. The agency also finalized changes to the MA risk adjustment model, but will instead phase the changes in over three years as opposed to implementation next year.
Administration officials said that the goal of the rule is to help ensure pay is accurate to plans in the popular program.
“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,” said CMS Administrator Chiquita Brooks-LaSure in a statement.
CMS will still transition the coding system from Internal Classification of Diseases (ICD)-9 to ICD-19 more commonly used by physicians.
The agency will still pull more than 2,000 diagnostic codes that are “focused on conditions that are subject to more coding variation,” according to a release.
The original rule proposed a 1% pay raise to plans, but insurers cited their own research that predicted a 2.27% cut. The insurers believed that CMS did not properly factor changes to star ratings calculations and alterations to the risk adjustment model.
The insurance lobbying group Better Medicare Alliance has launched television ads amid a campaign to convince lawmakers to oppose the rule, claiming that the agency will cut the popular program.
Several modifications appeared to influence the changes from the proposed rule. For instance, the risk score trend increased from 3.3% in the proposed rule compared to 4.4% in the final regulation. The effective growth rate also increased from 2.09% to 2.28%.
For the 2024 coverage year, the risk score trend will be calculated based on two-thirds of the old risk adjustment model and one-third of the new one. In 2025, that will change to two-thirds of the new model and one-third of the old one. The changes will be fully phased in for the 2026 year.
Opposition to the rule was not just relegated to insurers. Several provider groups claimed the removal of more than 2,000 diagnostic codes could shift resources away from dual eligible beneficiaries. Provider groups were also concerned about the short transition to risk adjustment changes.
Brooks-LaSure told reporters during a call Friday that the goal of the coding removals is to pay MA plans more accurately and that the changes won’t affect duals.
“There are hundreds of codes left for all of the diagnoses where codes were removed,” she said.
She added that the goal was to remove ambiguous codes.
“Some of the codes that were removed were what I like to say are eye of the beholder codes,” Brooks-LaSure said. “There was ambiguity where we were seeing differences in how the same person might be coded depending on which plan they were in.”
Some provider groups were happy CMS listened to the concerns about the short transition time.
“Proceeding rapidly with these changes without further analysis and stakeholder input would have flown in the face of the administration’s commitment to greater health equity,” said Susan Dentzer, president and CEO of America’s Physician Groups, in a statement.
The MA program has steadily gained popularity among seniors, with more than 30 million signing up this coverage year. But critics have claimed the program has not generated the savings it has expected for Medicare, as plan payments have outpaced traditional Medicare due in part to gaming of risk adjustment tactics.
The payment rule and a final rule overhauling risk adjustment audits are part of a larger effort by CMS to address such tactics.
The Better Medicare Alliance said that it is still reviewing the rule but are still hesitant about the risk adjustment.
“We remain concerned about the unintended consequences for seniors of this risk adjustment policy,” said Mary Beth Donahue, president and CEO of Better Medicare Alliance, in a statement.