Medicare Advantage providers face a 1.12% average cut in next year's reimbursement rate, the Centers for Medicare & Medicaid Services announced on Friday. After intense insurance industry lobbying, the final rate was less than the 2.3% drop that regulators initially proposed.
Additional changes aimed at combatting overbilling by providers will be phased in over a three-year period.
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"This year's update strengthens Medicare for our seniors and Americans with disabilities," said Xavier Becerra, secretary of Health and Human Services. "We are committed to ensuring private companies are holding up their end of the deal to provide quality care to beneficiaries and that payments to these companies are accurate. Together with President Biden's budget, this update protects Medicare for beneficiaries today and beyond 2050."
Several modifications appeared to influence the changes from the proposed rule. The risk score trend, which is the average increase in Medicare Advantage risk scores not accounting for normalization and coding pattern adjustments to Medicare Advantage risk scores, increased from 3.3% in the proposed rule to 4.4% in the final regulation, according to the CMS fact sheet. The effective growth rate also increased from 2.09% to 2.28%.
Related: Senator urges CMS to approve its proposed Medicare Advantage policy changes
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.
The original rule proposed a 1% pay raise to plans, but insurers cited their own research that predicted a 2.27% cut. Insurers believed that CMS did not properly factor changes to star ratings calculations and alterations to the risk adjustment model.
UnitedHealth, Humana and Cigna are among the largest players in the Medicare Advantage market in which private insurers are paid a set rate by the government to manage member health care.
The insurance lobbying group Better Medicare Alliance ran television ads as part of a campaign to convince lawmakers to oppose the rule. "We remain concerned about the unintended consequences for seniors of this risk adjustment policy," said Mary Beth Donahue, president and CEO of the alliance.
However, the final rate will help strengthen Medicare Advantage for the future, CMS Administrator Chiquita Brooks-LaSure said.
"Medicare should be providing equitable, high-quality affordable care that will be available for our children and grandchildren," she said. "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."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
