CMS expects MA, Part D payments to grow by nearly 3% in 2022

Medicare Advantage
The Centers for Medicare & Medicaid Services is giving insurers a head start on what Medicare Advantage and Part D payments could look like in 2022 as plans must weigh the impact of COVID-19. (Image: Getty/designer491)

The Trump administration is expecting Medicare Advantage (MA) and Part D payments to rise by 2.82% in 2022 after taking into account several regulatory changes, according to an advanced rate notice. 

The Centers for Medicare & Medicaid Services (CMS) released late Friday the second part of the advance rate notice for the 2022 coverage year for MA and Part D plans. CMS released the first part of the rate notice back in September and hopes to finalize both parts by April 5.

The agency expects Medicare costs to grow by 4.55% in 2022 compared to the year before, but plans would likely only see a 2.82% increase in their revenue growth after taking into account several regulatory changes like risk scores and star ratings.

CMS released the advance notice three months early to help plans get a fuller picture of how the COVID-19 pandemic will affect their estimated costs in 2022, officials said. Plans will still have to submit their bids for 2022 next June.

The agency said Friday that it will apply a coding pattern adjustment of 5.9% to plan payments. The adjustment is to reflect differences in coding between MA organizations and fee-for-service providers.

The 5.9% adjustment is the minimum required under federal statute, CMS said.

The agency also reiterated that it would rely solely on encounter data for risk adjustment for MA plans starting in 2022, which was previously announced in the first part of the advance rate notice.

CMS has previously used diagnoses submitted by a plan’s Risk Adjustment Processing System to calculate risk scores. The 21st Century Cures Act requires CMS to move solely to encounter data for risk adjustment.

Next year, CMS will use a hybrid model where 75% of the data used to calculate risk scores will come from encounter data. But in 2022, encounter data will make up 100% of the data.

Payers have routinely criticized the use of encounter data, which is information submitted by a doctor or hospital that details a diagnosis.

America’s Health Insurance Plans, the top insurance lobbying group, wrote to CMS back in 2019 that encounter data have severe gaps and inaccuracies that could lower patient risk scores and with it lead to lower payments to plans.

CMS is also asking for feedback on how to improve star ratings for MA and Part D plans and a potential COVID-19 vaccine “measure to encourage Medicare beneficiaries to receive the vaccine when one becomes available,” according to a release.

The agency announced earlier this week that Medicare will offer the vaccine at no cost to all of its beneficiaries.