Becerra takes bipartisan hits from senators over Medicare Advantage pay rule as lobbying efforts heat up

Several senators pressed Department of Health and Human Services (HHS) Secretary Xavier Becerra on how a proposed payment rule will impact benefits offered by Medicare Advantage (MA), underscoring the political pressure the agency is facing over reforms to the popular program. 

Becerra spoke to two separate Senate committees Wednesday to discuss the president’s recent budget proposal but also faced questions over a controversial proposed 2024 advance notice payment rule that outlines rates and policies for MA and Part D plans.

Sen. Bob Menendez, D-New Jersey, asked Becerra about the impact of the rule on Puerto Rico. A recent analysis from consulting firm Milliman estimated the territory could see a 9.1% decline in MA payments due to changes to the risk adjustment model.

“I am concerned these changes would undermine progress we made to date addressing disparities on the island,” said Menendez during a hearing of the Senate Finance Committee.

Becerra responded that the advance notice does not cut any benefits to MA. Some insurers have said the rule would lead to cuts to supplemental benefits or hikes to premiums, but experts say plans could absorb the cost to stay competitive in the lucrative MA marketplace. 

The proposed advance notice estimates a 1% pay hike for MA plans for 2024. However, several analyses from insurers contend that the pay rule will result in a cut to plans of more than 2% after factoring in changes to star ratings and the MA risk adjustment model. 

Providers have also chided the Centers for Medicare & Medicaid Services’ (CMS') decision to remove more than 2,000 diagnosis codes from the risk adjustment model as well as transition the model to ICD-10 codes. CMS has responded that it removed the codes to help crack down on rampant up-coding among MA plans, where insurers inflate the risk scores of patients in order to get higher Medicare payments. 

The health insurance industry has launched a massive lobbying campaign aimed at changing the rule, including running television ads.

Sen. Mike Crapo, R-Idaho, told Becerra he has heard “multiple concerns from providers, patients and plans stating that these changes will disproportionately impact the most vulnerable MA beneficiaries, including those with low incomes or chronic conditions.”

Sen. Shelley Moore Capito, R-West Virginia, also asked Becerra during a hearing of the Senate Appropriations Committee's HHS subcommittee about whether any benefits to seniors will be cut. 

A plan could change out certain benefits, but they are not allowed under law to cut Medicare benefits from any beneficiary, Becerra responded. He added that the rule still gives MA plans more money compared to last year, but that plans “don’t like they are not getting as much as they recently got.”

Some senators have called on Becerra to do more beyond the advance notice. 

“Insurance companies want a lot more taxpayer dollars, not just a little more,” said Sen. Elizabeth Warren, D-Massachusetts. “CMS needs to double down on its efforts to crack down on industry.”

Becerra told Fierce Healthcare after the hearing that the agency now expects to increase transparency in the MA program. 

“Now that we have far more insight, far more data, we can do a better job of tracking this and do the oversight,” he said.

CMS did finalize a rule recently that overhauls how it performs risk adjustment data validation audits. The audits compare the claims submitted by MA plans to medical records to ensure there has been no overpayment to the plan.