Better Medicare Alliance launches bid to get rid of potential Medicare Advantage pay cut

The advocacy group Better Medicare Alliance (BMA) launched a new effort Wednesday to persuade the Biden administration to overhaul a proposal it says will cut Medicare Advantage (MA) plan payments by 2.27%.

BMA, which lobbies Congress and the federal government on MA issues, released a new analysis Wednesday (PDF) that predicts a proposed payment rule will lead to a $540 per MA enrollee decline in spending next year. The analysis, conducted by consulting firm Avalere Health, is part of a concerted effort by BMA to combat the Centers for Medicare & Medicaid Services' (CMS') advance notice, a proposed rule that lays out payments for MA and Part D plans for 2024.

“The Avalere analysis finds these proposed policy changes could lead to billions of dollars in new, out-of-pocket expenses for seniors and individuals with disabilities in Medicare Advantage,” said BMA President and CEO Mary Beth Donahue in a statement Wednesday. 

The analysis comes amid a heated dispute between insurers and CMS on whether the proposed advance notice, which the agency must finalize by April 3, constitutes a cut to MA. CMS charges that, on average, plans will see a 1% increase in their payments and denies the rule will result in any cut.

However, Avalere’s analysis conducted on behalf of BMA—which counts nonprofits and payers among its members—argues that a lower effective growth rate for MA benchmarks that help determine plan payments, as well as the end of COVID-19 flexibilities and risk adjustment changes, will result in the cut to plans.

Avalere used a model to predict the impact of the advance notice on MA rebates for 2024. If the rule is finalized as is, average monthly rebates to plans would be $45 per member lower (29%) next year compared with 2023. 

An MA plan gets a rebate if it bids below the benchmark across its service area. A plan can bid against a higher benchmark if it has at least one four-star plan, but star ratings for plans on average declined in 2023 due to changes in how they are calculated, Avalere wrote.

The rebate decline could vary based on the plan’s location. For example, plans in Houston could see a 63% decline in rebates, but Los Angeles plans will only see a 19% decline. 

With fewer rebate dollars, plans will not be able to fund additional benefits or lower premiums, Avalere wrote. This could lead to an average increase in premiums or a decline in supplemental benefit funding of nearly $45 per member a month.

The analysis comes as BMA is likely to rely on allies in Congress to press CMS for changes to the advance notice. 

Donahue told reporters during a call Wednesday that on the same day the advance notice was released, a letter from more than 60 senators from both parties called for the Biden administration to protect MA. 

“We see that during this comment period and beyond that members of Congress who have been champions of this program for their constituents will be speaking out,” she said.

She added that CMS needs to look at the “full picture” of the rule’s impact on payments. 

Some Republicans have also recently called out the Biden administration saying the rule amounts to a cut, especially after the White House has charged the party wants to cut Social Security and Medicare.

CMS pushed back that the advance notice results in a cut to plans. 

"Cherry picking certain policies without considering all elements does not give a complete picture of expected revenue impact, which, again, will be an increase from 2023," the agency told Fierce Healthcare in a statement. 

Since the rule doesn't amount to any cut, CMS said it is not expecting any changes to MA plans and " are confident that Medicare beneficiaries will continue to have a broad array of choices of MA plans that have low or no premiums and generous coverage of extra benefits."

The agency added that there has also been rapid growth in supplemental benefits that are funded by rebates. 

"Rebates have doubled since 2018 and grew 20% from 2022 to 2023, indicating MA payment is adequate and MA plans have continually been able to bid below government estimates for cost and apply extra payments to supplemental benefits," CMS said.

The advance notice is the latest scrutiny facing the MA program, which has topped 30 million enrollees this year. CMS recently released a controversial final rule that overhauls risk adjustment data validation audits in a bid to curb overpayments in the popular program. Some insurers are weighing litigation in response to the rule.