CMS finalizes 8.5% rate hike for Medicare Advantage, Part D plans in 2023

The Biden administration finalized an 8.5% increase in rates to Medicare Part D and Medicare Advantage plans, slightly above the 7.98% proposed earlier this year. 

The Centers for Medicare & Medicaid Services (CMS) released the final 2023 MA and Part D rate announcement on Monday and with it a 4.88% effective growth rate, slightly above the 4.75% rate released in the advance notice.

The change from 7.98% to 8.5% is due in part to the application of the rebasing/re-pricing impact, which was not available when the advance notice was released back in February.

CMS did not change the planned coding pattern adjustment of 5.9% to reflect any differences in diagnosis coding between MA plans and fee-for-service providers, with that being the statutory minimum.

The agency acknowledged it had received several comments asking for a higher adjustment than the minimum and that CMS must consider differences in coding patterns across MA plans. 

The comments come as critics have charged some MA plans engage in risk adjustment tactics such as up-coding to increase unnecessary diagnoses and glean overpayments from Medicare. CMS decided, however, to not make any changes to the coding pattern adjustment at this time. 

“CMS continually reviews MA coding patterns and continues to assess how we calculate the MA coding pattern adjustment, how best to apply it and what the appropriate level of the adjustment should be,” the agency said in a fact sheet. 

The agency also solicited feedback on what measurements it should pursue to improve health equity in MA and Part D star ratings. This includes comments on how to develop a health equity index to determine how MA and Part D plans performed in combating social risk factors, and how it will affect star ratings. 

Another measure would assess whether plans are screening enrollees for social needs such as transportation or food insecurity, according to a release from CMS.

The agency did not release any specific reforms, but said it will take the “feedback received into consideration as we continue to explore ways to further drive health equity and high quality care.”

Improving health equity is a major priority for the Biden administration and CMS has hinted how equity will be a factor in agency regulations. The Center for Medicare and Medicaid Innovation recently outlined new equity requirements, including the development of an equity plan, as part of the newly unveiled ACO REACH payment model.