Health insurers and the Biden administration are at loggerheads over whether Medicare Advantage (MA) plans will see a pay cut next year, the ramifications of which come amid increased regulatory scrutiny for the popular program.
Insurer groups and some politicians charge that the latest 2024 payment rule will wind up being a 2.27% cut to MA plans after considering risk adjustment changes and other factors. The Centers for Medicare & Medicaid Services (CMS) has pushed back, arguing that isn’t true.
The debate comes amid increasing scrutiny of MA and after CMS has proposed an overhaul to plan audits to curb overpayments.
“We think it is important not to cherry-pick the numbers,” said CMS Administrator Chiquita Brooks-LaSure during a call with reporters last week. “When we look at all the elements, we do see a net positive so an increase of little over 1%.”
At issue is the proposed advance notice released earlier this month that details the payments to MA and Part D plans for the 2024 coverage year. The proposed rule lays out the payment policies and changes to MA capitation rates for the upcoming year as well as outlining key changes to risk adjustment.
When the rule was announced Feb. 1, CMS expected a 1.03% increase for plans. The agency came to this number after factoring in a decline in payments when taking in risk adjustment changes.
Since the rule was released, the insurance industry has pushed back that it will actually result in a 2.27% cut to plans if finalized.
The advocacy group Better Medicare Alliance (BMA) said that the rule “would raise costs and cut benefits for 30 million American seniors who rely on Medicare Advantage, a vital part of Medicare,” said BMA President and CEO Mary Beth Donahue in a statement.
The insurance lobbying group AHIP told Fierce Healthcare that a series of policy changes would result in the 2.27% cut to average MA payments, not 1.03% as CMS predicted.
AHIP pointed to other factors including a 1.24% decline in quality bonus payments under MA and Part D star ratings for 2024. The agency has sunset certain flexibilities that let plans score higher on their star ratings to help with financial pressures caused by the COVID-19 pandemic.
Another area of change is that county benchmarks which are used to set the payment rates for MA plans are expected to increase by 2.09% in 2024. This is less than half the growth rate for this year at 4.88% and “well below the projected growth in per enrollee Medicare costs (5 percent),” AHIP told Fierce Healthcare.
AHIP also doubted CMS’ estimates that the risk scores and risk adjustment payments would offset any reduction.
“CMS has provided no information on how they estimate this coding trend,” the group said. “Consequently, there is no way to validate the accuracy of the CMS coding trend estimate.”
Brooks-LaSure said during the call that when taking in all the elements, “we do see a net increase.”
She added that MA plans have seen better updates in recent years compared to other parts of the Medicare program.
CMS finalized a 4.75% bump to MA plan payments for 2023 and 5.59% for 2022.
The advance notice clash comes after CMS last month released a new final rule that overhauls how the agency conducts risk adjustment data validation (RADV) that compares claims data from a sample of plans to patients' medical records to ensure they match up. The goal of the new rule is to clamp down on overpayments to MA plans, which advocates like the Medicare Payment Advisory Commission found increased in recent years.
Industry groups have pushed back on the RADV rule and its removal of a fee-for-service adjuster that brings the error rate for MA plans in line with traditional Medicare. Plans have argued that without the adjuster they will be held to an impossible standard with no errors whatsoever in claims.
Some plans such as Humana have weighed legal action to challenge the rule.
But the fight over the CMS rule could play out in the political arena instead of the courtroom. On the day the rule came out, BMA released a letter from 61 bipartisan senators calling for CMS to ensure any payment rule and policy change “enable MA to continue providing the affordable, high-quality care our constituents rely on every day.”
Several Republicans in Congress have also latched onto the industry’s arguments about a pay cut after President Joe Biden said that the GOP wants to cut Medicare and Social Security during the State of the Union.
“It’s President Biden who is proposing to cut Medicare Advantage, a program used by almost 4 in 10 Arkansas seniors,” tweeted Sen. Tom Cotton, R-Arkansas. “This would be a mistake.”