Providers join insurers in calls for changes to controversial Medicare Advantage pay rule

Health insurers have been livid over a proposed payment rule they say will cut Medicare Advantage (MA) payments in 2024. 

But the Biden administration is now facing stiff opposition from providers, too, who charge a change to risk adjustment codes could hurt practices. 

Both payer and provider groups made their case during comments submitted recently to the proposed Medicare Advantage advance notice rule, which outlines payment rates and risk adjustment changes for 2024. While the opposition was expected from insurers to the rule—which the Centers for Medicare & Medicaid Services (CMS) estimates will result in a 1% pay raise—provider groups have raised concerns about proposed changes to the risk adjustment model. 

“We are concerned with CMS’ lack of transparency regarding the estimated effects of the revisions,” wrote the Medical Group Management Association (MGMA) in comments. 

In addition to laying out the payment rates for MA and Part D, the rule called for making significant changes to the risk adjustment model, which adjusts plan payments based on how sick their patients are. 

The rule proposes transitioning from the International Classification of Diseases (ICD) 9 diagnostic codes to more recent ICD-10 codes. CMS also identified more than 2,000 ICD-10 codes it wants to remove from the risk adjustment model to better reflect updated cost and health utilization data. CMS previously told Fierce Healthcare it consulted a clinical expert panel on which codes to remove.

The decision comes amid increased scrutiny of risk management in MA, as critics have warned plans are gaming the model to make patients appear sicker than they actually are to get higher payments. 

Provider groups said they agree with CMS’ goal of ensuring accurate payments to MA plans but worry the agency is moving too fast in the transition to ICD-10. 

“Historically, CMS has phased in changes to the MA risk adjustment model to allow plans and providers to adjust their systems and anticipate the potential effects of the changes,” wrote the American Medical Group Association (AMGA) in comments. “However, if finalized as proposed, CMS would not use this approach.”

An MA plan would need to submit its initial bids for government approval by June 5, 2023. Providers do not have enough time to really study its impact, the group added. 

AMGA didn’t have enough time to define how its members use the codes that are currently on the hook for removal but was concerned about a potential impact for those in value-based care models. 

“AMGA members do use these codes for preventive care, which is a critical aspect of any value-based or population health-based model,” the group wrote. 

MGMA also wanted CMS to pause the implementation of the proposed risk adjustment changes without more time to study the impact on those in value-based care models. 

Controversy over 'cuts'

Several insurer groups echoed concerns from providers over the risk adjustment changes but prominently called for changes to the proposed payment rate. 

CMS estimated that MA plans would get a pay raise of roughly 1% after factoring in risk score trends. 

Insurance group AHIP wrote in comments that a recent study from consulting firm Wakely showed the rule would result in a 3.7% cut. Another analysis commissioned by the group Better Medicare Alliance and conducted by Avalere predicted the rule would reduce payments by 2.27% after factoring in changes to star ratings and risk adjustment.

“We believe the Advance Notice is inconsistent with national and CMS policy goals of advancing health equity, improving the healthcare delivery system, expanding use of quality- and value-based payments and enhancing care coordination and disease management,” AHIP wrote. 

The Biden administration has fiercely pushed back at the insurance industry’s remarks in recent weeks. Department of Health and Human Services Secretary Xavier Becerra previously said that insurers’ claims of a cut were “categorically false” and that any talk of a cut is being pushed out by “high-paid industry hacks and their allies.”

While payers are repulsed by the rule, a collection of more than 30 health leaders and experts lauded the proposed changes. A letter from the leaders—which include former members of the Medicare Payment Advisory Commission—pointed to an estimate from the panel that there will be $27 billion in excess and inaccurate payments to plans for 2023. 

The experts said CMS is looking to remove diagnosis codes that have been abused by plans to glean overpayments. 

The proposed rule should be able to leave MA plans in a “strong financial position while penalizing those who game the risk adjustment system,” the letter to CMS said. 

CMS must finalize the advance notice rule by April 3.