The CMS on Friday released a final Medicare Advantage payment rule that is more favorable for insurers than what the agency initially proposed.
The agency announced a 3.3% increase in MA payments next year as opposed to a 1% increase put forward in an earlier draft, driven by the CMS’ decision to phase in technical risk adjustment changes over three years.
Next year, the CMS will blend one-third of the new adjustment risk model with two-thirds of the old model, gradually increasing the amount of the new model that is used until it is 100% in the third year.
Payer lobbies including The Association for Community Available Plans praised the rule, adding that the nonprofit trade group appreciates “the ability to adjust to these changes over the period of time.”
Jefferies analysts said in a note released over the weekend that the rate update, in aggregate, would be “incrementally positive” for MA payers in its coverage, like CVS-owned Aetna.
Insurers fought the proposed payment rule when it was released in February. In comments to the CMS, the national payer lobby AHIP cited its own research to argue that the earlier proposed payment rule actually amounted to a 3.7% drop when all changes were considered.
In a call with reporters Friday, CMS Administrator Chiquita Brooks-LaSure pushed back on the idea that plan rates would get a cut for 2024.
“We are very comfortable that in our rate notice plans are going to be paid more than they were last year,” she said. “And that we expect that premiums and plan benefits will be consistent with what they have been and that anything that differs are choices that plans are making.”
Some lawmakers, including Sen. Elizabeth Warren, pushed for the initially proposed rate change to be finalized. In a letter dated last week to HHS and CMS leaders, Warren said insurers play “tricks” to “squeeze billions of extra dollars out of the Medicare program.”
She also said overpayments to MA plans, estimated at $23 billion this year, force those enrolled in traditional Medicare to pay higher premiums.
Friday’s win for payers comes as insurance companies continue to fight other proposals targeting MA plans from the Biden administration, including a January proposal that seeks to claw back billions in overpayments beginning in 2018.