Overview of the 2024 Medicare Advantage Advance Notice, Payer Reactions

Impact of changes

According to the fact sheet, Medicare Advantage revenue could increase by 1.03 percent. The expected average change in revenue has been lower than the final rate announcement for the past three years.

Medicare Advantage could see a much lower growth rate in the 2024 Medicare Advantage payment benchmarks than the agency projected for 2023. The changes that CMS has suggested brought the effective growth rate down to 2.09 percent growth in 2024, from 4.75 percent in the 2023 advance notice. Medicare fee-for-service per capita costs are primarily responsible for the 2024 growth rate.

CMS also expected to see a 1.24 percent drop in Medicare Advantage star ratings in 2024. The Medicare Advantage coding pattern adjustment will remain the same. The risk model revision and normalization may drop 3.12 percent. The Medicare Advantage risk score trend is expected to increase by 3.3 percent.

Historically, the 2024 advance notice’s revenue expectations fall back in line with trends from before the 2023 advance notice. The advance notices from 2018 through 2022 all projected revenue increases of less than 3.0 percent.

In 2021, the advance notice projected that revenue would increase by 0.93 percent; it jumped 1.66 percent in the rate announcement. In 2022, the advance notice indicated average revenue would increase by 2.82 percent, but it was projected to grow by 4.08 percent in the rate announcement. In 2023, the advance notice projected a 7.98 percent revenue boost, but the rate announcement expected an 8.5 percent increase.

Medicare Advantage risk adjustment model changes

CMS updated the Medicare Advantage risk adjustment model condition categories according to the International Classification of Diseases (ICD)-10 classification system. Fee-for-service data years are now considered 2018 diagnoses and 2019 expenditures.

“The proposed new risk adjustment model reflects more current costs associated with various diseases, conditions, and demographic characteristics, takes into account the ICD-10 diagnostic classification system that has been in use for medical payment since 2015, and includes revisions designed to reduce the sensitivity of the model to coding variation,” the fact sheet explained.

Inflation Reduction Act updates

CMS noted that the Inflation Reduction Act of 2022 introduced changes to Medicare Part D that will impact Medicare Part D 2024.

In 2024, beneficiaries with catastrophic phase coverage will not face cost-sharing for Part D drugs in that phase.

The low-income subsidy program will encompass a larger income bracket in 2024. Individuals with incomes between 135 and 150 percent of the federal poverty level within the statutory resource limit requirements will have the same low-income subsidies as individuals making less than 135 percent of the federal poverty level.

Part D enrollees will have access to a month’s supply of insulin for no more than $35 in the initial coverage and coverage gap phase. This cost will not factor into their deductible.

Also, the deductible will not apply to adult vaccines that are recommended by the Advisory Committee on Immunization Practices. These vaccines must have zero cost-sharing.

Base Beneficiary Premium growth will not exceed six percent.

Medicare Advantage, Part D star ratings updates

Payers may be required to list eligible disasters for adjustment, Medicare Part C and D Improvement measures, the 2024 star ratings Categorical Adjustment Index, non-substantive measure specifications updates.

The public payer agency is introducing a set of quality measures for its quality rating and value-based care programs. The new measures will be called the universal foundation of quality measures. CMS sought feedback on this concept.

Payer reactions

AHIP and Better Medicare Alliance found that the 2024 Medicare Advantage advance notice included technical changes that could have complicated results, particularly in light of separate developments related to the Medicare Advantage program that occurred in close proximity to this announcement.

“We are concerned with the potential adverse impact of the rate notice on seniors and people with disabilities, especially when taken together with the final risk adjustment data validation (RADV) rule and other policy changes proposed for next year,” Matt Eyles, president and chief executive officer of AHIP, said in a press release.

Better Medicare Alliance also commented on the potential impacts.

“The Advance Notice that CMS released today proposes multiple complex technical changes, including significant changes to the risk adjustment model. The Better Medicare Alliance is working to conduct a thorough review of CMS’s Advance Notice provisions to fully understand their impact on the coverage and care of more than 30 million Medicare Advantage beneficiaries,” Mary Beth Donahue, president and chief executive officer of Better Medicare Alliance, said in a press release.

However, the reaction was not entirely characterized by this hesitancy. Some payers supported certain proposals.

“ACHP is thrilled that CMS is seeking to establish a ‘universal foundation’ of quality measures which align across federal programs. Consistency in a core set of quality measures reduces burden on clinicians, increases consumer understanding of quality and drives meaningful innovation. We are excited to continue to lead the industry towards high-quality care,” a press release from the Alliance of Community Health Plans (ACHP) shared.

CMS officials expected that the advance notice and accompanying Medicare Advantage and Part D proposals would contribute to the Medicare Advantage program’s strengths.

“The commonsense proposals in the Advance Notice, coupled with the proposals in the MA and Part D rule released in December, ensure these important programs continue to meet the health care needs of all beneficiaries while improving the quality and long-term stability of the Medicare program,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and director of the Center for Medicare.