CMS: 2023 Medicare Advantage, Part D Rate Sees 8.5% Revenue Boost

CMS announced an 8.5 percent boost on average to payer revenues next year in the 2023 Medicare Advantage and Part D Rate, according to a CMS press release.

This final rate announcement was higher than the expectations laid out in the advanced notice. The advanced notice projected a revenue increase of 7.98 percent.

The revenue was not the only impact that shifted with the finalized rate. The Rate announcement determined that the effective growth rate for 2023 will be 4.88 percent. This was slightly higher than the projection in the advanced notice, which was 4.75 percent.

The change in star ratings, changes in normalization, and the Medicare Advantage risk score trend projections stayed the same between the advanced notice and the final rate.

CMS finalized a 0.54 percent boost to Medicare Advantage star ratings, on average.

The Medicare Advantage coding pattern adjustment and risk model revision did not change at all.

The agency finalized changes to the risk adjustment model for payment to Medicare Advantage organizations for members with end-stage renal disease (ESRD).

“The revised model is calibrated on more recent data, using CMS’s current approach to identify risk adjustment eligible diagnoses from encounter data records,” CMS explained. 

“It also incorporates improvements previously made to the Part C CMS-HCC model, specifically the clinical updates and revised segmentation, which accounts for the differential cost patterns of dually eligible beneficiaries.”

Every year, the agency adjusts its Medicare Advantage coding pattern to account for differences between fee-for-service Medicare and Medicare Advantage. In 2023, CMS raised the coding pattern by only 5.9 percent. The press release noted that this is the least amount of change allowed.

CMS will not update the Medicare Advantage normalization factor, which aims to keep fee-for-service Medicare risk scores fairly unchanging. Instead, the agency will apply risk scores from 2016 through 2020.

CMS outlined the changes in detail in the fact sheet accompanying this announcement.

In early reactions, payer organizations have expressed some positive impressions of the final rate notice.

“While we continue to review details, this is a Rate Announcement that puts beneficiaries first and ensures stability and continuity of care for the more than 28.5 million seniors and individuals with disabilities who choose Medicare Advantage nationwide,” Mary Beth Donahue, president and chief executive officer of the Better Medicare Alliance, said in a published statement. 

“Better Medicare Alliance also applauds CMS’s keen focus on health equity in the Rate Announcement. The Medicare Advantage community is committed to being a good partner with CMS in the critical work of addressing social determinants of health and eliminating health disparities.”

However, AHIP noted some concerns in its response. In particular, the organization shared its reservations regarding pharmacy price concessions being included in negotiations in Medicare Part D. AHIP also discouraged the new out-of-pocket costs calculation for dual special needs plans.

“We also renew our call for CMS to extend its COVID-19 disaster relief policy and special rules to 2023 Star Ratings,” the organization stated. “We urge CMS to swiftly re-evaluate the substance and timing of these proposals, as 2023 MA plan designs are being finalized now in advance of the June 6 deadline.”

Some of these comments were reservations that the payer organization had expressed earlier in the year.