CMS last month proposed an average 1.03% revenue increase for Medicare Advantage (MA) plans in 2024, but both healthcare providers and insurers are pushing back against the proposal.

Why providers and insurers are pushing back against CMS' proposal

On February 1, CMS released the advance notice, proposing changes to MA payment methodologies by updating the risk adjustment model for 2024. The agency accepted comments on the proposal through March 3 and will publish the final rate announcement by April 3.

Insurers argue that changes to the MA risk model will result in a net cut next year. In a comment letter submitted to CMS, America's Health Insurance Plans (AHIP) highlighted the results of a study they commissioned from the Wakely Consulting Group, which found the proposed changes to MA's risk adjustment model would lead to an average MA payment cut of 3.7%.

The study also found there would be even larger cuts to MA plans that serve dual eligible patients, with an average cut of 6.4%.

In addition, a separate analysis commissioned by Better Medicare Alliance (BMA) and conducted by Avalere Health found the proposed changes would cut payments by 2.27%.

"We are especially concerned about proposed changes to the risk model which could negatively impact Medicare beneficiaries, especially those with chronic conditions, those who are low income, and those who are dually eligible for Medicaid," said Mary Beth Donahue, president and CEO of BMA. "As a result, these changes place at risk the substantial progress made in improving care and outcomes for Medicare beneficiaries."

AHIP noted it's concerned the proposal could limit funding for supplemental benefits potentially not covered through Medicaid, putting sicker, lower-income patients at risk.

"If finalized, the proposals would ultimately increase premiums and/or reduce benefits for tens of millions of seniors and people with disabilities in 2024 — and in an especially meaningful way for some of the most medically vulnerable and low-income seniors enrolled in MA," AHIP said in their letter.

Meanwhile, the Medical Group Management Association (MGMA) wrote in a letter that CMS should delay implementing the proposed changes until it's able to study the effect the changes will have on physician groups and patients.

"While MGMA shares concerns about abuse in the MA program, we are concerned that this overhaul of the CMS-HCC model may result in unintended consequences that could impact beneficiary access to care and impede important value-based care initiatives critical to the success of medical group practices," said Anders Gilberg, SVP of government affairs at MGMA.

In a separate letter, the American Medical Group Association (AMGA) said the proposed changes "likely will reduce payments to plans, and ultimately providers who care for [patients] with chronic conditions."

"Modifying the HCC model is not a simple technical update or revision," said Jerry Penso, AMGA president and CEO. "It's likely to have significant ramifications, affecting both plans and providers. CMS should recognize that stakeholders can't provide substantive, constructive feedback in such a short timeframe." (Goldman, Axios, 3/8; AHIP release, 3/6; Asser, HealthLeaders, 3/9)