Stacks of coins going down

Medicare Advantage (MA) plans are projected to receive a skimpy 1.03% pay bump in 2024 — a fraction of nearly 8% increase they received from the Centers for Medicare & Medicaid Services (CMS) in 2023.

CMS announced the projected increase Wednesday and is giving Medicare Advantage Organizations only about a month to file public comments on it. In the advance notice, the agency forecast that MA plan growth next year will be 2.09%. That is roughly half of the 4.75% rate it projected for this year. CMS also projected a -1.24% change in star ratings in 2024 compared to 0.54% improvement in 2023. 

Bill Winfrey, ATI Advisory’s director of Medicare Innovation Practice and a former CMS analyst, told McKnight’s Home Care Daily Pulse in an email the small increase should not necessarily be seen as a reflection of CMS changing its policy position towards MA plans.

“Instead, it appears to reflect a lower rate of growth in Medicare fee-for-service per capita costs, which are used in MA payment calculations, and a series of technical updates,” Winfrey stated. “For example, CMS is proposing to terminate the star ratings adjustment for the COVID-19 public health emergency and update the risk adjustment model to use more current data and disease classifications.”

CMS said it will make a final decision on the rate increase no later than April 4.

The advance notice on the 2024 rate increase came just two days after CMS released its final rule on Risk Adjustment Data Validation (RADV) audits. The rule is intended to stop overpayments to MAOs and recoup billions of dollars in overpayments dating back to 2018 where the beneficiary’s medical record does not support medical diagnoses submitted for risk-adjusted payments. CMS estimates it could recoup up to $9.5 million per contract. 

Humana CEO Bruce Broussard told analysts during an earnings call yesterday the company “is considering its options” when it comes to the RADV rule.

Editor’s note: The 1.03% pay bump had erroneously been written as 1.09% in a previous version. It has been corrected.