CMS Releases Medicare Advantage Rates
On March 31st, the Centers for Medicare and Medicaid Services (CMS) released final Calendar Year (CY) 2024 payment policies for Medicare Advantage (MA) and Part D plans. On average, CMS anticipates a payment increase for MA plans of 3.3 percent from 2023 to 2024, which is approximately a $13.8 billion increase in MA payments for next year. This is notably higher than the 1 percent average expected increase proposed in the Advance Notice.
The Effective Growth rate, the starting point of the rate change calculation, is largely driven by the growth in Medicare Fee-for-Service (FFS) per capita costs, as estimated by the Office of the Actuary. Included in the 2024 growth rate estimate is a technical adjustment to the per capita cost calculations related to indirect and direct medical education costs associated with services furnished to MA enrollees, which will be phased in over three years. The Rate Announcement revises the Part C risk adjustment model by restructuring condition categories using the International Classification of Diseases (ICD)-10 classification system (instead of the ICD-9 classification system) and updating underlying FFS data years (from 2014 diagnoses and 2015 expenditures to 2018 diagnoses and 2019 expenditures). These changes will also be phased in over three years.
CMS expects that these policies will help make payments more accurate and will continue to pay more for someone who is dually eligible for Medicare and Medicaid than someone who is not when they have the same diagnoses.
The Announcement also incorporates several Part D drug benefit cost-sharing provisions enacted by the Inflation Reduction Act of 2022. These include:
- the elimination of cost-sharing for Part D drugs for beneficiaries in the catastrophic phase of coverage
- the expansion of the Low-Income Subsidy (LIS) program under Part D so that beneficiaries who earn between 135 and 150 percent of the federal poverty level and meet statutory resource limit requirements will receive full LIS subsidies
- a requirement that in CY 2024, Part D plans not apply the deductible to any Part D-covered insulin product and charge no more than $35 per month’s supply of a covered insulin product in the initial coverage phase and the coverage gap phase
- a prohibition against applying the deductible to an adult vaccine recommended by the Advisory Committee on Immunization Practices
- a capping of the annual growth in the Base Beneficiary Premium at 6 percent
Nationwide MA penetration is close to 50 percent, with more than 52 percent of New York Medicare-eligible individuals enrolled in Medicare managed care plans. MA penetration varies across the state, from a high of 75 percent in Monroe County to below 30 percent on Long Island.
A fact sheet is available here, and the full text of the announcement is here.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841