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Action Alert: Urge CMS to Rein in Expensive Overpayments to Medicare Advantage Plans

The Medicare Rights Center is providing template comments to help individuals and organizations respond to the 2024 Advance Notice. We invite you to download and personalize these documents, and to share this opportunity widely. To submit your comments, please follow the instructions on this page. Comments are due Monday, March 6.

Through annual rulemaking known as the Advance Notice (AN), the Centers for Medicare & Medicaid Services (CMS) recommends updates to Medicare Advantage (MA) and Part D payment rates and methodologies.

For 2024, CMS is proposing small but important changes to how MA payments are calculated. Overall, these policies would increase plan payments by 1% next year, on top of the 8.5% hike they received in 2023.

The Medicare Rights Center strongly supports the proposals in the AN that would improve MA payment accuracy. The research from independent experts is clear: Medicare overpays MA plans by billions of dollars each year. This misallocation of resources is negatively impacting Medicare’s finances and long-term sustainability, as well as driving up beneficiary premiums and taxpayer costs.  The AN is largely responsive to these findings, and to the concerns many current and future beneficiaries have about rising Medicare costs and the program’s future.

While reining in MA overpayments is long overdue, the AN’s modest efforts to do so has led some plans to consider, or at least to threaten, to scale back benefits, raise premiums, or both. This response and risk seems exaggerated, as following through would require plans to act against their own self-interest: beneficiaries would be more likely to reject pared back or more costly coverage, endangering plan enrollment and profits. Cutbacks are additionally unlikely because they would weaken plans’ most powerful marketing tool: supplemental benefits. In 2022, these “extras” were the top reason enrollees cited for choosing MA over Original Medicare—despite a troubling lack of data on their utilization, quality, and value.

Payment rate modeling and past plan behaviors reinforce that any cost-shifting to enrollees is entirely the plan’s choice. They could instead operate within the increased payment rate parameters or achieve savings internally, such as by lowering administrative costs or reducing disproportionately high profits.

Industry claims that they cannot provide a competitive product without being overpaid is either a startling admission of their own inefficiencies, a ploy to pad profits, or both. We urge CMS to reject these extortive arguments and to move forward with beneficiary-centered reforms to the Risk Adjustment Model and Coding Pattern Adjustments, as outlined below.

The MA Risk Adjustment Model

The AN would update MA’s risk adjustment model to make MA payment methodology more accurate and rates more rational, appropriately slowing MA payment growth while maintaining beneficiary access to a robust MA marketplace. It would do so in several commonsense ways:

  • The AN would transition the risk adjustment model to a diagnostic classification system that has been in place since 2015 and long-used by other programs, including the Affordable Care Act market and Medicare Part D.
  • It would link MA risk adjustment to more recent data. Presently, the model relies on cost, utilization, and demographic patterns that are nearly a decade old.
  • In addition, it would disregard certain “discretionary” diagnoses that MA plans utilize but that are not connected to program spending.

We encourage CMS to finalize these proposals. Together, they would modernize systems, achieve efficiencies, and reduce payment errors.

MA Coding Pattern Adjustments

We were disappointed that CMS is again seeking to apply the 5.9% statutory minimum coding intensity adjustment. This across-the-board reduction is intended to offset the inflated payments generated by MA plan practices of coding enrollees too intensely. Although CMS can go beyond the statutory minimum in order to more forcefully address these coding variances, the agency is not proposing to do so in 2024.

We strongly urge CMS to reconsider. A higher adjustment would be more effective and appropriate. Year-over-year applications of the minimum rate fail to recognize or keep pace with coding intensity trendlines, which are only going up. As this gap grows, so will overpayments. In 2020, risk scores for MA enrollees were already 9.5% higher than they should have been, resulting in $12 billion in excess plan payments. CMS must meaningfully intervene, without delay.

MA payment must strike a balance between encouraging insurer market participation and providing value for beneficiaries, taxpayers, and Medicare. Currently, the needle has swung too far towards plans, as carriers inundate the market and are rewarded with extreme profits, at the expense of Medicare solvency and individual Americans’ financial security.

Make Your Voice Heard! Use Our Template Comments to Weigh-in Today

The AN is an important step towards correcting the decades-long problem of MA overpayments; improving MA payment accuracy; and making Medicare, beneficiaries, and taxpayers more financially secure.

Make sure CMS knows you support the AN provisions that advance these goals. Follow these steps to weigh in by Monday, March 6:

  1. Download and personalize the Medicare Rights Center’s template comments (for individuals and/or organizations)
  2. To submit your comments, follow the directions on the comment portal page.
  3. Share this opportunity widely!

For more information

Read the 2024 Advance Notice.

For more information about the proposals, see this HHS Fact Sheet, CMS Summary, and CMS Press Release.

Download Medicare Rights template comments for organizations and individuals.

Policy Issues: Medicare Advantage
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