News Briefs: Final Rate Notice, Rule Offer Upside to Medicare Advantage Plans

Medicare Advantage plans can expect to receive, on average, a 3.32% increase in risk adjusted revenue, compared with the 1.03% increase CMS projected in its Advance Notice released on Feb. 1. That’s largely because the agency opted to phase in its controversial changes to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model, rather than fully implement it next year, after considering feedback from stakeholders. Managed care industry leaders have claimed that the proposed rate change was a dramatic shift from previous rate-setting actions, but both the proposed and finalized rate fit within the normal range of rate changes for non-pandemic years, according to AIS Health data. Wall Street reacted with relief to the news, following weeks of anxiety after the Biden administration proposed implementing the lower-than-expected rate increase and risk adjustment changes. Credit Suisse analyst A.J. Rice wrote in a research note that the phasing in of the risk adjustment changes should help both health plans and primary care physicians. One insurer that Credit Suisse analysts spoke to, he said, indicated “that the phase-in approach should enable it to adjust benefits in a relatively modest way for 2024 that should not impede on-going growing interest in MA versus traditional fee-for-service Medicare.” And Jefferies analyst David Windley called the final rate notice “the first piece of positive news for MCOs in months.”

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