MA Plans Get Partial Relief With Phase-In of New Risk Adjustment Model

For payment year 2024, 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. Still, some organizations remain concerned about the potential impact the new model will have on certain high-risk populations.

According to a fact sheet about the 2024 MA and Part D rate notice, which was released on March 31, two key components of the agency’s forecast changed: (1) a revenue decline stemming from the risk model revision and fee-for-service (FFS) normalization changed from -3.12% to -2.16%, and (2) the underlying coding trend is now expected to be 4.44%, compared with a previous estimate of 3.30%. CMS noted in the fact sheet that unlike in previous years’ estimates, it could not provide a separate update on the FFS normalization factor “because there is considerable interaction between the impact of the MA risk adjustment model updates and the normalization factor update.”

© 2024 MMIT
Lauren Flynn Kelly

Lauren Flynn Kelly Managing Editor, Radar on Medicare Advantage

Lauren has been covering health business issues since the early 2000s and specializes in in-depth reporting on Medicare Advantage, managed Medicaid and Medicare Part D. She also possesses a deep understanding of the complex world of pharmacy benefit management, having written AIS Health’s Radar on Drug Benefits from 2004 to 2005 and again from 2011 to 2016. In addition to her role as managing editor of Radar on Medicare Advantage, she oversees AIS Health’s publications and manages the health editorial staff. She graduated from Vassar College with a B.A. in English.

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