CMS proposes 2.1% payment increase for MA plans in 2024

The Centers for Medicare and Medicaid Services (CMS) published its payment updates for Medicare Advantage (MA) plans and Part D prescription drug coverage for 2024. The advanced rule, published Feb. 1, builds on a proposed rule published by CMS in late 2022.

The plan, if finalized, increases payments for MA plans by 2.09%. The notice includes changes to the risk adjustment model. CMS proposed adjusting 2024 star ratings -1.24%, which means the expected average change in revenue for 2024 is 1.03%.

The advanced notice also implements directives from the Inflation Reduction Act, which was signed into law in 2022 and included several healthcare provisions. Namely, the law allowed Medicare to negotiate for drug prices for the first time in history. It also capped pharmacy costs for Part D prescription drug plans at $2,000 for beneficiaries, capped insulin at $35 per month and extended subsidiaries for the Affordable Care Act (ACA) marketplace, ensuring more Americans can find affordable insurance plans. 

Some of the improvements in the Inflation Reduction Act will go into effect Jan. 1, 2024, inducing the continuation of reduced cost-sharing for insulin and eliminating cost-sharing for recommendations, preventative vaccines and elimination of Part D drug plan cost sharing for catastrophic coverage, CMS noted.

“Medicare Advantage and Part D prescription drug plans are essential parts of CMS’s vision that all parts of Medicare are working to provide more equitable, high quality and person-centered care that is affordable and sustainable for the people we serve,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “The Advance Notice will maintain strong value and choice for people with Medicare, continue our efforts to improve our programs, and fulfill our mandate to implement the Inflation Reduction Act effectively and efficiently.”

The advanced notice was good news for MA plans due to the increase in payments, however, the amount is likely lower than payors and plan providers had hoped. 

“We are concerned with the potential adverse impact of the rate notice on seniors and people with disabilities, especially when taken together with the final risk adjustment data validation (RADV) rule and other policy changes proposed for next year,” America’s Health Insurance Plans (AHIP) said in a statement about the proposed plan. “We will carefully review and analyze the details of the proposed notice and provide comprehensive, constructive feedback to CMS during the comment period to reinforce that CMS should not finalize payment policies that increase costs and/or reduce benefits for MA enrollees, especially when health care cost and inflationary pressures remain high.”

MA plans have become more and more popular with Medicare beneficiaries over the last several years, covering more than 30 million Americans, according to AHIP. 

“The commonsense proposals in the Advance Notice, coupled with the proposals in the MA and Part D rule released in December, ensure these important programs continue to meet the health care needs of all beneficiaries while improving the quality and long-term stability of the Medicare program,” CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani, MD, PhD, said in a statement.

Amy Baxter

Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."

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