2024 Advance Notice Deep Dive Signals ‘Radical’ Change on the Horizon

  • Feb 16, 2023

    Two weeks ago, CMS in its 2024 Advance Notice projected that Medicare Advantage organizations can expect an average estimated change in revenue of 1.03%, when accounting for underlying factors. Although the industry had been bracing for a much smaller rate increase than the robust 8% CMS predicted this time last year, a deeper dive into the notice has plan sponsors and providers understandably concerned about potential rate reductions. That’s largely because the annual rate notice, which often includes proposed changes to the risk adjustment model used to determine plan payments, proposes a substantial redesign of the model.

    “This is the most radical change to the risk adjustment model since it started,” asserts risk adjustment consultant Richard Lieberman, who estimates that the Part C CMS-Hierarchical Condition Categories (HCC) model has gone through “four major iterations” since it was first used to adjust plan payments in 2004. One significant change in the proposed 2024 CMS-HCC model is that it has 115 payment HCCs, up from 86 in the current model, which was updated in 2020. In addition, CMS proposed moving from using ICD-9 diagnoses codes to the “more commonly used” ICD-10, as well as shifting to more recent underlying fee-for-service (FFS) Medicare data years to reflect 2018 diagnoses and 2019 expenditures (from 2014 diagnoses and 2015 expenditures).

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  • Lauren Flynn Kelly

    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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