MA Benefit Innovation May Slow Down Amid 2024 Rate Uncertainty

As Medicare Advantage organizations prepare for the next bid cycle, each year seems to bring its own set of factors that threaten their ability to stay competitive amid potential cost increases. For the 2023 plan year, the expiration of COVID-related adjustments and expected decline in quality bonus payments had plans considering modest benefit enhancements. For the 2024 plan year, maintaining stable benefits and premiums amid anticipated rate cuts and uncertainty around Medicare Part D trends is the name of the game, according to actuaries who helped plans submit bids that were due on June 5.

After proposing substantial revisions to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model that insurers argued would result in rate reductions, CMS on April 3 opted to phase in the changes starting with 2024. CMS at the time estimated that plans would, on average, see a 3.32% increase in risk adjusted revenue, although that will vary broadly by plan. CMS also estimated the combined impact of the risk model revision and fee-for-service normalization could reduce payments by 2.16%. However, given that the agency will apply a blended method to calculate risk scores next year, plans could see a 4.44% overall risk score trend.