Finalized updates to MA payment models: Rate changes, CMS-HCC V28, and more

CMS has finalized policy updates for Medicare Advantage (MA) plans, including major changes to reimbursement structures like CMS-HCC Version 28.
CMS-HCC V28

The Centers for Medicare & Medicaid Services (CMS) finalized significant policy updates for Medicare Advantage (MA) plans in the Medicare Advantage Rate Notice for 2024.

CMS finalized the Announcement of Calendar Year (CY) 2024 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies on March 31, 2023. The Medicare Advantage Rate Notice includes the following:

Rate changes

CMS finalized a 2.28% Effective Growth Rate for MA non-End-Stage Renal Disease (ESRD) for 2024, a slight increase from their initial proposal. As CMS also finalized an enhanced adjustment for the risk score trend and decreased the negative adjustment for revisions to the risk model, plans could see an increase in revenue by 3.32% – a significant improvement to the proposed increase in revenue of only 1.03%.

Cost sharing

CMS finalized changes to the Part D drug benefit supported by the 2022 Inflation Reduction Act, significantly benefiting Part D beneficiaries. Changes include:

  • The elimination of cost sharing when a “catastrophic” threshold of $7,400 is met for drugs
  • An increase of the qualification threshold for the low-income subsidy program to 150% of the federal poverty level
  • The elimination of the deductible for covered insulin products and adult vaccinations

Quality reporting

CMS will add two new measures, Depression Screening and Follow-Up (Part C) and Adult Immunization Status (Part C and D), to the 2026 display page with data from the 2024 measurement year to inform potential future rule-making for inclusion in Stars Ratings.

In addition, CMS is exploring new measure concepts for Chronic Pain Assessment and Follow-up, Blood Pressure Control, Kidney Health, Social Connection Screening and Intervention, and Health Outcomes Survey (HOS) assessment measures for mental health; access to mental health care; and addressing unmet health-related social needs.

CMS also received overwhelming support for their proposal to develop a core set of measures, a “Universal Foundation” intended to streamline quality and performance measures across federal and private payers. This will facilitate a focus on measures meaningful for Medicare populations and significantly reduce provider burden. While the agency did not specify an implementation timeline for the Universal Foundation in the Rate Notice or other currently proposed rule-making for 2024, they did include a sample set of measures for review in both the Advance Notice and the Rate Notice. It is expected that CMS will begin to phase in this program over the next several years.  

2024 CMS-HCC Version 28 Model

CMS finalized revisions for the Part C risk adjustment model for 2024 that incorporate recalibration and clinical reclassification of HCCs. Recalibration will update the data year to 2018 diagnoses and 2019 expenditures from 2014 diagnoses and 2015 expenditures. The denominator year used to calculate risk scores will update to 2020 from the current 2015.

Reclassification updates to ICD-10-CM from ICD-9-CM will improve the alignment between diagnosis and HCC mappings; increase the number of HCCs in the model; and eliminate diagnoses determined to be subject to coding variation or inappropriate coding.

Furthermore, ICD-10-CM updates will improve the alignment between ICD-driven diagnostic groups and HCCs to ensure that risk score calculation is weighted by only the most severe manifestation among related diseases.

In the final 2024 CMS-HCC model, 115 HCCs will qualify for payment, up from the current 86. This change is due to improvements in the clinical specificity of codes within ICD-10-CM; updates in clinical concepts for some conditions; newly created HCCs; and the splitting of several existing HCCs.

To address coding variation or inappropriate coding, CMS incorporated clinical input and analysis of MA coding compared to fee-for-service (FFS) coding for certain conditions. This resulted in the proposed removal of several condition categories that do not accurately predict the projected cost of a beneficiary and the constraining of certain HCCs to carry the same weight in the risk score.

CMS will phase the model in over three years, beginning with Contract Year (CY) 2024. In CY 2024, 67% of risk scores will be calculated with the current V24 model, and 33% of risk scores calculated with the updated V28 model. In CY 2025, CMS expects 33% of risk scores to be calculated with the V24 model and 67% with the V28 model. And finally, in CY 2026, CMS expects 100% of the risk scores to be calculated with the V28 model.

Watch the webinar on-demandCMS-HCC Version 28: Get informed and be prepared for change for an in-depth look at the CMS-HCC Version 28 model, potential implications, and strategies on managing the transition.

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