On Higher FFS Costs, MA Risk Scores, CMS Proposes Pay Boost of 8% for 202323

by Lauren Flynn Kelly

In addition to floating a variety of potential changes aimed at advancing health equity in the Medicare Advantage and Part D programs, CMS in its Feb. 2 release of the 2023 preliminary rate notice estimated that MA plans will see an average pay boost of 8% in 2023. And that estimate could change: CMS for 2022 originally estimated that plans would receive an average reimbursement increase of 2.8%, then bumped that estimate up to 4.08% in the final rate announcement.  

Notice is good news for payers  

• To Evercore ISI, the 2023 estimate isn’t far off from the “all-in” rate increase of 7.6% in 2022, when considering average risk coding trend, which varies by company. 
• “This proposal is an unqualified big positive for MCOs [Humana Inc. in particular] given fears the new Biden administration might bring unfavorable rate updates — or at minimum less favorable given strong recent increases,” wrote Elizabeth Anderson and Michael Newshel in a Feb. 2 note to investors. 
• To arrive at an expected average change in revenue of 7.98% for 2023, CMS factored in an effective growth rate of 4.75%, which is based largely on an anticipated rise in fee-for-service (FFS) Medicare costs.
• Other factors contributing to the sizable rate increase included an average change in star ratings of 0.54% and an average increase in risk scores of 3.50%, according to a CMS fact sheet accompanying the release of the 2023 Advance Notice.  

CMS is focused on social needs, equity 

• The notice also sought feedback on the myriad ways CMS is looking to advance health equity, including through the introduction of a Health Equity Index in the star ratings that would summarize measure-level performance by social risk factors into a single score used in determining a Part C or a Part D plan’s overall star rating. 
• The agency added that it is considering the development of a separate Part C measure that would track how MA organizations are driving quality through value-based care (VBC) models with providers.  
• In addition, CMS is interested in collecting more and improved data on beneficiaries’ race, ethnicity and social determinants of health. 
• Better Medicare Alliance President and CEO Mary Beth Donahue called the rate notice “a thoughtful proposal that will help ensure stability for the millions of diverse seniors and individuals with disabilities who count on Medicare Advantage.” 
• The agency is accepting comments on the notice through March 4. The final rate notice will be published no later than April 4. 

From Radar on Medicare Advantage

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