March 31, 2023
NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties
<aside> 💡 This is the summary of CY 2024 Rate Announcement. We cherry-picked the information related to Key Updates on risk adjustment models. Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (cms.gov)
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<aside> 📔 Table of Contents
In accordance with section 1853(b)(1) of the Social Security Act, we are notifying you of the annual capitation rate for each Medicare Advantage (MA) payment area for CY 2024 and the risk and other factors to be used in adjusting such rates.
Policies
After considering all comments received, we are finalizing policies in the Announcement of CY 2024 MA Capitation Rates and Part C and Part D Payment Policies (CY 2024 Rate Announcement) that reflect CMS’ commitment to ensuring that people with Medicare receive equitable, affordable, high quality, and whole-person care now and in the future, especially the most vulnerable. The policies in the CY 2024 Rate Announcement are an important step in our efforts to make sure the MA program meets the health care needs of all beneficiaries while improving the quality and long-term stability of the Medicare program. The CY 2024 Rate Announcement finalizes an important transition to an updated risk adjustment model that implements a set of commonsense, clinically-based technical updates needed to keep MA payments up-to-date and to improve payment accuracy to MA plans.
Updated Model
Specifically, the updated risk adjustment model is developed using ICD-10 codes to align with the rest of the health care system, which has been using ICD-10 since 2015. It also incorporates newer data – the current MA risk adjustment model is calibrated with 2014 diagnosis data and 2015 FFS expenditure data and the new model uses 2018 diagnosis data and 2019 expenditure data. Finally, the revised model includes clinically-based adjustments to ensure that conditions included in the model are stable predictors of costs. These adjustments help ensure payments accurately reflect what it costs to care for beneficiaries and make the model less susceptible to discretionary coding, which can lead to excess payments to MA plans. This is consistent with updates we have done in the past where we removed or reclassified codes disproportionately coded in MA compared to Medicare FFS to avoid wasteful spending.
Together, these updates improve the model’s ability to predict the cost of care and ensure MA risk-adjusted payments are as accurate as possible, which ultimately makes sure MA plans are paid enough to deliver the benefits that their enrollees are entitled to.
Attachment VIII contains the CMS-HCC Risk Adjustment Factor and Predictive Ratio tables.
Capitation Rate
The capitation rate tables for 2024 and supporting data are posted on the CMS website at https://www.cms.gov/Medicare/Health- Plans/MedicareAdvtgSpecRateStats/Ratebooks-andSupporting-Data.html.
The statutory component of the regional benchmarks, qualifying counties, and each county’s applicable percentage are also posted on this section of the CMS website.
Economics