News: CMS releases 2024 Medicare Advantage, Part D Rate fact sheet

On March 31, 2023, CMS released the Medicare Advantage (MA) Capitulation Rates and Part C and Part D Payment Policies Fact Sheet for calendar year (CY) 2024. CMS stated these updates will finalize an important transition to an updated risk adjustment model with technical updates to improve payment accuracy for MA plans. The updates were developed to move from 2014 diagnosis data and 2015 fee-for-service (FFS) expenditure data, restructuring condition categories using ICD-10 codes to align with 2018 diagnosis data and 2019 expenditure data.

Since the United States healthcare system transitioned to ICD-10 in 2015, CMS has mapped ICD-10 codes according to ICD-9 Hierarchal Condition Categories (HCC) until coding practices stabilized. Now, to adjust with this system in CY 2024, CMS built new HCCs from the ground up by reviewing diagnoses and the best grouping for each. The resultant HCCs look quite different from the past, with many diagnosis codes falling under different HCCs. Over 95% of the 2,000 codes no longer mapping to HCCs in this model have been moved as part of the transition to the ICD-10 system, with 115 of the 266 HCCs in the payment model.

Though roughly 97% of codes removed from payment were due to the transition, certain clinical categories were classified differently to better reflect predictors of costs to non-payment HCCs, such as mental health diagnosis codes and some for diabetes (though 300 diabetes codes remain in the model). For more details, read ACDIS Interim Director Laurie Prescott’s breakdown of the proposed changes here.

These changes align with the agency’s overall vision for their programs to “advance health equity, drive comprehensive, person-centered care, and promote affordability and the sustainability of the Medicare program,” CMS said in their announcement of the fact sheet.

In regards to the Part D updates, the Inflation Reduction Act of 2022 (IRA) made several improvements to beginning in or during CY 2024 including the following:

• Cost-sharing for Part D drugs will be eliminated for beneficiaries in the catastrophic phase of coverage
• The Low-Income Subsidy program (LIS) under Part D will be expanded so that beneficiaries who earn between 135-150% of the federal poverty level and meet statutory resource limit requirements will receive full LIS subsidies (previously available only to beneficiaries earning less than 135% of the federal poverty level)
• Part D plans must not apply the deductible to any Part D covered insulin product and must charge no more than $35 per month’s supply of a covered insulin product in the initial coverage phase and the coverage gap phase
• Part D plans must not apply the deductible to an adult vaccine recommended by the Advisory Committee on Immunization Practices and must charge no cost-sharing at any point in the benefit for such vaccines
• The annual growth in the Base Beneficiary Premium will be capped at 6%

Editor’s note: To read CMS’s fact sheet of the changes, click here. To access the announcement of the CY 2024 MA Capitation Rates and Part C and Part D Payment Policies, click here.