On March 31, 2023, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), announced the finalized capitation rates and payment policies for the 2024 Medicare Advantage Program. Notably, CMS indicated it expects and average change in revenue of 3.32% (compared with 1.03% in the Advance Notice) and opted to phase in the finalized risk adjustment program over three years. The updated risk adjustment model uses ICD-10 codes and includes clinically based adjustments to support the inclusion of conditions that are stable predictors of costs to discourage discretionary coding, It removed 2,000 codes. Overall, the allocation of funds seeks to improve payment accuracy for current Medicare beneficiaries and for Medicare recipients in the future.

A press release published by CMS states, “Paying Medicare Advantage plans more accurately for the care they provide is how we ensure that people enrolled in Medicare Advantage, especially populations with the highest health disparities and people in underserved communities, can continue to access the care they deserve.” 

To further efforts of accountability for proper payment, the current Administration will work to recover over payments made to insurance companies and return the money to the Medicare Trust Funds with hopes to protect the fiscal sustainability of Medicare. The effects of these actions can only be seen over time.

At present, Nelson Mullins is working with its provider clients that participate in Medicare Advantage plans to analyze impacts, including revenue and compliance considerations (especially for those that participate in HCC coding programs).