Medicare Advantage plan rates will increase by 2.09% next year, largely in line with analyst expectations but likely lower than payers had hoped.

The 2024 Medicare Advantage and Part D Advance Notice released Wednesday also includes some technical changes to the risk adjustment model, such as using ICD-10 codes instead of ICD-9, making it more up to date and more predictable, said CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani in a Wednesday call with reporters.

The rule comes on the heels of regulation opposed by payers that would begin retroactive plan audits in an attempt to claw back overpayments. Payer lobby AHIP said that proposal, the Risk Adjustment Data Validation, or RADV rule, was “fatally flawed.”

Stocks of payers tied to the MA market like Humana, UnitedHealthcare and Elevance all trended down Thursday morning.

Regarding the MA rate notice, AHIP said they “are concerned with the potential adverse impact of the rate notice on seniors and people with disabilities, especially when taken together with the final risk adjustment data validation (RADV) rule and other policy changes proposed for next year.”

With star ratings and risk adjustment factored in, the total expected average change in revenue is 1.03%, the CMS said.

Jefferies analysts in a note said the rate update was mostly mechanical, but that “scrutiny of MA coding practices developed around the RADV debate, and COVID impacting elderly that were higher acuity, all give CMS cover to slow the growth of MA rates. CMS appears to have taken the opportunity.”

The analysts noted that the rate could increase even more when the final rule is released in early April.

The MA program has been popular in recent years and now serves more than half of the entire Medicare population. However, the plans have been dogged with fraud investigations linked to alleged upcoding and exaggerations of patient illness.

Some of the rule addresses changes due in part to the Inflation Reduction Act, such a no cost sharing for Plan D drugs for those in catastrophic coverage. Part D plans will also not be allowed to apply a deductible or charge cost sharing for approved vaccines.

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