HHS Updates MA and Part D Payment Policies amid Program Controversy

Skyrocketing rates of improper payments have coincided with historically rapid enrollment in the MA program.

It was a Centers for Medicare & Medicaid Services (CMS) press release announcing the perhaps seemingly mundane and routine process of updating federal payment policies via a final rule – but this one sure felt different.

While unveiling changes to the ways in which it reimburses services provided under Medicare Advantage (MA) and Part D, U.S. Department of Health and Human Services (HHS) officials recently also noted that they will soon be aggressively targeting and taking back improper payments made under the programs – arguably a tacit acknowledgement that the topic has been made national headlines during recent months.

“In addition to today’s final rule, the Biden-Harris Administration has taken action to make the Medicare program stronger and hold industry accountable,” the press release read. “This year, it will start recovering improper payments made to insurance companies in Medicare Advantage. Recovering these improper payments and returning this money to the Medicare Trust Funds will protect the fiscal sustainability of Medicare and allow the program to better serve seniors and people with disabilities.”

The final rule should result in what CMS said would be a payment increase of 3.32 percent for MA plans from 2023 to 2024, constituting $13.8 billion more in expenditures.

“This year’s update strengthens Medicare for our seniors and Americans with disabilities,” HHS Secretary Xavier Becerra said in a statement. “We are committed to ensuring private companies are holding up their end of the deal to provide quality care to beneficiaries, and that payments to these companies are accurate. Together with President Biden’s Budget, this update protects Medicare for beneficiaries today and beyond 2050.”

“Medicare should be providing equitable, high-quality affordable care that will be available for our children and grandchildren,” CMS Administrator Chiquita Brooks-LaSure added. “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.”

If a 3.32-percent increase amounting to nearly $14 billion sounds like a lot, well, it is. Enrollment in MA plans has reportedly approximately doubled over the last decade, with more than 28 million beneficiaries now on the books for a program whose expenditures have ballooned to $427 billion annually – far beyond what Biden’s student loan forgiveness program will cost over 30 years.

Late last year, quoting audit summaries exclusively obtained by Kaiser Health News (KHN) via a three-year Freedom of Information Act (FOIA) lawsuit, NPR reported that some large MA plans were found to have been overbilling the government by more than $1,000 per patient a year, on average.

The federal response won’t be limited to monetary takebacks, officials said. The press release included a pledge to “hold health insurance companies to higher standards by cracking down on abusive and confusing marketing schemes” while “addressing problematic prior authorization practices that prevent timely access to needed care; making it easier to access vital behavioral health care; and raising the bar on quality and driving toward more equitable care.”

“The commonsense policies in the Rate Announcement ensure these important programs continue to meet the healthcare needs of all people with Medicare while improving the quality and long-term stability of the Medicare program,” CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani, MD, Ph.D. said in a statement of her own.

The announcements included a provision that will modernize the MA risk adjustment model to align it with ICD-10 – something that other federal healthcare programs did years ago, and with the industry now taking the first preliminary steps toward implementing ICD-11.

“The changes in risk adjustment payment policies finalized as part of this Rate Announcement were developed in collaboration with expert clinicians to take into account how well different conditions predict costs,” officials noted. “The policies finalized in this Rate Announcement will help make more accurate payments. This reduces incentives to cherry-pick healthy beneficiaries and discriminate against sicker patients. In addition, CMS will continue to pay more for someone who is dually eligible for Medicare and Medicaid than someone who is not when they have the same diagnoses.”

The 2024 Rate Announcement can be viewed online at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents, selecting “2024 Announcement.”