2024 Medicare Advantage and Part D Advance Notice Fact Sheet

Today, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2024 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Advance Notice). CMS will accept comments on the CY 2024 Advance Notice through Friday, March 3, 2023. CMS will carefully consider timely comments received before publishing the final Rate Announcement by April 3, 2023.

Net Payment Impact

The chart below indicates the expected impact of the proposed policy changes on MA plan payments relative to last year.  

Year-to-Year Percentage Change in Payment

¹Rebasing/re-pricing impact is dependent on finalization of the average geographic adjustment index and will be available with the publication of the CY 2024 Rate Announcement. 

²The 2023 Star Ratings used for 2024 Quality Bonus Payments (that were made public in October 2022) are, on average lower than the 2022 Star Ratings; while the circumstances for particular contracts differ, an overall decrease in the Star Ratings is to be expected because the adjustments for extreme and uncontrollable circumstances due to the COVID-19 PHE are not included in the 2023 Star Ratings for most measures and there were additional methodological changes from the prior year.

³The underlying risk score trend is the average increase in risk scores, not accounting for normalization and MA coding adjustments, which are shown in separate rows. Individual plans’ experience will vary.

Growth Rates

The effective growth rate reflects the current estimate of the growth in benchmarks used to determine payment for Medicare Advantage plans. This growth rate is largely driven by the growth in Medicare Fee-For-Service (FFS) per capita costs, as estimated by the Office of the Actuary. Included in the 2024 growth rate estimate is a proposed technical correction to the per capita cost calculations related to indirect and direct medical education costs associated with services furnished to MA enrollees; this correction results in a one-time adjustment to the growth rates.

Part C Risk Adjustment Model Revision

CMS is proposing a revised Part C risk adjustment model. The proposed model includes important technical updates, including restructured condition categories using the International Classification of Diseases (ICD)-10 classification system (instead of the ICD-9 classification system), and updated underlying FFS data years (from 2014 diagnoses and 2015 expenditures to 2018 diagnoses and 2019 expenditures), as well as revisions focused on conditions that are subject to more coding variation. The proposed new risk adjustment model reflects more current costs associated with various diseases, conditions, and demographic characteristics, takes into account the ICD-10 diagnostic classification system that has been in use for medical payment since 2015, and includes revisions designed to reduce the sensitivity of the model to coding variation. The Advance Notice contains detailed descriptions of these updates.

Inflation Reduction Act of 2022 (IRA) Updates for 2024

The IRA made several amendments and additions to the standard Part D drug benefit defined in the Social Security Act. The Part D benefit-related IRA updates that will be in place for CY 2024 and that are described in the Advance Notice include:

• Beginning in CY 2024, cost-sharing for Part D drugs will be eliminated for beneficiaries in the catastrophic phase of coverage.
• Beginning in CY 2024, the Low-Income Subsidy program (LIS) under Part D will be expanded so that beneficiaries who earn between 135 and 150 percent of the federal poverty level and meet statutory resource limit requirements will receive the full LIS subsidies that were prior to 2024 only available to beneficiaries earning less than 135 percent of the federal poverty level.
• During CY 2024, 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.
• During CY 2024, 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.
• Beginning in CY 2024, the growth in the Base Beneficiary Premium will be capped at 6 percent. The Base Beneficiary Premium for Part D is limited to the lesser of a 6% annual increase, or the amount that would otherwise apply under the prior methodology had the IRA not been enacted.

Please note that IRA provisions that take effect in 2025 and beyond will be addressed in future Advance Notices and Rate Announcements.

Puerto Rico
The proportion of Medicare beneficiaries who receive benefits through MA (as opposed to  Medicare FFS) is far greater in Puerto Rico than in any other state or territory. The policies proposed and under consideration for 2024 would continue to provide stability for the MA program in Puerto Rico and for Puerto Ricans enrolled in MA plans. These policies include basing the MA county rates in Puerto Rico on the relatively higher costs of beneficiaries in FFS who have both Medicare Parts A and B and applying an adjustment to reflect the propensity of beneficiaries with zero claims.

Part C and D Star Ratings

In the Advance Notice, CMS provides information and updates in accordance with the Star Ratings regulations at §§ 422.164, 422.166, 423.184, and 423.186 of title 42 of the Code of Federal Regulations. In addition, CMS solicits input on future measures and concepts as CMS continues to enhance the Star Ratings over time.

Star Ratings updates for CY 2024 include providing the list of eligible disasters for adjustment, non-substantive updates to several measure specifications, and the list of measures included in the Part C and D Improvement measures and Categorical Adjustment Index for the 2024 Star Ratings to be issued later this year. CMS is also soliciting initial feedback on potential substantive measure specification updates, new measure concepts, and the addition of measures to align with other CMS programs. Specifically, across our CMS quality rating and value-based care programs, where applicable, we are considering including what CMS is calling a “Universal Foundation” of quality measures, which is a core set of measures that are aligned across programs.

Process

Comments on the proposals set forth in the Advance Notice must be submitted by Friday, March 3, 2023. The final 2024 Rate Announcement will be published no later than Monday, April 3, 2023.

To submit comments or questions electronically, go to www.regulations.gov, enter the docket number “CMS- 2023-0010” in the “search” field, and follow the instructions for ‘‘submitting a comment.’’

The 2024 Advance Notice may be viewed by going to: https://www.cms.gov/files/document/2024-advance-notice.pdf and selecting “2024 Advance Notice.”

###