CMS softened proposed rate changes, but strengthened prior authorization rules for MA plans

Last Friday, the Centers for Medicare and Medicaid Services (CMS) announced that it will begin phasing in major Medicare Advantage (MA) risk-adjustment changes over a three-year period, slower than previously anticipated. Thanks to this delay in full implementation, MA plans will see an average 3.3 percent payment increase in 2024, up from the one percent projected in the earlier draft notice.

CMS also finalized regulations this week that aim to limit MA prior authorizations and denials by requiring that coverage decisions align with traditional Medicare.

The Gist: After CMS began proposing changes to MA payment formulas last year, aimed at reining in pervasive abuses and fraud, 

the insurance industry responded with a $13M marketing blitz to oppose the changes. 

The ads, one of which aired during the Super Bowl, tied Medicare Advantage “cuts” to the time-tested “Hands Off My Medicare” messaging directed at seniors. 

With MA enrollment projected to overtake traditional Medicare this year, the federal government finds itself walking a tightrope in clamping down on overpayments to MA plans, given that any reductions will impact a growing number of seniors.

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