CMS published the Calendar Year (“CY”) 2024 Medicare Advantage (“MA”) Capitation Rates and Part C and Part D Payment Policies (“Rate Announcement“) on March 31 and, five days later, issued the MA and Part D final rule for 2024 (“Final Rule“). Together, the Rate Announcement and Final Rule pave the way for final bid submissions due by June 5, 2023. We briefly summarize some of the significant changes in the Rate Announcement and Final Rule.

Rate Announcement Changes

  • Rate Increase – CMS announced an average increase in payments to MAOs of 3.32%, up from just 1.03% as originally proposed. This average increase is based on changes in Star Ratings, risk model revision, risk score trend, and the effective growth rate (inflation and the most current Medicare fee-for-service per capita costs adjusted for MA payments).
  • Risk Adjustment Model RevisionCMS will phase in changes to the risk adjustment model over 3 years:  in 2024, CMS will blend 67% of the risk scores calculated under the 2020 model with 33% of the risk scores calculated under the 2024 model; in 2025, the mix will shift to 33% based on the 2020 model and 67% based on the 2024 model; and in 2024, 100% of the risk scores will be based on the 2024 model. The updated risk adjustment model is expected to result in $7.6 billion net savings to the Medicare Trust Fund in 2024.

The 2024 Risk Model uses ICD-10 codes, diagnoses from 2018, and costs from 2019. It also revises hierarchical condition categories (“HCC”) for the following categories and conditions: (1) vascular, (2) metabolic, (3) heart, (4) blood, (5) amputation, (6) neurological, (7) diabetes, (8) kidney, (9) psychiatric and (10) musculoskeletal. The revisions may add, delete, or subdivide an HCC into more specific HCC to better reflect the spectrum of severity for certain conditions—for example, congestive heart failure has 5 HCCs under the 2024 Risk Model instead of 1. The 2024 Risk Model maps 10.5% of ICD-10 codes to 1 of 115 payment HCCs.

  • Star RatingsIn addition to announcing update Star Ratings measures for 2024, the Rate Announcement previewed potential policy changes and new measures. CMS explained it received overwhelming support from commenters in response to its proposed set of “Universal Foundation” measures, to be assessed across all CMS programs, to enable CMS to “measure quality across the entire care continuum in a way that promotes the best, safest, and most equitable care for all individuals.” CMS’s goal is to reduce administrative burdens and align federal and private payers and providers to work together toward a consistent set of patient goals and outcomes. CMS also shared feedback from commenters with the National Committee for Quality Assurance (“NCQA”) regarding potential changes to various substantive measures and the implementation of new measures.

The 2024 Final Rule

As expected, because CMS forwarded the rulemaking to OIRA about 3 weeks after the close of the comment period, the Final Rule largely finalizes the provisions of the proposed rule.

  • Marketing – Following scrutiny by the Senate Finance Committee and increasing oversight of marketing activity during last year’s annual enrollment period, CMS proposed extensive changes to Medicare marketing. The Final Rule adopts 21 of 22 proposals, finalizing 17 of them exactly as proposed. The changes include limits on how marketing may use the Medicare name, logo, and card; prohibitions on advertising benefits that are not available in the service area; and requires at least annual notification to beneficiaries that they can opt-out of being contacted to discuss plan business. The Final Rule also prohibits collecting a scope of appointment (“SOA”) at educational events—but not business reply cards (“BRC”).

    The Final Rule also requires waiting periods for certain marketing activities, such as 12 hours between an educational event and a marketing event in the same place and 48 hours between an SOA and a personal marketing appointment. Notably, however, CMS adopted 2 exceptions to the 48-hour requirement in response to comments: (1) it does not apply to appointments within 4 days of the end of an election period; and (2) it does not apply to “an unscheduled in-person meeting initiated by a beneficiary.” CMS also extended the timeframe for use of beneficiary contact information from a BRC or SOA from 6 months, as proposed, to 12 months.

    CMS did not finalize a proposal to limit how third-party marketing organizations (“TPMOs”) share data, which would have limited lead generation activities.
  • Prior Authorization and Utilization Management – Last year, HHS-OIG published a report indicating that some MAOs denied prior authorization requests despite those requests’ satisfaction of Medicare coverage rules. The Final Rule reiterates and clarifies that MAOs must comply with national coverage determinations (“NCD”), local coverage determinations (“LCD”), and general coverage and benefit conditions in Medicare unless they are superseded by a law applicable to MAOs. If there are no NCD, LCD, or applicable Medicare law for an item or service, MAOs may develop their own coverage criteria—but such criteria must be based on current evidence in widely used treatment guidelines or clinical literature and made publicly available. MAOs also must establish a Utilization Management Committee to review coverage policies for compliance with NCD, LCD, and Medicare law annually.
  • Health Equity – Consistent with the Biden Administration’s focus on racial equity and the 2022 CMS Strategic Plan, the Final Rule broadens the scope of populations considered when evaluating whether services are provided in a culturally competent manner to include, categories such as disabled people, LGBTQIA+ people, and rural people. The Final Rule also updates Medicare Advantage’s provider directory requirements to align them with Medicaid managed care standards for disclosure of provider’s cultural and linguistic capabilities, including languages such as American Sign Language. Provider directories also must include whether a provider offers medications for opioid use disorder. MA plans also must develop processes to offer digital health education to enrollees to facilitate and improve access to telehealth benefits. CMS will provide a health equity index reward factor as part of the 2027 Part C and Part D Star Ratings, calculated using data collected for the 2026 and 2027 Star Ratings (2024 and 2025 measurement years). 
  • Behavioral HealthThe Final Rule adds 2 behavioral health provider types—clinical psychology and clinical social work—to network adequacy requirements, along with time and distance and minimum ratio criteria. MAOs can receive a 10-percentage point credit toward the percentage of beneficiaries who reside within the time-and-distance requirements if the plan has 1 or more clinical psychology or clinical social work providers that provide telehealth benefits. The same timeliness of access to care criteria now apply to behavioral health as medical/surgical care: immediately for urgently needed services or emergencies; within 7 business days for non-emergency or urgent care when the enrollee needs medical attention; and within 30 business days for routine and preventive care. The Final Rule also adds behavioral health services to the conditions for which MA coordinated care plans must coordinate care with community and social services.
  • Enrollee Notification of Provider TerminationsCMS refined existing notification requirements to give enrollees at least 45-days’ prior notice of not-for-cause terminations of primary care or behavioral health providers. Enrollees who are currently seeing affected providers or who have seen them in the preceding 3 years must receive notice. MAOs must provide both written and telephonic notification to enrollees. Telephonic notice is limited to 1 attempted call to enrollees who have not opted out of calls regarding plan business. The requirement to provide 30-days’ prior written notice to enrollees for not-for-cause terminations of other provider types remains in effect. Written notification of the provider’s termination must include: names and phone numbers of in-network providers whom the enrollee can access for continued care, how the enrollee may request continuation of ongoing medical treatment or therapies with their current provider, and the MAO’s call center contact information and hours and days of operation. The notification also must explain that an enrollee can contact 1-800-MEDICARE to request assistance in switching to other coverage or to request a special election period, if applicable, to maintain network status with the provider.

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