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2023 MA and Part D Final Rate Announcement Includes 8.5% Revenue Boost, Increased Star Ratings

Updated: Apr 13, 2022

The Centers for Medicare and Medicaid Services (CMS) published the Announcement of Calendar Year (CY) 2023 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies on April 4, 2022.

The letter includes confirmed changes in the MA capitation rate methodology and risk adjustment methodology applied under Part C of the Medicare statute, discussion of annual adjustments to the Medicare Part D benefit parameters for the defined standard benefit, and updates for the MA and Part D Star Ratings including enhancements for future rating years.

As follows are highlights of the Final Announcement:

  • Growth and Revenue: CMS finalized an effective growth rate of 4.88% (from 4.75% in Advance Notice) and an overall expected average change in revenue of 8.5% (from 7.98%).

  • CMS-HCC MA risk score calculation methodology: For CY 2023, CMS will continue to calculate 100 percent of the risk score for non-ESRD MA enrollees using the 2020 CMS-HCC model, as proposed in the CY 2023 Advance Notice. For CY 2023, CMS will continue to use the 2017 CMS-HCC risk adjustment model and associated frailty factors to calculate risk scores for participants in PACE organizations, as proposed in the CY 2023 Advance Notice.

  • ESRD Risk Adjustment: For CY 2023, CMS will implement updated versions of the CMS-HCC ESRD risk adjustment models to calculate risk scores for MA enrollees with ESRD, as proposed in the CY 2023 Advance Notice. The updated models are segmented by dual status and calibrated using an updated clinical version as well as updated data years. For CY 2023, CMS will continue to use the 2019 CMS-HCC ESRD risk adjustment models to calculate risk scores for participants in PACE organizations with ESRD.

  • PACE Risk Adjustment: CMS will continue to use the 2017 CMS-HCC model to calculate non-ESRD risk scores.

  • Part D Risk Adjustment: For CY 2023, CMS will use an updated version of the RxHCC risk adjustment model used to adjust direct subsidy payments for Part D benefits offered by stand-alone PDPs and MA-PDs. The recalibrated model includes a clinical update based on ICD-10 diagnosis codes.

  • Puerto Rico: For CY 2023, CMS is again basing MA county rates in Puerto Rico on the relatively higher costs of beneficiaries in FFS, continuing the statutory interpretation that permits certain counties in Puerto Rico to qualify for an increased quality bonus adjusted benchmark, and apply an adjustment to reflect the nationwide propensity of beneficiaries with zero claims

  • Star Ratings: CMS provided information and updates for Star Ratings changes for CY 2023 in the Advance Notice and solicited input on the following future measures and concepts, all of which are adopted in the Final Rate Announcement:

Extreme and Uncontrollable Circumstances Policy:

  • In the 2023 Part C and D proposed rule, CMS proposed to address the CY 2023 Star Ratings for HEDIS measures derived from the 2021 HOS survey only removing the 60 percent rule for affected contracts to ensure that they are able to calculate the Star Ratings cut points for the three HEDIS measures derived from the HOS survey and are able to include these measures in the determination of the performance summary and variance thresholds for the reward factor for the 2023 Star Ratings since the disaster adjustment due to COVID-19 for measures from the HOS survey is delayed one year given timing of survey administration and recall periods.

Changes to Existing Star Ratings:

  • CMS is including CMS Lead Marketing Misrepresentation and allegation of inappropriate marketing by plan CTMs in measure specifications.

  • NCQA is considering developing new measures focused on eye exams and controlling blood sugar for diabetics relative to Diabetes Care Measures and CMS shared comments from the Advance Notice with NCQA.

  • As in the CY 2022 Advance Notice, CMS again solicited comments on potential measures related to COVID-19 vaccination for performance measure display and inclusion in Stars program. In the final announcement, CMS declared their intention to share feedback with NCQA for their consideration as they continue to explore updates to the Adult Immunization Status measure.

Potential New Measures:

  • CMS received unanimous support for new incentives to reduce socioeconomic healthcare outcome disparities including stratified reporting (by disability, LIS status, dual status, CAHPS measures as appropriate) and the development of a health equity index as an enhancement to Star Ratings that will summarize contract performance among those with social risk factors across multiple measures into a single score.

  • CMS received mixed reaction to proposed measures to capture value-based care arrangements MA organizations have with providers (ie: risk-sharing arrangements and associated performance target bonuses, or non-financial resources) based on health outcomes and quality of services provided to their patients, including how plans are aligning incentives with their providers so that they are rewarding better value and outcomes rather than the volume of services.

As a reminder, policies in the Advance Notice that were not modified or retracted in the Final Rate Announcement will be effective in the upcoming payment year.

Revenue was not the only impact that shifted with the finalized rate. What's Next? Contact us today to get started.


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