The Centers for Medicare & Medicaid Services (CMS) released the Announcement of Calendar Year (CY) 2023 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Rate Announcement). CMS’s goals for Medicare Advantage and Part D mirror our vision for the agency’s programs as a whole, which is to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program.
In the CY 2023 MA and Part D Advance Notice, CMS solicited comments on a variety of topics, including seeking input on promoting health equity in Medicare Advantage and Part D plans. CMS appreciates the submitted comments and will consider them in future policymaking.
Net Payment Impact
The chart below indicates the expected impact of the policy changes and updates on MA plan payments relative to 2022.
Year-to-Year Percentage Change in Payment
| Impact | 2023 Advance Notice | 2023 Rate Announcement |
|---|---|---|
| Effective Growth Rate | 4.75% | 4.88% |
| Rebasing/Re-pricing | N/A | 0.39% |
| Change in Star Ratings | 0.54% | 0.54% |
| Medicare Advantage Coding Pattern Adjustment | 0% | 0% |
| Risk Model Revision | 0% | 0% |
| Normalization | -0.81% | -0.81% |
| MA risk score trend | 3.50% | 3.50% |
| Expected Average Change in Revenue | 7.98 % | 8.50% |
Part C Risk Adjustment
CMS will continue the CY 2022 policy to calculate 100% of the risk score using the 2020 CMS-HCC model, which was phased in from CY 2020 to CY 2022, as required by section 1853(a)(1)(I) of the Social Security Act, as amended by the 21st Century Cures Act. We are also continuing our policy of calculating risk scores for MA enrollees using diagnoses exclusively from MA encounter data submissions and fee-for-service (FFS) claims. CMS solicited and received comments on whether enhancements can be made to the CMS-HCC risk adjustment model to address the impacts of social determinants of health on beneficiary health status by incorporating additional factors that predict the relative costs of MA enrollees and will consider all comments received on this topic for future policymaking.
Part C End Stage Renal Disease (ESRD) Risk Adjustment
For CY 2023, we are finalizing the revised risk adjustment model for payment to MA organizations and additional demonstrations and programs (such as Medicare-Medicaid Plans (MMPs)) where the demonstration also uses the MA risk adjustment models) for enrollees with ESRD in order to improve the prediction of costs for these enrollees. The revised model is calibrated on more recent data, using CMS’s current approach to identify risk adjustment eligible diagnoses from encounter data records. It also incorporates improvements previously made to the Part C CMS-HCC model, specifically the clinical updates and revised segmentation, which accounts for the differential cost patterns of dually eligible beneficiaries.
Program of All-Inclusive Care for the Elderly (PACE) Risk Adjustment
For CY 2023 payment to PACE organizations, we will continue to use the 2017 CMS-HCC model to calculate non-ESRD risk scores as we have done since CY 2020, the 2019 CMS-HCC ESRD models to calculate ESRD risk scores as we have done since CY 2019, and the 2020 RxHCC model to calculate Part D risk scores as we have done since CY 2020.
Medicare Advantage Coding Pattern Adjustment
Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between MA organizations and FFS providers. For CY 2023, CMS is finalizing a coding pattern adjustment of 5.9%, which is the minimum adjustment for coding pattern differences required by statute. CMS received a number of recommendations from stakeholders regarding approaches to estimate the MA coding pattern adjustment. These included recommendations that CMS apply a higher coding pattern adjustment than the statutory minimum and that CMS consider approaches that take into account differences in coding patterns across MA plans. CMS continually reviews MA coding patterns and continues to assess how we calculate the MA coding pattern adjustment, how best to apply it, and what the appropriate level of the adjustment should be. Ensuring that the coding pattern adjustment policy appropriately addresses differential coding in MA is essential and we will consider these recommendations in the development of future coding pattern adjustment proposals.