2024 Advance Notice Would Substantially Alter Risk Adjustment Model

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Summary

Proposed technical changes to the MA risk adjustment model would have major implications if finalized.

On February 1, the Centers for Medicare & Medicaid Services (CMS) released the 2024 Medicare Advantage (MA) and Part D Advance Notice. The Advance Notice is an annual regulatory document that describes the agency’s proposed payment and coverage policies for MA and Part D plans for the upcoming plan year.

In the Notice, CMS is proposing to switch the diagnostic classification used for risk adjustment in the MA program to ICD-10. CMS estimates that this, combined with other risk adjustment changes, will lead to a 3.12% reduction to 2024 plan payments. The payment decrease would be driven by the removal of 2,269 unique codes from the Hierarchical Condition Category (HCC) model. Among the top conditions impacted are major depressive disorder, diabetes with chronic conditions, vascular disease, and rheumatoid arthritis and inflammatory connective tissue disease.

CMS noted that it “conducted an assessment of conditions that are coded more frequently in MA relative to FFS.” In effect, this proposal operates as a coding intensity adjustment. Stakeholders should evaluate the impact of these changes on beneficiary access and plan payment.

Table 1. Number of Unique ICD-10 Codes Dropped Under 2024 Advance Notice Proposal Compared to Current Risk Adjustment Model
2020 HCC Label 2020 Count of Diagnoses Number of Diagnoses Dropped Under 2024 Advance Notice Percent Dropped
Major Depressive, Bipolar, and Paranoid Disorders 827 425 51%
Complications of Specified Implanted Device or Graft 325 325 100%
Major Head Injury 496 251 51%
Amputation Status, Lower Limb/Amputation Complications 291 250 86%
Other Significant Endocrine and Metabolic Disorders 229 178 78%
Vascular Disease 330 146 44%
Spinal Cord Disorders/Injuries 352 90 26%
Diabetes with Chronic Complications 400 80 20%
Rheumatoid Arthritis and Inflammatory Connective Tissue Disease 648 71 11%
Dialysis Status 50 50 100%
Grand Total (Unique ICD-10 Codes) 9797 2269 23%

*Columns may not sum due to exclusion of less impacted HCCs and inclusion of codes mapped to more than one HCC.

To learn more about payment and coverage policies for MA and Part D plans and how they affect your business, connect with us.

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