AHIP expresses concerns on CMS’ Final Rate Notice for Medicare Advantage, Part D


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The Centers for Medicare and Medicaid Services yesterday released 2023 Medicare Advantage capitation rates and Parts C and D payment policies, and it has drawn reaction from insurer group AHIP, which praised the administration for promoting innovation and flexibility but expressed concerns over potentially “unworkable” policies.

AHIP President and CEO Matt Eyles by statement that due to separate and ongoing rulemaking, several policies remain in question, “which if finalized would be unworkable and could negatively impact seniors by increasing premiums or reducing benefits. Examples include requiring all possible pharmacy price concessions be included in Part D point-of-sale negotiated prices and changing the calculation of maximum out-of-pocket costs for Dual Eligible Special Needs Plans (D-SNP).”

AHIP also renewed its call for CMS to extend its COVID-19 disaster relief policy and special rules to 2023 Star Ratings.


AHIP’s chief concern is over policies it says could increase premiums or reduce benefits, and therefore limit future affordability and stability for consumers.

For instance, CMS proposed excluding 2020 data in calculating the annual adjustment known as “fee-for-service normalization.” CMS typically adds a new year of data in projecting the FFS risk scores that determine the adjustment. But according to AHIP, CMS assumes that 2023 FFS risk scores will return to pre-pandemic trends, and therefore proposed not updating the years of data to include 2020 – a year of reduced risk scores – because it would result in lower projected risk score growth in the FFS program for 2023, and a lower normalization factor.

AHIP is requesting that CMS explain its reasoning in excluding 2020 data, and explain how it will address 2020 data in calculations for future years.

When it comes to provider diagnoses, AHIP complained that CMS isn’t addressing the extent to which delayed or foregone care during the pandemic has limited providers’ ability to accurately document enrollees’ health conditions. The group recommended CMS allow plans to carry over diagnosis codes for non-curable chronic conditions documented in prior years for purposes of determining enrollee risk scores; allow diagnosis codes documented during audio-only telehealth visits to be counted for purposes of risk scores where clinically appropriate; and permit the use of prescription drug data to support diagnoses.

AHIP also took issue with the way star ratings are being handled. When CMS solicited feedback on star ratings related to social risk factors, the agency announced plans to report stratified Part C and D Star ratings measures by social-risk factors; develop a Health Equity Index to summarize measure-level performance by social-risk factors in a single score; develop a measure to assess whether plans are screening their enrollees for health-related social needs such as food, housing and transportation; and get to a determination of how MA organizations are transforming care and driving quality through value-based contracts.

However, AHIP claimed that the ongoing public health emergency could affect patient experience survey responses and response rates. The group renewed the call for CMS to issue an interim final rule with comments (IFC) that maintains the weighting of patient experience and complaints.

“In addition, the PHE affected the 2021 measurement year,” wrote AHIP. “Given the potential impacts on provider and plan performance on a variety of measures across different geographies, we urge CMS to extend its COVID-19 disaster relief policy and special rules through an IFC to all applicable measures for 2023 Star Ratings.”

AHIP also expressed ongoing concerns with certain benchmark calculation methodologies. For Parts A and B fee-for-service costs, CMS calculates benchmarks by including people enrolled in FFS who, by statute, are ineligible to enroll in MA plans, thereby artificially reducing rates in many counties. This approach, said AHIP, fails to adequately determine the cost of providing a benefit to MA enrollees that is comparable to the cost of providing the benefit under Original Medicare.

As for ESRD payment methods, CMS isn’t proposing any major change to how it calculates expected costs for enrollees with end stage renal disease (ESRD). But AHIP cited a recent Wakely analysis showing that current payment methodologies don’t adequately address expected costs for enrollees with ESRD. Cost-to-payment ratios for ESRD enrollees in MA are dramatically higher than those for non-ESRD enrollees, averaging 104% in 2020.

“We urge CMS to provide more details about the study and work with stakeholders to assess alternatives,” AHIP wrote.


In the rule, Medicare Advantage plans are expected to get an 8.5% revenue increase for 2023, an increase over the 7.98% proposed in the February advance notice.

For Part C risk adjustment, CMS will continue the 2022 policy to calculate 100% of the risk score using the 2020 CMS-HCC (Hierarchical Condition Categories) model, which was phased in from CY 2020 to CY 2022. CMS is also continuing its policy of calculating risk scores for MA enrollees using diagnoses exclusively from MA encounter data submissions and fee-for-service claims.

In addition, CMS is finalizing its proposal to implement an updated version of the RxHCC risk adjustment model to include a clinical update reflecting ICD-10-CM diagnosis codes, rather than ICD-9-CM codes used in the prior models.

AHIP cited a 93% approval rate among beneficiaries for MA, and said health insurance providers were willing to work with lawmakers in Washington D.C. to ensure the program continues to deliver value for recipients, “including the 57% of MA enrollees who are women, and the 40% of enrollees who earn less than $25,000 a year.”

Earlier this year, numerous legislators called upon Congress to keep MA rates stable. More than 60 senators wrote a letter to CMS urging the agency to protect MA and rates.

In January, the House of Representatives drafted its own letter to CMS.

The Medicare Payment Advisory Commission warned that, as MA costs the government more than original Medicare, MA could worsen Medicare’s sustainability.

Twitter: @JELagasse
Email the writer: [email protected]


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