The Department of Health and Human Services (HHS) last week issued a rebuttal against industry concerns that the proposed payment rule will result in payment reductions to Medicare Advantage (MA) plans and possible increases to premiums and/or fewer benefits to seniors.

In a statement, HHS pushed pack against claims that the 2024 Medicare Advantage and Part D Advance Notice would result in payment cuts to MA plans. Indeed, the department said that the administration proposes to increase MA payments this year by 1 percent, on top of an 8.5 percent increase in MA payments last year.

RELATED: CMS releases the 2024 Medicare Advantage and Part D Advance Notice: Proposed changes to Stars, MA risk adjustment

“The Bident-Harris Administration is not reducing payments to Medicare Advantage,” HHS said, noting that the proposed increase for 2024 and last year’s increase in payments will result in increased payments to MA by nearly 10 percent in the past year.

And in a tweet on Friday, HHS Secretary Xavier Becerra said, “Any claim that this Administration is cutting Medicare is categorically false. Leave it to deep-pocketed insurance companies and industry front groups to characterize this year's proposed increase in Medicare Advantage payments as a pay cut.”

RELATED: Proposed Medicare Advantage change cannot accurately be called 'cuts,' experts say

In addition, HHS said it will begin to recover improper payments made to MA plans through audits and return the money to the Medicare Trust Fund. MA now represents about half of the Medicare program and plans receive more than $420 billion in payments each year, HHS said. 

RELATED: RISE National 2023 can’t-miss sessions: OIG reps to offer a deep dive into high-risk areas for MA plans

Audits conducted by the Office of the Inspector General dating back to 2019 that examined risk adjustment payments to MA plans have identified overpayments made to the plans going back as far as the 2012 plan year.

RELATED: CMS releases RADV final rule: Unwelcome changes ahead for Medicare Advantage plans

These initiatives, as well as other proposed policies, aim to strengthen the MA program by cracking down on confusing marketing schemes, addressing problematic prior authorization practices, and making it easier for seniors to access behavioral health care services.

RELATED: CMS releases the 2024 Medicare Advantage Proposed Rule: What it means for Star ratings, prior authorization, and marketing requirements

But a recent study by Avalare found in the Advance Notice that the Centers for Medicare & Medicaid Services (CMS) estimates the net growth in MA plan revenue for 2024 to be -2.27 percent compared to last year’s net change of 5 percent. The change is due to a lower effective growth rate for MA county benchmarks, the expiration of a COVID-19 related adjustment to the 2023 Star ratings, and changes to the MA risk adjustment model. Analysts said this decrease in payments to plans could lead to less funding that plans use to offer supplement benefits and lower premiums for their enrollees. The decrease in payment could result in a $540 decrease in benefits per member per year, according to the Avalere report.

RELATED: Study: Advance Notice could reduce MA benefits by $540 per beneficiary in 2024

In response to HHS’ statement, the AHIP President and CEO Matt Eyles said that based on the three changes in the Advance Notice, MA plans would on average see a cut in average MA rates in 2024 by 2.27 percent. He said that the proposed changes would:

  • Reduce payments by 3.12 percent in 2024 through changes to the MA risk model that accounts for the health status and demographic characteristics of enrollees
  • Lower quality bonus payments by 1.24 percent in 2024 under the Medicare Star Ratings program
  • Increase benchmarks, used to set maximum payment rates, on average by 2.09 percent in 2024—less than half the growth rate in 2023 (4.88 percent) and well below the projected growth in per enrollee Medicare costs (5 percent)

“We respectfully disagree with the Secretary’s recent statements about the impact of the Administration’s proposed 2024 Advance Rate Notice for Medicare Advantage,” Eyles said. “It will have real-world consequences in 2024 for the more than 30 million seniors and people with disabilities who choose MA—they will face increased costs and reduced benefits.”

For more on the ramifications of the Advance Notice, join RISE and Healthmine for a complimentary webinar, Deep Dive into the CMS Advance Notice, at 2 p.m. to 3:30 p.m. EST, Tuesday, February 28. Click here to register. RISE will also be examining the Advance Notice, the final RADV rule, and other regulatory changes at RISE National 2023, March 7-8, with preconference workshops on March 6, at The Broadmoor Resort, Colorado Springs. Click here to learn more.