Reductions in funding to Medicare Advantage (MA) could mean increased premiums and/or reduced benefits for millions of seniors and individuals with disabilities.

An unexpected impact of the recently released Center for Medicare & Medicaid Service’s (CMS) 2024 Advance Notice—enrollees in MA could have higher premiums and/or fewer benefits in 2024 than 2023.

That’s the finding of an independent analysis released by Avalere Health and funded by the Better Medicare Alliance.

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

“The Avalere analysis finds these proposed policy changes could lead to billions of dollars in new, out-of-pocket expenses for seniors and individuals with disabilities in Medicare Advantage,” said Mary Beth Donahue, president and CEO of Better Medicare Alliance in a statement. “As Medicare Advantage beneficiaries may face an average reduction of $540 per beneficiary in 2024, the reductions will have a detrimental impact on many of the 30 million beneficiaries who rely daily on the high quality, affordable care provided by Medicare Advantage. The cuts could threaten important benefits, such as transportation to medical appointments, healthy meals, vision exams, and preventative dental work. President Biden must honor his promise to protect Medicare by reversing these cuts.”

Indeed, the analysis suggests that the proposed payment changes by CMS for 2024 could disproportionately impact seniors and individuals with disabilities living on a fixed income and who are unlikely able to pay higher premiums, said Tom Kornfield, senior consultant at Avarele Health. “An estimated 52 percent of Medicare Advantage beneficiaries live on an annual income of less than $25,000, compared to 38 percent of fee-for-service Medicare beneficiaries,” he said.

In the Advance Notice, 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, Avalere explained. 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.

If CMS finalizes its proposed changes, MA members could see plans reduce their 2024 benefits to keep premiums at their 2023 rate, increase their 2024 premiums to offer the same 2023 benefits, or a combination of both, Avalere said.

CMS is accepting public comments about the proposals in the Advance Notice through March 3 and will finalize payment rates by April 3.

RISE National 2023

Join RISE National 2023 for a deep dive into regulatory changes for 2023 , including the Advance Notice, RADV audit final rule, and the Medicaid redetermination. The panel will include Avalere’s Sean Creighton; Greg Gierer, vice president of policy and research, Better Medicare Alliance; and Mikal L. Sutton, managing director, Medicaid, Blue Cross Blue Shield Association. RISE National 2023 will take place March 7-8, with preconference workshops on March 6, at The Broadmoor Resort, Colorado Springs. Click here to see the full agenda, roster of speakers, and how to register.