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Financial impact summary of the 2024 Medicare Advantage Advance Notice

This week, our In Focus section highlights a Wakely, an HMA Company, summary and analysis of the 2024 Medicare Advantage Advance Notice, prepared for America’s Health Insurance Plans (AHIP). The Centers for Medicare & Medicaid Services (CMS) released the contract year (CY) 2024 Advance Notice with an accompanying fact sheet on February 1, 2023. AHIP has retained Wakely Consulting Group to provide a financial impact summary report of the information presented in the notice. Specifically, Wakely was asked to analyze changes to Medicare Advantage (MA) revenue, risk adjustment models, and fee-for-service (FFS) normalization.

Key highlights of the analysis are:

  • The CY 2024 FFS growth rate is lower than projections from the 2023 Final Announcement. A portion of the downward restatement is driven by a technical change. CMS has not commented on the additional drivers.
  • Based on a large sample of plans, Wakely estimated that the proposed Part C risk adjustment model is expected to decrease plan risk adjusted payment by 3.7 percent overall, which represents a bigger headwind than the CMS estimated decrease of 3.12 percent. The impacts vary significantly by model segment and geographic region, and for individual plans.
  • The proposed FFS normalization factor excludes PY 2021 risk scores in the calculation of the underlying trend. The exclusion of PY 2021 increases the FFS normalization factor which decreases PY 2024 risk scores.

The report, released March 6, 2023, provides additional detail and discussion of these issues. For questions, please contact Tim Courtney or Rachel Stewart.

Click here to read the report.

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