2024 Medicare Advantage and Part D Rate Announcement

Medicare Advantage rates will see a 3.3 percent increase in 2024 under a final notice issued by the Centers for Medicare and Medicaid Services. That amounts to a $14 billion increase in Medicare Advantage payments next year, according to CMS. 

The finalized rate increase is higher than what was proposed earlier this year as CMS will phase in some changes over three years instead of making them effective next year.

CMS said the changes will ensure the government is paying Medicare Advantage plans more accurately amid claims from experts that the program overpays for care.

“We are committed to ensuring private companies are holding up their end of the deal to provide quality care to beneficiaries and that payments to these companies are accurate,” said Health and Human Services Secretary Xavier Becerra in a statement.

About 50 percent of Medicare beneficiaries are in the private Advantage plans, which are paid by the government a fixed amount to manage those enrollees. Plans are paid more for sicker beneficiaries through a process called “risk adjustment.” But critics say plans make enrollees look sicker to gain larger payments. CMS said it will phase in changes to risk adjustment to reduce some of those payments.

Experts like the Medicare Payment Advisory Commission have claimed for several years that Medicare Advantage plans are overpaid by the government, resulting in the Biden administration trying to rein in some of the spending.

But the proposal faced blowback from some members of Congress — mostly Republicans — who argued it would harm Medicare Advantage beneficiaries by leading to cuts to extra benefits, like gym memberships and dental coverage.

Becerra has defended the proposed rates and derided the messaging from the industry.

The Better Medicare Alliance, an organization representing Medicare Advantage insurers, commissioned a study from health consulting firm Avalere Health that estimates the 1 percent proposal would have led to a $45-per-month decrease in benefits per member.

Fact Sheet: LINK

Full Announcement: LINK