Helping Medicare Advantage plans understand impact of new CMS risk adjustment ruling

The Centers for Medicare and Medicaid Services (CMS) recently announced changes to the risk adjustment model used by Medicare Advantage plans to convert member demographic and diagnoses information into risk adjustment factors. The new model is being phased in over three years, beginning in the CY 2024 plan year. By the CY 2026 plan year, the model will be fully in place.

The announcement outlines the changes to the model, which include an overall reduction in the number of diagnosis codes included, a breakout of some of the hierarchical condition categories (HCCs) and changes in the weights of HCCs demographic elements that are used in the model. Overall, this new model is expected to better reflect the actual acuity of the Medicare population. The average risk adjustment factor is expected to reduce, based on current coding and data, while new-to-Medicare members on the community model should see a slight increase in their risk adjustment factors — a long-awaited adjustment for many plans.

This paper will outline other changes introduced in the new CMS model, identify areas to continue to monitor within a specific member population, discuss the operational implications to a plan’s risk adjustment operations and touch on specific impacts of GenAI on risk adjustment capabilities.

PwC can help plans understand the impacts to their Medicare population and evaluate strategies to ensure they are staying ahead of the changes. For additional details, read our analysis and contact us to discuss further.