As we near the end of the year, CMS has rolled out important updates for Medicare Advantage and Prescription Drug Plans. These adjustments impact payments, risk adjustment reconciliations, and processing systems, and there’s a lot to unpack. Here’s a breakdown of what these changes mean for plan sponsors, plus tips for adapting smoothly.
1. Risk Adjustment Reconciliation: Fixing Payment Errors
In mid-2024, CMS identified an issue in their MARx software, which mistakenly used the wrong risk factors for certain payments to long-term institutional (LTI) beneficiaries. Payments for these beneficiaries should have reflected an LTI risk factor, but a community risk factor was used instead, leading to incorrect payment amounts:
Overpayments and Underpayments: For Part C (medical), LTI beneficiaries were often overpaid due to higher community risk factors. Conversely, for Part D (prescription drug), these beneficiaries were underpaid. CMS is addressing these discrepancies with payment adjustments.
What to Expect in November Payments: Plan sponsors will see adjustments in the November 2024 Monthly Membership Report (MMR), which will retroactively correct payments from January through October 2024. These corrections mean reduced payments overall for Part C overpayments and increased payments for Part D underpayments.
2. Delay in 2023 Final Part D Payment Adjustments
CMS completed the 2023 Part D payment reconciliation in September, which would typically have been included in the November payments. However, due to unforeseen circumstances, these payment adjustments are now scheduled to appear in the December 2024 payment cycle.
Impact on Sponsors: Plan sponsors should prepare for these changes and adjust their financial planning for the coming months to account for the December adjustments.
3. MARx System Migration to AWS and Data Accuracy
CMS successfully migrated the MARx system to Amazon Web Services (AWS) in July 2023. The shift to a cloud-based environment aims to improve the processing of enrollments, premiums, and payments. While the migration was successful, CMS has noted some inaccuracies in Part C and Part D risk scores due to data discrepancies:
Current Fixes in Progress: CMS is working to resolve these issues with software updates and data cleanups, prioritizing fixes based on the impact on payment accuracy.
What Sponsors Need to Know: CMS will notify plans as these cleanups are completed. If your plan has already submitted a trouble ticket, no further action is required. For broader issues affecting multiple organizations, CMS has created “master tickets” to streamline communication and prioritize fixes.
4. Sequestration Suspension and Adjustments
The sequestration suspension, a policy that temporarily halted Medicare payment cuts, has ended. However, CMS continues to honor sequestration suspensions for certain retroactive payment adjustments from May 2020 to March 2022. Here’s a quick breakdown of the impact:
Suspension Periods: Payments for May 2020 to March 2022 remain unaffected by sequestration. For April to June 2022, a 1% sequestration applies, and starting from July 2022 onward, a 2% sequestration will be applied.
Ongoing Adjustments: These rules will continue to apply to all retroactive payment adjustments, ensuring that sponsors receive accurate, policy-compliant payments.