Work

Exposure to the new Medicare Advantage risk adjustment model varies across insurers

Year: 2026

Type: article

Abstract: Introduction: Medicare Advantage plan payment depends on the health of enrolled patients. As a result, the extent to which beneficiary clinical severity is documented administratively-known as coding intensity-is greater in Medicare Advantage (MA) than in traditional Medicare, which inflates payment to plans. In 2024, the Centers for Medicare and Medicaid Services began phasing in a new risk adjustment model intended to reduce the susceptibility of MA payments to higher coding intensity. Methods: Using 2021 data, we compared average MA contract risk scores under the new model and the old model. Results: Risk scores were 5.8% lower under the new risk adjustment model. Differences between average risks scores under the new and old model varied substantially across contracts and insurers. For example, 1 large insurer's risk scores were essentially unchanged across models while another large insurer's risk score was 18% lower under the new model. Contracts with higher estimated coding intensity had greater exposure to the new risk adjustment model. Conclusion: Our results suggest that the new risk adjustment model will likely reduce MA payments due to enhanced coding intensity, with these reductions appropriately targeting insurers that code more intensely.

Source: Health Affairs Scholar

DOI: 10.1093/haschl/qxag092

Authors: Jeffrey Marr, Andrew M Ryan, David J Meyers

Institution: Brown University

Language: English

Topic: Healthcare Policy and Management

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Good health and well-being

Open Access status: gold

Estimated APC paid: $3,150