New MA Risk-Adjustment Model Had Limited Effects On Premiums And Cost Sharing, Small Effects On Benefit Generosity.

Beginning in 2024, the Centers for Medicare and Medicaid Services implemented version 28 of the Medicare Advantage (MA) risk-adjustment algorithm, which altered payments to MA plans. This article examines how these risk-adjustment changes, which were expected to reduce payments to most plans, affected plan premiums, cost sharing, and benefits. Our findings suggest that version 28 did not significantly affect plan premiums or most forms of cost sharing, but it was associated with less than 1-percentage-point reductions in the availability of some supplemental benefits. These findings suggest that moderate payment reductions to MA plans are unlikely to substantially reduce benefit generosity. However, the value of forgone benefits to beneficiaries and the potential impact of larger cuts remain uncertain. Policy makers must weigh whether the fiscal savings resulting from reduced payments justify any potential declines in benefit generosity.