To attenuate the effects of diagnostic coding by Medicare Advantage (MA) plans-a practice that increases plan payments-beginning in 2024 the Centers for Medicare and Medicaid Services adjusted its payment method to exclude some of the most differentially coded diagnoses from the risk-adjustment model used to calculate payment. MA payment is adjusted for enrollee health risk, which is determined using diagnoses submitted by MA plans, and MA plans report more diagnoses than would be reported for the same beneficiary enrolled in traditional Medicare. In this article, we assess how insurers responded to the new model (known as V28) by changing supplemental benefits, cost sharing, and enrollee premiums. We found a muted response in 2024 and 2025: 17-24 percent of the anticipated reduction in plan revenues was passed through to beneficiaries in the form of reduced benefits or increased cost sharing and premiums. Our finding that insurers largely absorbed V28's impact should be reassuring to policy makers contemplating further changes to more accurately pay MA plans.
Jacobs et al. (Sun,) studied this question.