Officials at the Centers for Medicare and Medicaid Services(CMS) are trying to squeeze what they say is unjustified riskscore inflation out of the Medicare Advantage program in 2019.

CMS officials have included a 2.26 percent risk score"normalization" factor in their advance notice for theMedicare Advantage program bidding process for 2019.

Related: Healthcare.gov team drafts invitations for 2019plans

CMS officials say they think the "effective growth rate," orincrease in the underlying cost of care, will rise to 4.35 percentfor 2019, from the growth rate of 2.8 percent assumed for thepurposes of the bidding process for 2018.

But the addition of the risk score normalization factor couldreduce the "expected average change in revenue" to 1.84 percent,from 2.75 percent for 2018.

CMS could end up facing pressure from health insurers to reduceor eliminate the normalization factor.

Medicare Advantage basics

The oldest Medicare program, Medicare Part A, pays enrollees'hospital bills. The next oldest program, Medicare Part B, pays fordoctors and outpatient services.

The Medicare Advantage program, which is the biggest MedicarePart C program, gives private insurers a chance to offer Medicareenrollees an alternative to what CMS calls "Original Medicare," ortraditional Medicare program coverage.

The typical Medicare Advantage plan uses a managed care networkto help hold down the cost of care. In return, the plan may offerlower premiums, lower out-of-pocket costs and more benefits thanenrollees get through Original Medicare.

Medicare Advantage risk scores

CMS uses a risk-adjustment program to try to even out theoverall level of enrollee health risk each Medicare Advantage planissuer assumes. CMS bases the payment adjustments for the programon risk scores based on various factors that might make an enrolleemore or less healthy.

CMS believes that, because the Medicare Advantage plan issuerwant to optimize risk-adjustment results, they are working harderto put risk-related information in patients' records.

The extra effort issuers put into documenting Medicare Advantageenrollees' health problems means that Medicare Advantage enrollees'risk scores are creeping up, and are growing less easy to comparewith Original Medicare enrollees' risk scores, according to CMSofficials.

Even if the Medicare Advantage plan enrollees' risk scoresreflect actual health problems, CMS still wants to adjust theMedicare Advantage plan risk scores, so that risk scores mean thesame thing for all Medicare enrollees, officials said today, in aprogram parameters announcement.

The advance notice and the announcement come out early in thebargaining process CMS and the plan issuers use to set plan rates.The parameters included in the advance notice often change as theyear goes on.

Industry reaction

Marilyn Tavenner, the president of America'sHealth Insurance Plans (AHIP), said in a statement that 363Republicans and Democrats in Congress recently signed a letterexpressing strong support for the Medicare Advantage program.

"AHIP will review the advance rate notice carefully to ensurethe Medicare Advantage program is protected from policies thatcould impact the long-term stability of the program and seniors’access to quality, affordable health care that meets theirindividual needs," Tavenner said.

Resources

A copy of the advance notice announcement is here.

Links to many more documents related to the biddingprocess are available here.