Medicare Advantage risk scores continue to rise, inflating payments to the private plans that far exceed their actual costs, staff for a Congressional advisory commission warned members Friday.

The Centers for Medicare & Medicaid Services uses risk scores, based on patient demographics and their needs, to establish payments to plans during each bid season. 

Medicare Payment Advisory Commission staff highlighted disparities between payments to MA and funding for traditional Medicare in a status update to MedPAC commissioners in Washington Friday.

“Overall, we estimate that coding and [patient] selection will cause MA payments to be 23% above Fee-For-Service spending in 2024,” said analyst Luis Serna. “That difference translates into additional MA payments that are a projected $88 million.”

More than half of that increased cost was attributed to chart reviews that allow for additional codes to be added after a patient is treated, a process that is not used in traditional Medicare. Analyst Andy Johnson, PhD, said plans have an incentive to drive codes higher, as prior risk fuels future years’ payment rates.

The presentation of a 75-page chapter on Medicare Advantage came across as an indictment of insurers’ financial gains in recent years, with no clear explanation as to whether the plans were inflating risk beyond what actually required care to pocket the excess pay, or whether they’d found ways to eliminate unnecessary procedures and interventions.

One study Johnson cited showed a 1% average increase in risk score per year; for 2024, he projected plans risk scores would be 20.1% higher than if the same patients had been enrolled in Fee-For-Service plans.

He said those higher payments also would increase premiums for all Medicare beneficiaries, whether covered by an MA plan or not, at an estimated total of about $13 billion for 2024.

Beneficiaries have flocked to Medicare Advantage over the last decade, especially, with national penetration surpassing 52% in 2023. But plans have come under increasing fire for denying access to care or requiring pre-authorization for many kinds of services, including skilled nursing.

An ‘attack’ on plans

Commissioner Brian Miller, MD, of Johns Hopkins likened the MedPAC staff report to “attack journalism” and called it politicized; he asked for a more balanced report that includes some of the “good things” that plans are providing to their members. 

“In the time I’ve been here, there’s been growing momentum of concern, and I can say that personally as a taxpayer,” said commissioner Betty Rambur, PhD, RN, and a nursing professor at the University of Rhode Island. ”The good thing about it is people can have a less expensive premium and a gym membership and things like that… but the concern I feel very deeply is the magnitude of the spending is a serious difference and those beneficiaries get less services … but maybe less services are better.”

Other members decried a lack of visibility into MA trends, such as denial rates and reversals on appeal and broker payment strategies that drive patients to such plans. They asked MedPAC staff to dive deeper into those.

A group of Senators has asked the Centers for Medicare & Medicaid Services to collect more data on denials and to make it transparent for consumers selecting plans. CMS, meanwhile, has yet to finalize a prior authorization rule it first proposed in December 2022.

MedPAC Chair Michael Chernew, a Harvard healthcare policy expert, said the commission would hear more data from staff in June about prior authorization and other operational impacts, including those on different provider segments, at its June meeting. He defended the staff’s status report as one section of a larger body of ongoing work, noting that his own research had shown MA plans to deliver better outcomes in some cases than traditional Medicare.

“The Commission strongly supports inclusion of private plans in Medicare,” Chernew said. “It’s really an issue of how we balance. … There are added benefits and there is higher payment, which we acknowledged and are concerned about. That’s at some level the core tradeoff.”