Medicare Advantage overpayments are driving up Medicare premiums, depleting the Medicare Trust Fund and endangering Medicare’s sustainability. They are projected to cost taxpayers $1.2 trillion over the next ten years. This year alone, MedPAC, an independent Medicare advisory committee, projects Medicare Advantage overpayments to be $76 billion. The Centers for Medicare and Medicaid Services (CMS’) proposed Medicare Advantage rate for 2027–0.09 percent, not including a 2.45 percent upcoding increase based on historical trends–is a meaningful step towards getting payments to insurers in proper balance with spending in Traditional Medicare.
CMS appears serious in its desire to end MA overpayments and save taxpayers from wasteful spending. If finalized, CMS’ proposal would eliminate nearly $15.2 billion in overpayments based on “upcoding,” adding diagnosis codes to patient records that have no bearing on the treatments they receive. It would also reduce Medicare premiums, strengthen the Medicare Trust Fund and promote Medicare’s long-term viability.
CMS also proposed prohibiting insurers from adding diagnosis codes to patient records based on “chart reviews,” which are responsible for an additional $7.12 billion in overpayments. These reviews have no relationship to the care patients receive and should not lead to higher Medicare Advantage payments.
Insurers will do everything in their power to stop CMS from finalizing the 2027 MA rate proposal. The biggest MA insurers saw a big drop in their stock prices after CMS released the proposal. They will make all sorts of unsubstantiated claims and rally their enrollees with Medicare to support them.
Medicare Advantage insurers have been treating Medicare Advantage as a money machine, doing everything in their power to drive profits, too often at the expense of the health and lives of older and disabled Americans. Evidence of waste, fraud and abuse abounds. Even with billions of dollars in overpayments, insurers engage in widespread and persistent inappropriate delays and denials of care.
Congress should take the lead in eliminating the remaining $55 billion in annual overpayments. Those savings should cover the cost of an out-of-pocket cap in Traditional Medicare in order to make Traditional Medicare a meaningful choice for those for whom Medicare Advantage can’t meet their health care needs. We must protect people in Medicare Advantage who cannot get medically necessary care but who need catastrophic protection to enroll in Traditional Medicare.
Here’s more from Just Care:
- 2026: Five things to think about when choosing between Traditional Medicare and a Medicare Advantage plan
- Senator Grassley takes on UnitedHealth Medicare Advantage overpayments
- Medicare Advantage overpayments drive up Medicare premiums by $220 billion
- Congressional Budget Office finds $1 trillion in Medicare Advantage overpayments
- 2026: What are your Medicare premiums and out-of-pocket costs?
