JustCare

Tag: Overpayment

  • Medicare Advantage overpayments drive up Medicare premiums by $220 billion

    Medicare Advantage overpayments drive up Medicare premiums by $220 billion

    If Republicans are serious about eliminating government waste and protecting Medicare and Medicaid, they will end Medicare Advantage overpayments; in addition to strengthening Medicare, ending these overpayments would lower premiums for older adults and people with disabilities by $220 billion. Ending these overpayments would also add $550 billion to the Medicare Trust Fund.

    Ending government overpayments to Medicare Advantage insurers would put spending in Medicare Advantage on a level playing field with traditional Medicare. Ending overpayments would mean reducing already high MA insurer profits, not Medicare benefits. Reducing overpayments would strengthen the Medicare program.

    Here’s the data revealing the excessive costs of Medicare Advantage relative to traditional Medicare as well as the toll it is taking on the out-of-pocket health care costs of older Americans and people with disabilities and the Medicare Trust Fund. 

    Medicare overpays Medicare Advantage insurers

    • “The MA program has been expected to reduce Medicare spending since its inception—under the original incorporation of private plans in Medicare in 1985, payments to private plans were set at 95 percent of FFS payments—but private plans in the aggregate have never produced savings for Medicare, due to policies governing payment rates to MA plans that the Commission has found to be deeply flawed.”
    • According to the Medicare Payment Advisory Commission (MedPac), the program’s watchdog agency, Medicare Advantage plans cost taxpayers 20% more than traditional Medicare, amounting to a projected $84 billion in 2025.
    • The Committee for a Responsible Federal Budget reports that overpayments to MA plans will total  $1.2 trillion dollars over the next decade.
    • A report by the Wall Street Journal of roughly 2 billion diagnoses covering 84% of the nation’s MA enrollees from 2018-2021 found that MA insurers collected $50 billion in payments for diseases that doctors never diagnosed or treated.

    Medicare Advantage overpayments strips billions from the Medicare Trust Fund

    • The Committee for a Responsible Budget reports that eliminating the overpayments would save the Medicare Trust Fund $550 billion.

    Older adults and people with disabilities pay higher premiums because of Medicare Advantage

    Here’s more from Just Care:

  • Medicare adds $25+ billion to Medicare Advantage insurer coffers

    Medicare adds $25+ billion to Medicare Advantage insurer coffers

    The Centers for Medicare and Medicaid Services just announced the final rule regarding Medicare Advantage payments in 2026. Notwithstanding $83 billion in overpayments to MA insurers last year and  this year as well, the Trump Administration opted to increase insurer payments by $25+ billion in 2026.

    The payment increase of 5.06 percent is more than double the proposed increase of 2.23 percent in the Biden administration’s Advance Notice for MA payments in 2026. To be clear, increases in payments to Medicare Advantage insurers end up largely in the form of profits for the insurers, but they also allow the insurers to market “additional benefits” to people with Medicare.

    Beware: If you are enrolled in a Medicare Advantage plan and you are diagnosed with a complex and costly condition, you might not be able to see the specialists you want to see or use the hospitals you want to use. Moreover, you may face inappropriate delays and denials of care. If you want easy access to care, you should enroll in traditional Medicare.

    The serious problem with any payment increase is that the Medicare Advantage insurers are expected to be overpaid more than $1 trillion in the next 10 years. The result is that people with Medicare will be forced to pay $220 billion more in Medicare premiums over the next ten years. Medicare premiums are calculated based on program costs.

    What’s equally concerning is that the Medicare Trust Fund is projected to lose $550 billion over the next ten years as a result of government overpayments to insurers.

    The Centers for Medicare and Medicaid Services claims that the additional boost to MA insurers stems from higher costs in the last quarter of 2024.

    On a happier note, CMS is finalizing the third and last year of the proposed change to the Medicare Advantage “risk-adjustment model” for paying insurers that the Biden administration launched in 2024. The changes are intended to eliminate some of the gaming that insurers engage in to collect more from the government for their services than appropriate.

    Here’s more from Just Care:

  • Republicans look to end Medicare Advantage overpayments

    Republicans look to end Medicare Advantage overpayments

    More members of Congress on both sides of the aisle are looking at ways to end massive overpayments to Medicare Advantage insurers as a means of reducing federal spending, reports Peter Sullivan for Axios. Ending these overpayments should not affect people’s Medicare benefits, it would simply put spending in Medicare Advantage for each enrollee on a par with spending in Traditional Medicare. In sharp contrast, cutting Medicaid benefits would likely cause tens of millions of Americans to become uninsured or underinsured.

  • Senator Grassley takes on UnitedHealth Medicare Advantage overpayments

    Senator Grassley takes on UnitedHealth Medicare Advantage overpayments

    One moderate Republican Senator is concerned about the billions of dollars in government overpayments to UnitedHealth Medicare Advantage. Senator Chuck Grassley, who chairs the Senate Judiciary Committee, sent UnitedHealth CEO Andrew Witty a letter demanding that he release information on the company’s Medicare Advantage government billing practices.

    Countless reports and analyses show that the big Medicare Advantage insurers are overbilling Medicare to the tune of as much as $140 billion a year. The Medicare Payment Advisory Commission more conservatively estimates $83 billion in overpayments last year alone. But UnitedHealth won’t acknowledge that engaging nurses to add diagnoses to their enrollees’ medical records, even when the nurses have no clue what the diagnoses mean and perform no additional tests to determine additional diagnoses, is at the very least wrong, if not outright fraud.

    Senator Grassley wants UnitedHealth to provide Congress will lots of information about their billing practices. Grassley alleged apparent fraud, waste and abuse at UnitedHealth. In 2021, UnitedHealth allegedly benefited to the tune of $8.7 billion from overbilling the government.

    “Despite these oversight efforts, [Medicare Advantage Organizations] continue to defraud the American taxpayer, costing them billions of dollars a year … The apparent fraud, waste, and abuse at issue is simply unacceptable and harms not only Medicare beneficiaries, but also the American taxpayer,” Grassley wrote. Everyone with Medicare pays higher Part B premiums as a result of the overpayments, and the overpayments are eating into the Medicare Trust Fund.

    Grassley wants Congress to examine UnitedHealth’s training manuals, guidance documents, compliance program details, audit results and other documents.

    To be clear, UnitedHealth is the largest Medicare Advantage insurer and, consequently, likely to be reaping the greatest amount in overpayments. But, Humana, CVS Health and Anthem are also beneficiaries of these overpayments. According to the Congressional Budget Office, ending these overpayments would mean $1 trillion in savings over the next ten years.

    Here’s more from Just Care:

  • Congress could end overpayments to big insurers in Medicare Advantage and save $1 trillion, without gutting Medicaid

    Congress could end overpayments to big insurers in Medicare Advantage and save $1 trillion, without gutting Medicaid

    Instead of gutting Medicaid, Congress could save $1 trillion by ending hundreds of billions of dollars in overpayments to corporate health insurers in Medicare Advantage. A new report by Arnold Ventures details how our federal government could effectively end Medicare Advantage and other health care wasteful spending, save as much as $4 trillion, and not touch Medicaid spending.

    The Arnold Venture report spells out 10 ways for Congress to spend less and 10 ways to close tax loopholes that could pay for a permanent extension of the 2017 Tax Cuts and Jobs Act (TCJA). It proposes four smart ways to spend less on health care.

    Arnold Ventures recommends fixing the broken Medicare Advantage payment system that leads to as much as $140 billion a year in overpayments to corporate health insurers. Insurers use a variety of methods to maximize government payments, including “upcoding.” Insurers add diagnosis codes to enrollees’ medical records, which allows them to bill Medicare at higher rates for these enrollees, even when the insurers provide no additional services to these enrollees. The government could adjust down the rate it pays insurers to reduce overpayments significantly. This policy could save as much as $1 trillion over 10 years.

    If Congress ended overpayments to health insurers, the health insurers would claim that the government was “cutting” people’s Medicare benefits. But, the government would still be spending as much on enrollees in Medicare Advantage as in Traditional Medicare. The government would simply be reducing fraud and waste.

    Arnold Ventures recommends “site-neutral payments,” a policy that would require Medicare to pay the same amount for care in a hospital setting as for care in a physician’s office. For reasons that make little sense other than bolstering hospital coffers, today Medicare pays hospitals as much as four times more when a service is performed in a hospital setting. Hospitals have gamed the Medicare payment system by buying physicians’ practices; they can then legally charge the hospital outpatient rate for services, even though the services are identical to what they were before the hospital owned the practices.

    A few years ago, Congress limited the ability of hospitals to continue to game the Medicare payment system through purchases of physician practices. But, Congress grandfathered in the higher rates for hospital outpatient clinics established before the law passed. Ending this grandfathering provision alone would save $30 to $40 billion over ten years.

    Shockingly, the current Medicare payment system still creates an incentive for hospitals to steer patients to get care in a hospital setting, even when the service can be provided at far lower cost in a physicians’ office. Site-neutral payments could save as much as $157 billion over ten years. It would also lower out-of-pocket costs for people with Medicare.

    Arnold Ventures recommends penalizing pharmaceutical companies if they raise the price of their drugs above the rate of inflation for people in the commercial marketplace. The Inflation Reduction Act enacted this policy for Medicare and Medicaid but not for working people. This policy could save the federal government as much as $40 billion over 10 years.

    Arnold Ventures supports requiring Medicaid managed care plans to pay hospitals and nursing homes no more than the Medicare rate.

    Today, states can direct Medicaid managed care plans to pay hospitals and nursing homes at “average commercial rates.” Those rates are far higher than the Medicaid fee-for-service rates. They also incentivize hospitals with monopoly power to increase their rates, which are already twice Medicare rates. Medicaid managed care plans should not be allowed to pay hospitals and nursing homes more than the Medicare rates. This policy would save as much as $120 billion over 10 years.

    Here’s more from Just Care:

  • Medicare Advantage offerings change little in 2025

    Medicare Advantage offerings change little in 2025

    The Centers for Medicare and Medicaid Services just announced that the Medicare Advantage insurers are not raising costs or cutting benefits for enrollees in 2025. This should have been expected, given how handsomely the insurers profit from the Medicare Advantage program and how much they want to enroll more members to increase their profits further. But, for months, the insurers spouted lies about 2025 enrollee costs rising and benefits being cut in a vain attempt to secure higher payment rates and boost their already excessive Medicare payments.

    You can imagine the resources the insurers invested lobbying for rate increases, as the Centers for Medicare and Medicaid (CMS) was determining how much to increase their Medicare payment rate in 2025. Every year, insurers scare older adults and people with disabilities and lobby Congress heavily in order to pressure the government into overpaying them more. Thankfully, recognizing the $83 billion to $140 billion in overpayments to the MA insurers this year alone, CMS decided to raise MA insurer rates by 3.7 percent in 2025.

    It’s no surprise the rate increase–too much in the view of dozens of experts and advocates–did not lead to higher costs for MA enrollees or cuts in their “extra” benefits. People can still choose among a large number of MA plans with no additional monthly premiums. The MA insurers knew they had to keep upfront costs down and deliver extra benefits in order to increase their enrollee ranks and their profits. And, while that sounds good, it’s not possible for people to know whether the plan they choose will cover the care they need or offers a lot of nothing.

    The surprise will come to those people enrolled in MA plans who develop a serious condition and cannot see the specialists they want to see or can’t get approval for the care they need. Narrow provider networks and high denial rates continue to be the M.O. for many MA plans. The “extra” dental, vision and hearing benefits are the sweetener; little do enrollees know how hard it can be in many MA plans to find providers to deliver these benefits to them or how high their out-of-pocket costs can be even with some coverage.

    If you can get a low-cost Medicare supplemental insurance plan, seriously consider enrolling in Traditional Medicare, where you can choose your physicians and hospitals and get the care you need when you need it, without administrative hurdles. MA plans would be a fine option if: 1. The insurers did not have a strong financial incentive to avoid providing costly care to people with complex conditions; 2. Enrollees could meaningfully compare MA plans and avoid the bad actors; and 3. The government could kick out the worst actors. Sadly, that is not the case.

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  • 33 experts call on CMS to continue reining in Medicare Advantage overpayments

    33 experts call on CMS to continue reining in Medicare Advantage overpayments

    February 29, 2024

    The Honorable Xavier Becerra, Secretary, U.S. Department of Health and Human Services, Washington, DC

    The Honorable Chiquita Brooks-LaSure, Administrator, Centers for Medicare and Medicaid Services, Washington, DC

    Mr. Jonathan Blum, Principal Deputy Administrator and Chief Operating Officer, Centers for Medicare and Medicaid Services, Washington, DC

    Meena Seshamani, MD, Deputy Administrator and Director, Center for Medicare, Centers for Medicare and Medicaid Services, Washington, DC

    Dear Secretary Becerra, Administrator Brooks-LaSure, Principal Deputy Administrator Blum, and Deputy Administrator Seshamani:

    The undersigned share a commitment to protecting and enhancing the Medicare program for all beneficiaries. Medicare Advantage (MA) now accounts for more than half of all Medicare enrollment. However, the rapid growth in MA enrollment reflects the unequal financing of MA versus traditional Medicare (TM) rather than superior performance by MA plans. In 2024, MedPAC estimates that Medicare will overpay MA plans by 23%, at least $88 billion, due to upcoding of diagnoses and favorable selection alone. That amounts to a staggering $2,700 more per beneficiary than the same beneficiary would cost TM. This subsidization and the resulting overpayments to MA are wasteful, unfair, and create a set of perverse outcomes. By fundamentally distorting the marketplace, unequal financing strongly pushes beneficiaries to choose MA over traditional Medicare for the wrong reasons. We strongly believe in giving beneficiaries a fair, even-handed choice between MA and TM and advocate for improving both programs.

    At the state level, the rapid growth of MA is distorting the insurance markets for dual eligibles, retirees and commercially covered lives. MA firms, financed by subsidies, are consolidating plans and owned primary care practices then using their increased market power to extract higher commercial rates at a state and regional level.

    In 2023, CMS finalized positive steps that began to rein in some of the major contributors to excessive MA subsidization by revising the MA payment formula in the CY 2024 Rate Announcement and finalizing the MA Risk Adjustment Data Validation (RADV) Rule. The Rate Announcement included a three-year phase-in of the V28 HCC risk adjustment model, which began to close some of the more egregious loopholes for upcoding. We vigorously applauded this important step and at a minimum urge CMS to continue with the planned three-year implementation schedule. We also recommend CMS take further steps to improve choices for beneficiaries by adopting other measures to reduce distortions in the Medicare coverage marketplace.

    Background:

    MA Overpayments have grown tremendously

    The MA industry continues to drive ever-higher revenues primarily by increasing their “risk scores,” which MedPAC reports are the largest source of overpayments. Inflated risk scores increase monthly MA payments by an estimated 20.1 percent (or 14.2 percent after accounting for the 5.9 percent statutory minimum adjustment). Per CMS, average MA risk scores are increasing approximately at a rate of 5% per year when measured using the 2020 V24 Model risk score model but by 3.3% under the V28 2024 Model. Upcoding not only distorts choices between MA and TM but also unfairly penalizes MA plans that do not engage in equally aggressive upcoding because they do not receive the same “revenue enhancements” that enable higher profits while offering somewhat more generous benefits. As recently documented by Kronick et al, some large MA firms, such as United Healthcare, are much more aggressive coders and drive much higher Risk Scores than their competitors. One 2024 Advance Notice comment letter, using data provided by United Healthcare in their own 2022 study, demonstrated that they submitted twice as many diagnoses as were submitted for a matched FFS population, positioning them to obtain as much as 34% more revenue.

    Over the past year researchers have elucidated even more drivers of MA overpayments. Lieberman et al demonstrated that favorable selection contributes an additional 14% in overpayments. Ryan et al demonstrated that favorable selection increases benchmarks resulting in 4% additional revenue over and above the Lieberman numbers. MedPAC concluded that favorable selection adds 9% in more overpayments. When added to the 14% from Risk Scores, they estimate that total overpayments will be 23% in 2024. These overpayments are added into the calculation of Part B premiums that all Medicare beneficiaries pay. 58% of these payments are considered Part B. The Beneficiary premium is set to cover 25% of all Part B expenses meaning beneficiaries will pay 15% of any overpayments. So, $13 B in 2024 and $220 B over 10 years will come directly from beneficiaries’ pockets.

    Despite CMS spending $15 B in 2024 quality payments, and over $60 billion since the Affordable Care Act, MedPAC continues to point out that “it is impossible to evaluate the quality of care in Medicare Advantage.” However, studies have shown that MA members are directed into networks of lower rated hospitals, skilled nursing facilities, and home health agencies. MA beneficiaries in need of complex cancer care have less access to it and worse outcomes. Mortality rates differ widely across MA plans with one study showing that 10,000 deaths annually result from beneficiaries unknowingly enrolling in poor performing plans. Other studies show that patients with costly and complex conditions are much more apt to disenroll from MA Plans, presumably because they are concerned about getting the care they need. But for most people choosing MA is a one-way street. All but four states allow medical underwriting of people returning to Medigap. The result is Medigap prices that are unaffordable for all but the wealthy.

    Once again, MA acts as a driver of inequities. This reality is also a major driver of the favorable selection in MA. People in TM who know they have a serious medical condition are much less likely to move into MA.

    Total MA Subsidies are greater than just Overpayments

    MedPAC estimates compare MA payments to what the same population would cost CMS under traditional Medicare coverage. But the subsidies we provide to MA are even greater. First, the legislated county and quality Bonus payments which are in addition to traditional Medicare costs, according to MedPAC, increase benchmarks by 8% and revenue by about 5.2%. Second, MA benchmarks include the cost of the “induced utilization” Medicare incurs as a result of the higher service use by the 90% of beneficiaries that have supplemental insurance. These higher medical costs are passed through to MA Plans as revenue because they are included in the benchmark. They have been estimated to add 11% more revenue to MA firms. Total subsidies, which is the incremental revenue provided to MA Plans above what they say they can provide Medicare benefits for, are likely in the range of 40%, or $140 B annually and $2 T over 10 years.

    MA exposes beneficiaries to significant out-of-pocket costs and plans avoid decreasing cost sharing

    MA is not first dollar coverage for most members. According to a United Health study MA members on average still pay for about 11% of the cost of their medical services. Despite being given the revenue to cover this in their premium, and despite rapidly increasing rebates due to risk score gaming, MA plans have not used their subsidized payments to improve cost sharing for members, presumably because as MedPAC says:

    “. . . doing so could induce greater service use among enrollees, as occurs among FFS beneficiaries with first dollar Medigap coverage.” In short, they maintain significant member coinsurance to further their aim of liming the use of services. The most significant area of impact is the 20% and higher MA coinsurance for high cost drugs used to treat cancer and other serious illnesses. These limited benefits have the added effect of deterring high-cost paents from enrolling.

    MA plans receive $15 Billion in Star-Rating Bonuses that do not meaningfully reflect quality

    Contrary to the original intent to provide incentives and reward exemplary performance, the CMS Quality Bonus Program (QBP) and the attendant Star Ratings neither provide beneficiaries with meaningful quality information nor reward plans for excellent performance. Indeed, the disproportionate share of 4-star and4.5-star plans reflect the “Lake Wobegon Effect”, where all plans are above average —not quality, as MedPAC has extensively documented.

    In line with the MedPAC recommendations for completely revamping the QBP, MA quality accountability should move away from overreliance on performance measurement by moving to a quality improvement approach. CMS and Medicare have been and can be even more of a force for the proactive improvement of the quality of health care for beneficiaries and, indeed, for all Americans. Unfortunately, Medicare’s longstanding, positive influence on health care quality has been compromised by various statutory mandates for implementation of pay-for-performance programs (P4P) throughout Medicare. Numerous quality experts have now concluded that two decades of providing financial rewards and penalties for specified, measured performance has failed to improve the quality-of-care provided to Medicare beneficiaries but has come with high direct and opportunity costs as well as added burden for MA plans and providers. As argued by Berenson and Skopec recently, it is time for a fundamental reconsideration of the reliance on measurement and P4P as the primary approaches in Medicare for assuring accountability for the quality-of-care provided to beneficiaries.

    Quality measurement can identify exemplary and substandard performance but cannot accurately distinguish gradations of acceptable care – the situation applicable to the large majority of MA plans. To achieve better quality across MA, Medicare payments should reward delivery organizations that achieve exceptional quality-of-care performance. Likewise, it makes sense to avoid rewarding, and, indeed, in some cases penalize organizations that perform poorly. However, penalties and rewards systems must include consideration of the particular challenges of organizations addressing the needs of especially challenged populations. MA plans with demonstrably substandard performance on quality measures should be subject to direct sanctions resulting from more vigilant program oversight by CMS. Further, program oversight should more assertively assure MA plan administrative compliance with program requirements rather than assuming that the QBP will provide the necessary discipline for MA plans to adhere to program expectations and requirements. Given the apparent success of the CMMI funded “Partnership-for-Patients” in the last decade and the more recent success of the Million Hearts trial, MA plans and their contracted and employed providers should be expected to participate actively in provider-payer collaboratives. MA plans participating in these collaboratives would be expected to provide financial support for activities required by the particular QI model, often recouping their investment in improved quality, with decreased spending.

    We believe that CMS should support a major project, perhaps through a National Academy of Sciences, Engineering, and Medicine consensus study, to review and recommend revision of the current reliance on P4P across Medicare programs and consider a shift in emphasis to adoption of quality improvement projects applicable to the majority of providers and MA plans. In considering revision of the measurement system, the expert study should consider the feasibility of shifting the focus to reflect state-of-the-art inclusion of patient ratings, accurate assessment of clinical outcomes, and a focus on what truly matters to patients, families, and communities. In considering adoption of quality improvement initiatives, featuring multi-party collaboratives, the study should specify the appropriate, complementary roles of MA insurers and providers working together to achieve measured improvement and align the approach with that of their ACO programs.

    MA grows because of inequitable subsidies, not better care

    MA proponents cite their ability to deliver care for less as the basis for their success. There is a small number of MA plans that have a history of innovative care practices designed to improve outcomes for their members. Many of these are the descendants of the original group model HMOs that were part of the early Medicare privatization pilots. There are also thousands of employees in MA plans who are deeply committed to improving the lives and health of their members. But increasing revenue in MA is much easier than improving care, and driving revenue has replaced improving care as the central focus of the MA industry. It is the large subsidies – $2,700 per beneficiary – that are the source of the improved benefits and lower premiums, not savings from better care.

    MA’s rapid growth results from a very unlevel playing field. TM does not receive subsidies to provide the limited Dental, Vision or Hearing coverage MA plans offer. Most significantly, TM does not limit beneficiaries’ financial exposure because the program’s 1960’s-era indemnity benefit package (which we believe needs to be modernized) has no out-of-pocket cap and a coinsurance rate averaging 16%. While people can buy supplemental insurance to eliminate this risk, many, especially beneficiaries with lower income, cannot afford hundreds of dollars in monthly premiums to purchase Medigap plans. As a result of direct subsidies, MedPAC estimates that 99 percent of beneficiaries have the opportunity to purchase zero-premium MA/PD plans that offer prescription drug coverage and somewhat enhanced benefits. In assessing whether the growth of MA enrollment constitutes a reasonable proxy for the quality of its plans, imagine two ice cream trucks where one charges a reasonable price while the other gives ice cream away for free. The higher market share of the second results from free ice cream, not better ice cream!

    But, as described above, zero premium does not mean zero cost. MA members still face significant OOP expenses. If they have significant illness these can mount up to the average OOP cap of $5,000 or even beyond in some Plans up to the $8,000 – $13,000 maximum in-network and Out of Network OOP caps that CMS allows. And as noted this is most meaningful for patients who need high cost part B drugs for treatment of cancer and other serious illnesses. This is why MA members continue to cite the cost of services as reasons for not obtaining care.

    Massively subsidizing Medicare Advantage leads to perverse policy outcomes

    Assessing aspects of Medicare and MA should not be done in isolation. A view considering the greater impacts on our healthcare system reveals unintended—and highly undesirable— policy outcomes that one would never seek directly.

    1. Increasing numbers of medically and financially vulnerable individuals are driven into limited networks of lower quality providers and then subjected to administrative procedures designed to constrain access to needed care, which threaten the health and financial security of beneficiaries.

    2. Because lower income individuals and, disproportionately, people of color, are most in need of the highly subsidized MA benefits, we are spending more to push historically marginalized populations into lower quality care, thereby increasing the healthcare inequities the Administration is rightfully committed to eliminating.

    3. Inequitable MA subsidies have resulted in a vast administrative preauthorization and claims denial superstructure that permeates the delivery system delaying and distorting care delivery, denying payment to providers, increasing administrative complexity and costs for all segments of the system.

    4. Overpaying MA plans funds the acquisition of primary care practices by for-profit firms driven by financial results not health outcomes.

    5. Overpaying MA increases total Medicare spending, threatens the sustainability of Medicare itself, and is destabilizing traditional Medicare through unfavorable selection and the decline in beneficiaries making fee-for-service spending no longer a useful benchmark that is representative of the Medicare population as a whole.

    6. We will take $15 billion in 2024 and $210 B over the next 10 years from the pockets of seniors and people with disabilities via higher Part B premium to make these overpayments to MA firms.

    Recommendations:

    Use Current administrative authorities to rein in MA subsidies

    We encourage HHS and CMS to act using their current authorities to create a more level playing field for Medicare beneficiaries while also buttressing the financial sustainability of the Medicare program. Many opportunities to reduce MA overpayments remain that can be acted upon now:

    • Connue without interrupon the three-year phase-in of the V28 2024 HCC risk adjustment system. While Plans argue that reducing overpayments will require reducon in benefits, research findings show that the effects would be modest, at best.

    • Further revise the HCC model considering approaches as recently recommended by Kronick et al.

    • Explore other approaches using modern stascal and ML techniques to develop an alternave to HCC that could improve accuracy especially for lower cost patients.

    • Increase the Coding Intensity Factor adjustment to MA payment, as has been long recommended by MedPAC, above the 5.9% statutory minimum, and customize it to firms that are very high coders.

    • Explore approaches to creating a new risk adjustment system that is resistant to gaming. As examples, alternative approaches could include extended beneficiary surveys, MA plan/contract-specific coding intensity factors, reducing MA plan payments for those enrollees that recently switched to MA based on the prior year’s risk-adjusted spending.

    • Eliminate contractual arrangements and incentive systems that MA plans use to reward providers for adding more diagnostic codes that result in higher premiums including percentage of premium risk contracts.

    • Further revise the way CMS pays MA plans including changes to the benchmarking system to address the multiple documented sources of overpayments such as favorable risk selection.

    • Revise the QBP to accurately reflect local MA plan information rather than aggregate findings and incorporate corrective action and sanctions for MA plans with 1-, 2- or 3-star ratings. Large employers, including state governments, need local data to understand the performance of the Plan retirees are actually entering. Only having performance at the national level can cloud local or regional concerns.

    • CMS should support a major project, perhaps through a National Academy of Sciences, Engineering, and Medicine consensus study, to review and recommend revision of the current reliance on P4P in MA and across Medicare programs.

    • Assure the long-term viability of the Accountable Care Organization movement, drawing lessons from experience to date

    • Explore a CMMI model that would combine an improved traditional Medicare benefit with the use of ACOs and other alternative payment models to evaluate potential to decrease CMS expenditures by decreasing migration into MA

    Work directly with Congress to create a level playing field for real beneficiary choice:

    We believe that the traditional Medicare benefit package should be modernized. An optimal approach would offset the costs of an improved traditional Medicare benefit package with some of the savings from reduced MA subsidies. By making traditional Medicare a viable alternative for many who believe they cannot afford it today, these changes would be an important step towards meeting the Administration’s goal of advancing health equity. The cost of these improved benefits would flow into MA Benchmarks thereby blunting the MA lobby’s contention that reducing subsidies would require a reduction in benefits. In addition, work with Congress to revise the MA quality bonus program (QBP) and CMS’s approach to MA county adjustments to make them both budget neutral, as is required for all other Medicare bonus payments.

    We want to thank you and your dedicated and highly professional teams for the outstanding efforts to date to improve coverage and care for all. Feel free to contact us at any time if we can be of any assistance.

    Sincerely,

    Scot Armstrong, Former President & CEO, Group Health Cooperative, Former Commissioner, Medicare Payment Advisory Commission

    Richard J. Baron, MD, CEO and President, ABIM Foundaon, Former Director, Seamless Care Division, CMMI, Centers for Medicare and Medicaid Services (CMS)

    Elaine Batchlor, MD, CEO, MLK Community Healthcare, Los Angeles, California

    Robert Berenson, MD, Instute Fellow, Urban Institute, Former Acting Deputy Administrator, CMS, Former Vice-chair, MedPAC

    Susan E. Birch, MBA, BSN, RN, Director, Washington State Health Care Authority

    Donald Berwick, MD,President Emeritus and Senior Fellow, Institute for Healthcare Improvement (IHI), Former Administrator, CMS

    Maureen Bisognano, President Emerita and Senior Fellow, Institute for Healthcare Improvement

    Lawrence Casalino, M.D., Ph.D. Professor, Emeritus of Populaon Health. Livingston Farrand Professor of Public Health, (2008-2022), Chief, Division of Health Policy and Economics, (2008-2021), Weill Cornell Medical College

    Tina Castanares, MD, Principal, Castanares Consulting, Joseph Damore, LFACHE, President and CEO, Damore Health Advisors

    Andrea M. Ducas, MPH, Vice President, Health Policy, Center for American Progress

    Michael Eliastam MD, MPP, FACP

    Ezekiel J. Emanuel, M.D., Ph.D., Levy University Professor, Vice Provost for Global Initiatives, Co-Director, Healthcare Transformation Institute, Perelman School of Medicine and The Wharton School, University of Pennsylvania, Judy Feder, Professor and former Dean, McCourt School of Public Policy, Georgetown University

    Elliott Fisher, MD, MPH, Professor of Medicine and Health Policy, The Dartmouth Institute, Senior Fellow, IHI

    Lisa K. Fitzpatrick, M.D., MPR, MPA, CEO Grapevine Health, Former Chief Medical Officer, Medicaid, Washington, DC

    Emily R. Gee, PhD, Senior Vice-President, Inclusive Growth, Center for American Progress

    Richard J. Gilfillan, MD, Independent Consultant, Former Deputy Administrator, CMS, Former Director, CMMI, Former CEO, Trinity Health

    Merrill Goozner, Editor & Publisher of GoozNews.substack.com, Former Editor, Modern Healthcare

    Tia Goss-Sawhney DrPH, FSA, MAAA, Chief Operating Officer, Highlight Health

    Paul Ginsburg, PhD, Senior Fellow, USC Schaeffer Center, Professor, USC Price School of Public Policy, Nonresident Senior Fellow, Brookings Inst., Former Vice-Chair, MedPAC

    Frederick Isasi JD, MPHl Former Executive Director, Families USA

    Glenn Hackbarth, Former Chair, MedPAC, Former Deputy Administrator CMS

    Gary S. Kaplan MD, FACP, FACPE, CEO Emeritus, Virginia Mason Health System, Virginia Mason Franciscan Health

    Steve Lieberman, President, Lieberman Consulting Inc., Senior Non-Resident Fellow – USC Schaeffer Center, Non-Resident Fellow – Brookings Institution

    Peter Lee, Senior Scholar, Stanford University, CERC, Former Executive Director, Covered California, Former Deputy Director, Center for Medicare and Medicaid Innovation, CMS

    Michael R. McGarvey, MD, Chair, Board of Directors, New York County Health Services Review Organization

    John C (Jack) Lewin, MD, Administrator, Hawaii State Health Planning and Development. Senior Advisor to Governor Green, Honolulu, Hawaii, Founder and CEO, Lewin and Associates LLC, New York, NY

    Arnold Milstein, MD, Medical Director, Purchasers Business Group on Health, Clinical Excellence Research Center Director, Stanford University Former Commissioner, MedPAC

    Roy Schutzengel, MD, MBA, Former Medical Director, Integrated Systems of Care Division, California Department of Health Care Services

    Cary Sennett, MD, PhD, Principal, The Sennett Consulting Group, Former Executive Vice President, National Committee on Quality Assurance

    Bruce Vladeck, PhD, Former Administrator, Healthcare Financing Administration, U.S. Department of Health and Human Services

    Judy Zerzan-Thul, MD, MPH, Chief Medical Officer, Washington State Health Care Authority, Former Chief Medical Officer,Colorado Dept of Health Care Policy and Financing

     

  • How will the administration address Medicare Advantage overpayments in 2025?

    How will the administration address Medicare Advantage overpayments in 2025?

    When the Medicare Advantage program was enacted, health insurers claimed it would reduce Medicare spending. But, Medicare Advantage has always cost significantly more per person than Traditional Medicare, largely because of a defective payment system that the insurance industry has been able to game. In an election year, will the administration finalize its proposed rate increase for 2025 as is or succumb to pressures from the insurers that will enhance their profits while weakening Medicare?

    The Centers for Medicare and Medicaid Services (CMS) says that payments to MA plans will increase 3.7 percent ($16 billion) from 2024 to 2025. The insurance industry falsely claims CMS’ proposed adjustments to a defective coding system would result in a 0.2% pay cut in 2025 because it doesn’t factor in the 3.8 percent increase it will receive from gaming the payment system. The defective payment system leads to $88 billion in overpayments to insurers offering Medicare Advantage this year alone and rises each year.

    The insurers are also posturing. They claim that MA enrollees are using more health care services, so the proposed rule could lead to higher costs and fewer benefits. Insurers can always claim that a payment rule could lead to cuts; the additional benefits the insurers offer are within their control, which is the problem. But, there is every reason to believe insurers will not cut benefits next year, as the insurers are profiting handsomely from MA and want to increase enrollment in MA. Last year, CMS still caved and gave the insurers a 3.3 percent rate increase, after proposing a 1 percent increase.

    If CMS is listening to the Medicare Payment Advisory Commission, experts, advocates and other independent advisors, it must hold the line on its proposed rate for 2025 or reduce it further, in order to protect the Medicare Trust Fund and the Medicare program. Unfortunately, the rule does not stop the insurers’ “upcoding” that results in significantly higher payments for enrollees with multiple diagnostic codes, who do not receive additional care. Moreover, CMS continues to pay MA plans based on the costs of care for Traditional Medicare enrollees, even though Traditional Medicare enrollees tend to be significantly less healthy, leading to an additional 14 percent higher MA payments.

    Advocacy groups submitted more than 25,000 comments opposing any rate increase and suggesting further cuts are in order. Scores of independent experts submitted similar comments. The insurers were able to get 13,000 people to offer a bunch of pablum to CMS about the proposed rate for 2025. CMS will finalize the 2025 Medicare Advantage payment rate rule on April 1.

    CMS should follow the advice of independent experts:

    • Create a new payment system that “is resistant to gaming.”
    • Don’t allow the insurers to benefit from the fact that traditional Medicare enrollees are less healthy than MA enrollees.
    • Advocate for Congress to strengthen traditional Medicare so that it is on a more level playing field with MA.

    If CMS does not stick to its guns on the rate increase, people can expect to see Medicare premiums and out-of-pocket costs increase even further as traditional Medicare fades away and does not impose any competitive pressure on the MA plans. Without traditional Medicare in the mix, don’t be surprised when Medicare Advantage benefits and networks shrink significantly and enrollees’ costs rise.

    Here’s more from Just Care:

  • With Medicare Advantage, less for you is always more for insurers

    With Medicare Advantage, less for you is always more for insurers

    David Wainer reports for the Wall Street Journal that people in Medicare Advantage plans–coverage through corporate health insurers–are likely to see fewer extra benefits next year. That’s no surprise, nor will it be a surprise for Wall Street when everyone enrolled in Medicare Advantage faces much higher out-of-pocket costs than they do today and no longer have government-administered traditional Medicare as an option. If the administration and Congress do not swiftly rein in tens of billions in annual overpayments to insurers offering Medicare Advantage, the only question is when people will appreciate that Medicare Advantage is a helluva disadvantage.

    About 32 million people are  now enrolled in a Medicare Advantage plan, just under half the Medicare population. People are swayed by the ads offering “dental” benefits and free gym memberships and the seemingly trustworthy insurance agents steering them towards Medicare Advantage. Older adults and people with disabilities also can’t afford or don’t want to spend money on supplemental coverage in traditional Medicare that picks up most out-of-pocket costs, when they would like to believe they won’t be needing much health care. Since at any given time the vast majority of people don’t need a lot of health care, it has yet to sink in for them that insurers could take advantage of them if they are in a Medicare Advantage plan.

    Wainer says that insurers now need to address greater health care spending and lower government payments to appease Wall Street and deliver handsome shareholder returns. What’s concerning is that the bad actor Medicare Advantage plans–and we don’t know how many or which ones those are, but they appear to be numerous–are still raking in billions of dollars in profits from Medicare Advantage that they seem not prepared to spend on their enrollees’ medically necessary care. What kind of a health care coverage model is that?

    Wainer says that “if the current trends continue, plans will have to be more cautious in their offerings going forward.” Really? Truth is that people need to be more cautious about enrolling in a Medicare Advantage plan going forward. Medicare Advantage plan offerings in some, if not most, cases are concerning for people who need care–including restricted access to high quality doctors and hospitals, administrative hurdles and delays getting urgent care, inappropriate denials of care and high out-of-pocket costs.

    Even with tens of billions in annual overpayments, Medicare Advantage plans delay and deny care inappropriately. And, many restrict access to high quality providers. Some have such high mortality rates that one group of academics found that the government could save tens of thousands of lives a year if it ended contracts with those Medicare Advantage plans.

    If all goes well, people will start to see that Medicare Advantage is no free lunch when they most need care. In fact, it can easily cost people twice as much as what they’d spend on care in Traditional Medicare with supplemental coverage, with huge delays and obstacles to getting care.

    Wainer is correct that threats from insurers about cutting extra benefits in Medicare Advantage are designed to pressure the Biden administration to continue to overpay them. The administration is currently deciding Medicare Advantage rates for 2025. Beware: If CMS steers away from its current course of reining in Medicare Advantage overpayments, you will pay ever higher Medicare premiums and, before long, face signficantly higher Medicare costs.

    Here’s more from Just Care:

  • Will the Biden administration rein in Medicare Advantage overpayments in 2025?

    Will the Biden administration rein in Medicare Advantage overpayments in 2025?

    Each year, the Centers for Medicare and Medicaid Services (CMS) proposes the payment rate for insurers offering Medicare Advantage plans for the following year. Right now, payments to Medicare Advantage plans are projected to be $88 billion more than they should be, driving up Medicare premiums and threatening Medicare’s long-term sustainability. Will the Biden administration rein in Medicare Advantage payments?

    Excessive Medicare Advantage payments take a dangerous toll on the Medicare Trust Fund, rapidly eating into it and threatening its solvency. Moreover, excessive Medicare Advantage payments drive up people’s Medicare premiums. According to the Committee for a Responsible Federal Budget, people with Medicare will spend $260 billion more in Medicare premiums in the ten years between 2023 and 2033 than they would have if CMS stopped overpaying Medicare Advantage plans.

    In addition, Medicare Advantage overpayments are likely to lead to the death of traditional Medicare, the government administered alternative to Medicare Advantage. The overpayments enable the insurers offering Medicare Advantage to  lure people away from Traditional Medicare through offers of dental and hearing benefits.

    Last week, CMS proposed a continuation of its Medicare Advantage rate proposal from last year, which would result in about a 0.2 percent decrease in Medicare Advantage payments for 2025. CMS says it will also result in a 2.45 percent reduction in revenue.

    Overall, for other reasons, their revenue will increase about 3.7 percent. CMS is changing the way it determines whether it will pay more for enrollees who have a variety of different health conditions.

    The insurers, of course, are already starting to say that the proposed rate will hurt their bottom line. But, it should not affect people’s Medicare Advantage benefits because the MA plans will still be overpaid tens of billions of dollars.

    Here’s more from Just Care: