House Speaker Kevin McCarthy (R-Calif.) recently said he wanted to “eliminate waste, wherever it is.” That’s great news since MedPAC, the agency that oversees Medicare spending and quality, has new information exposing hundreds of billions of dollars of waste in Medicare Advantage that requires congressional attention. Could there be bipartisan action to eliminate this waste?
The Medicare Advantage program, which is administered by corporate health insurers, was designed with the goal of improving quality and reducing costs in Medicare. Nearly 20 years later, Medicare Advantage plans have yet to release complete and accurate data to assess the quality of care they provide and have always cost more per enrollee than Traditional Medicare. Moreover, the HHS Office of the Inspector General has found that some Medicare Advantage plans engage in widespread and persistent inappropriate delays and denials of care and coverage, endangering the health and well-being of their enrollees.
Medicare Advantage is plagued with waste and quality concerns. MedPAC pegs Medicare Advantage overpayments in 2022 and 2023 to total $44 billion relative to Traditional Medicare. Based on research finding that people enrolled in Medicare Advantage are significantly healthier than people in Traditional Medicare, some experts estimate far higher overpayments, totaling $600 billion over the next eight years.
The Centers for Medicare and Medicaid Services (CMS), which oversees Medicare Advantage, has recently taken some bold steps to address quality and cost concerns in Medicare Advantage. It is proposing to raise Medicare Advantage rates 1 percent in 2024; this year, CMS gave Medicare Advantage plans an 8.5 percent increase. And, CMS has announced that it plans to claw back a projected $4.7 billion in Medicare Advantage overpayments for the ten-year period beginning in 2018, based on erroneous and fraudulent billing.
Still, CMS has left billions on the table, and it is not at all clear that it will succeed at recouping these overpayments. CMS has waived its right to collect some $2 billion in overpayments for the period between 2011 and 2017. CMS is years from completing requisite audits on which to base the money it intends to claw back. If the past is any indicator, CMS lacks the tools, the resources, and the political will to drive meaningful accountability from the Medicare Advantage plans and protect the Medicare Trust Fund.
Moreover, the Medicare Advantage plans have no interest in returning even a small fraction of their billions in unearned profits. They are suggesting they will take the government to court rather than return the overpayments. On top of that, they are threatening to cut benefits and raise costs for enrollees.
On quality of care in Medicare Advantage, CMS has taken some important steps, particularly to streamline the prior authorization process. Medicare Advantage prior authorization policies have imposed huge costs on hospitals and physicians, as well as older adults and people with disabilities. Unjustified and burdensome prior authorization policies threaten enrollees’ health and well-being, sometimes leading to their premature death.
CMShas not identified the worst actors in Medicare Advantage, let alone canceled the bad actors’ contracts. CMS’ authority to ensure good access to care for enrollees and protect them from bad actors is highly circumscribed.
The most fundamental Medicare Advantage fixes lie with Congress. The biggest fix would be to address the “risk-adjusted” payment system, which is responsible for the wasteful spending and questionable quality of care. This payment system entrusts the Medicare Advantage plans with adding diagnosis codes to enrollee medical records to indicate their health status, rather than leaving it to the government to determine the cost of caring for the Medicare Advantage plans’ enrollees based on their encounters with the health care system.
Because of the authority the government affords Medicare Advantage plans to add diagnosis codes to patient records, the bad Medicare Advantage plan actors can make many of their enrollees appear a lot sicker than they are in order to inflate their revenues, even when these health plans spend no additional money on these enrollees for medical services. The fixed amount the government pays Medicare Advantage plans for each enrollee is wholly divorced from the cost of services they deliver. Consequently, the government also provides the Medicare Advantage plans with a powerful incentive to withhold care in order to maximize profits.
Kevin McCarthy and his fellow Republicans have said they have no intention of cutting Medicare in their efforts to reduce waste. We can do better and improve Medicare benefits, while strengthening the Medicare Trust Fund, if we push for changes in legislation to eliminate the massive waste and root out the bad actors in Medicare Advantage. We would make available hundreds of billions of dollars to rein in costs and help ensure everyone with Medicare is able to get the care they need.
Dr. Susan Rogers, immediate past president of Physicians for a National Health Program, is a retired general internist. She trained and spent most of her career at Stroger Hospital, formerly Cook County Hospital, in Chicago, which is a large publicly funded safety net hospital. She remains an Assistant Professor of Medicine at Rush University in Chicago. Diane Archer is a senior adviser at Social Security Works. She is founder and president of Just Care USA, an independent digital hub covering health and financial issues facing boomers and their families and promoting policy solutions. Archer is the past board chair of Consumer Reports and serves on the Brown University School of Public Health Advisory Board.