A recent ruling by a federal judge in Texas has significantly impacted oversight efforts for Medicare Advantage, a program intended to offer an alternative to traditional Medicare. The District Court invalidated a rule introduced by the Biden administration that empowered the Centers for Medicare and Medicaid Services (CMS) to conduct closer audits on Medicare Advantage plans and the insurance companies operating them. This decision, which favored major health insurer Humana, raises concerns about accountability and potential financial misconduct within the program.
Medicare Advantage (MA) is designed to provide beneficiaries with personalized healthcare plans through private insurers. While the concept is rooted in a free-market approach, the reality is marred by systemic issues that lead to significant overpayments and fraud, costing taxpayers billions. In 2024 alone, insurers incurred over $19 billion in improper payments, a figure that is projected to increase in the coming years.
Fraudulent Practices Undermining Patient Care
Two primary practices contribute to the ongoing problems within the Medicare Advantage framework. The first is known as “upcoding,” where insurers categorize patients with more severe conditions than they actually have. For instance, a routine visit for a cold might be billed as a serious illness like pneumonia. This practice allows insurers to receive inflated payments from the government, diverting funds from necessary patient care.
The second issue stems from how insurers conduct risk adjustments. Many insurance companies, including UnitedHealthcare and Humana, often employ non-physicians to evaluate patient health through “health risk assessments.” These assessments, which are merely questionnaires, can lead to inaccurate risk categorization and further inflate billing through unjustified claims. The combination of these practices results in insurers prioritizing profits over genuine patient health, leaving the actual needs of patients unmet.
According to an Inspector General’s report, approximately $7.5 billion of the improper payments in 2024 were directly linked to these risk assessments. This alarming trend underscores the necessity for immediate regulatory action to address the overbilling rampant in the system.
Call for Legislative Reform
With Medicare Advantage enrollment anticipated to surge in the coming decade—potentially surpassing traditional Medicare by 2034—the urgency for reform grows. Each new enrollee represents an opportunity for insurers to exploit the system further, leading to greater financial losses for taxpayers.
The court’s ruling has complicated efforts to enhance oversight. Despite this setback, it is crucial for Congress to take a proactive stance in reforming Medicare Advantage. Proposed legislation, such as the NO UPCODE Act introduced by Sen. Bill Cassidy, aims to amend the risk-adjustment model. This act seeks to extend the duration for assessments and limit the use of outdated conditions that facilitate upcoding. Yet, as of now, the bill has not progressed beyond committee discussions.
Addressing these issues is not solely the responsibility of insurers; legislative action is essential to realign payment incentives and ensure that funds are utilized effectively for patient care. By enacting reforms, Congress could not only safeguard taxpayer dollars but also enhance the quality of care provided to Medicare Advantage enrollees.
Dr. Juliette Madrigal, a practicing physician for 19 years, emphasizes the importance of returning Medicare Advantage to its foundational principles. By addressing systemic flaws and fostering an environment of accountability, the program can truly serve its intended purpose of providing affordable and effective healthcare options for millions of Americans.
