Congressional Joint Economic Committee Pegs Medicare Advantage Overpayments at $7 Billion Annually and Rising

According to Kiplinger, the Congressional Joint Economic Committee recovered Medicare Advantage is overpaying insurers by $212 per enrollee. The fig looks tiny until you standard it.

The data, scaled

Multiply $212 against astir 33 cardinal Medicare Advantage enrollees and the strategy is leaking astir $7 cardinal a twelvemonth successful excess payments to backstage insurers. Medicare Advantage present covers much than fractional of each Medicare beneficiaries, which puts the overpayment successful the mediate of the programme alternatively than astatine its edges.

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Where does the $7 cardinal go? Some flows into insurer margins, helping explicate wherefore publically traded MA carriers fertile among the largest U.S. healthcare companies. The remainder funds supplemental benefits that thrust MA marketing: dental, vision, hearing, gym memberships, and market cards accepted Medicare excludes.

The overpayment is structural. It originates successful 3 mechanics: hazard accommodation coding incentives that reward plans for documenting much diagnoses, the benchmark methodology CMS uses to acceptable county-level outgo rates, and upcoding, wherever plans seizure diagnoses accepted fee-for-service claims would ne'er person generated.

The discourse Kiplinger does not supply

Industry information confirms the pattern. Modern Healthcare reported $33 cardinal successful other payments to Medicare Advantage plans tied to coding intensity, with UnitedHealth (NYSE:UNH) and Humana (NYSE:HUM) the superior beneficiaries. CMS has been tightening hazard accommodation audits, and respective large insurers person faced DOJ investigations implicit coding practices. A Leerink study indicates UnitedHealth faces the largest RADV audit exposure, with 60 contracts covering 92% of its 2020 Medicare Advantage rank nether review.

The governmental effect cuts the different way. CMS announced a 2.48% mean summation successful Medicare Advantage payments for 2027, sending $13 cardinal successful further backing to backstage insurers, good supra the 0.09% complaint primitively projected successful January 2026 that concisely knocked Humana down much than 20%.