Biden Admin Delays Medicare Advantage Reforms
The Biden administration announced Friday that it will allow Medicare Advantage plans to continue overbilling the federal government in the short term after the insurance industry lobbied aggressively against proposed rule changes aimed at cracking down on fraud in the privately run program.
The Centers for Medicare and Medicaid Services (CMS) said it is still moving ahead with the changes despite industry pressure to drop or completely overhaul them.
But instead of implementing the reforms all at once, CMS outlined a plan to phase in the changes over a three-year period, a concession to large insurers that dominate the Medicare Advantage market—which is funded by the federal government.
"How Washington really works: Medicare Advantage providers whined for months that they simply couldn't survive without being able to rip off the government, so the government said 'you can rip us off for just a little longer,'" The American Prospect's David Dayen tweeted in response to the CMS announcement.
Medicare Advantage plans are notorious for piling on diagnoses to make patients appear sicker than they are to reap larger payments from the federal government. CMS estimates that overpayments to Medicare Advantage totaled $11.4 billion in fiscal year 2022, a sizeable drain on the Medicare trust fund.
"Nearly every large insurer in the program has settled or is facing a federal fraud lawsuit for such conduct," The New York Timesnoted Friday. "Evidence of the overpayments has been documented by academic studies, government watchdog reports, and plan audits."
Mark Miller, the executive vice president of healthcare for the philanthropy Arnold Ventures, expressed concern that the Biden administration's decision to phase the Medicare Advantage changes in over three years will "continue to reward those insurers with the most abusive practices over the next two years."
"We are disappointed to hear that reasonable changes targeting abuse and waste in Medicare Advantage will be phased in over three years rather than fully implemented immediately," said Miller. "The coding abuses by insurers in Medicare Advantage have led the independent Medicare commission (MedPAC), which was created to advise Congress, to call for a 'major overhaul' of Medicare Advantage policies."
Medicare Advantage insurers have been fighting the Biden administration's proposed changes for months, running ads warning that the reforms would result in higher premiums and worse care for patients—claims that federal health officials adamantly rejected.
Axiosreported that the Better Medicare Alliance, a Medicare Advantage lobbying group, "has spent $13.5 million on advertising since the beginning of the year, targeting markets with competitive 2024 Senate races. Their ads painted the CMS proposal as a cut to Medicare that will eat into consumer benefits."
But Stacy Sanders, an adviser to Health and Human Services Secretary Xavier Becerra, told the Times last month that "we will not be deterred by industry hacks and deep-pocketed disinformation campaigns."
Becerra himself pushed back on social media, writing, "Leave it to deep-pocketed insurance companies and industry front groups to characterize this year's proposed increase in Medicare Advantage payments as a pay cut."
Biden administration officials sounded a different note on Friday. "We were really comfortable in our policies, but we always want to hear what stakeholders have to say," CMS Administrator Chiquita Brooks-LaSure told the Times, admitting that industry lobbying impacted the agency's decision to drag out its implementation of the changes.
CMS projected Friday that under the finalized rules, Medicare Advantage plans will see a payment increase of 3.32%—nearly $14 billion—in 2024 compared to this year.
The payment boost will come as Medicare Advantage insurers are facing growing scrutiny from progressive lawmakers over their business practices, including widespread overbilling, the use of artificial intelligence to cut off patient care, and denials of necessary care.
"Federal audits have found that taxpayers have been overpaying bad actors running Medicare Advantage plans by billions of dollars every year, threatening the stability of both Medicare Advantage and traditional Medicare," Sen. Jeff Merkley (D-Ore.) said earlier this week. "This fraud has to end."
Sen. Elizabeth Warren (D-Mass.), who joined Merkley last week in criticizing the massive profits of Medicare Advantage insurers, tweeted Saturday that CMS is "making progress, but these delays are a step backward."
"For years, private Medicare insurers have been gouging taxpayers and denying care for seniors and people with disabilities," Warren wrote. "There is a lot more work to do to curb these abusive practices."