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Jayapal, Warren Call for Action Against Private Medicare Advantage Insurers that Waste Taxpayer Dollars and Unlawfully Deny Care 

Centers for Medicare and Medicaid Services Has Authority to Curb Billions in Overpayments to Private Medicare Advantage Insurers

Washington, D.C.  – U.S. Representative Pramila Jayapal (D-Wash.) and U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Finance Committee, sent a letter to the Centers for Medicare and Medicaid Services (CMS) urging the agency to take administrative action to curb billions in overpayments to Medicare Advantage (MA) insurers. The lawmakers called on CMS to (1) address perverse incentives in MA’s payment system, including favorable selection and risk code gaming, (2) reform the flawed Quality Bonus Program, and (3) crack down on private insurers that unlawfully deny care. The letter comes as CMS is expected to release its 2025 advance notice of methodological changes for MA payment rates and policies. 

“I appreciate the important steps CMS has already taken to limit overpayments, such as increasing audit rates of MA insurers and finalizing necessary adjustments to MA’s risk adjustment model. Yet, despite your agency’s efforts to date, the Committee for a Responsible Federal Budget projects that CMS will overpay MA insurers by as much as $1.56 trillion over the next decade. As enrollment in MA continues to grow,  CMS must take more aggressive action to ensure Medicare’s sustainability, protect taxpayer dollars, and curb abusive practices in MA,” wrote the lawmakers. 

The MA program was founded on the premise that private insurance companies would administer Medicare coverage more cost-effectively, saving taxpayer dollars. However, the MA program has failed to deliver savings in any year since its inception. The Medicare Payment Advisory Commission estimates that CMS pays MA plans 6 percent more per enrollee than what it would cost to cover the same enrollee in Traditional Medicare (TM), even though MA plans spend up to 25 percent less on health care per enrollee.

“As a result of these factors, the MA program has jeopardized the solvency of Medicare’s Hospital Insurance Trust Fund, raised Part B premiums for all Medicare beneficiaries by as much as $140 billion over ten years, and created significant barriers to care for vulnerable enrollees. It is imperative for CMS to rein in these abuses and protect Medicare coverage for the seniors and people with disabilities who rely on it,” continued the lawmakers. 

As CMS prepares its 2025 advance notice of MA payment policies, the lawmakers urged the agency to pursue the following actions: 

Reform base payments to offset favorable selection 

  • Modify benchmarks to offset favorable selection. 
  • Modify calculation of United States Annual Per Capita Costs to account for favorable selection. 

Risk adjustment 

  • Increase the coding intensity adjustment factor.
  • Increase recoupment of overpayments.
  • Restrict the use of chart reviews and health risk assessments. 
  • Eliminate the use of provider incentives that contribute to increased coding.

Reform the Quality Bonus Program (QBP)

  • Raise the standard for QBP.
  • Apply a network quality measure to MA plans’ star rating.

Strengthen enforcement against MA insurers that illegally deny care 

  • Investigate abuse of AI models.
  • Terminate contracts that are in violation of Medicare coverage rules.

“To protect Medicare beneficiaries and curb billions in overpayments driven by for-profit insurers, I respectfully urge you to take the actions outlined in this letter. Doing so will save hundreds of billions of taxpayer dollars, ensure Medicare’s sustainability, and improve health outcomes for Medicare enrollees. I also request that you provide a staff-level briefing on CMS’s plan to limit overpayments and hold MA insurers accountable for widespread delays and denials by February 8, 2024,” concluded the lawmakers.