MA Spending To Outstrip Traditional Medicare By $88B This Year: MedPAC

An article from

Dive Brief:

• The federal government could pay Medicare Advantage plans $88 billion more this year than it would be spending if those seniors were in traditional Medicare, according to new data from congressional advisory group MedPAC.
• That’s because MA insurers attract healthier and therefore lower-cost individuals into their plans, and aggressively code the medical needs of their beneficiaries to recoup higher reimbursement from the government, MedPAC said.
• MedPAC released the data Friday during a contentious meeting where members argued over the efficacy of MA, a program that’s growing in popularity among U.S. seniors but has snowballing spending.

Dive Insight:

Policy wonks are apparently not immune to the controversy swirling around MA, a program where the government pays private insurers to manage the care of Medicare seniors.

MedPAC’s meetups are usually routine and calm discussions of policy, but during Friday’s meeting commissioners made pointed jabs over the data. One member, arguing in support of MA, called it “fundamentally flawed” and politically biased.

“MedPAC is a 25-year-old policy institution, and I, along with the rest of the Washington policy community, will not stand by idly as it is hijacked for partisan political aims,” said Brian Miller, a researcher at the conservative American Enterprise Institute, according to Stat.

For the report, MedPAC staff analyzed federal data on MA with an eye toward including it in the group’s March report to Congress. They found overpayments to MA plans have grown to $350 billion since 2020.

Other commissioners said that growing proof of overpayments is a major problem, especially given reports that MA seniors may not be getting the care they’re due under Medicare.

Numerous studies have found evidence that upcoding and favorable selection are driving significant overpayments to MA plans. MedPAC also said the program’s quality bonus system isn’t a good measure of plan quality, joining other research groups who say the program needs reform.

Yet, major payers in MA are pushing back against regulatory changes that could upset their golden goose. (MA can be twice as profitable for insurers than other types of plans).

Currently, Elevance is suing the federal government to stop changes to how MA calculates quality bonus ratings, while Humana is suing to halt payment audits.