The companies that administer Medicare Advantage plans engage in widespread waste, fraud and abuse, earning them tens of billions of dollars in overpayments each year. Advocates and government agencies overseeing Medicare Advantage have spent nearly two decades reporting on this fraud and waste and urging Congress to overhaul the program. Few members of Congress or the administration were listening. Now the Biden administration is finally taking action, but it’s only the first step.
The Biden administration has just finalized a rule that is beginning to curb these overpayments, finally bringing to light an issue that Congress and the public have long ignored. The new rule addresses some of the overpayments to Medicare Advantage plans and protects the integrity of the Medicare Trust Fund, even if it’s not enough.
The insurance industry’s fierce opposition and the multimillion-dollar scare campaign launched by health insurance companies against the proposed rule was their admission that Medicare Advantage plans cannot provide coverage to a reasonable cost. Medicare Advantage only works for insurers if they are vastly overpaid and profiteering exorbitantly. It was their admission that they cannot do what they were created to do and are legally obligated to do so. They can’t offer Medicare coverage as cost-effectively as traditional health insurance, let alone at the lower cost they promised.
The fight for small improvements to Medicare Advantage’s flawed payment system reveals just how difficult it is to fix Medicare Advantage and free it from the bad actors who engage in massive — sometimes fraudulent — Medicare overbilling. Medicare Advantage needs a substantial overhaul, as all advocates have been saying, along with the Medicare Payment Advisory Commission, Government Accountability Office, and Office of Inspector General for years.
The Biden administration’s final rule — which includes good technical fixes to the payment model but allows tens of billions a year of overpayments to continue — is a small step forward, and at the same time a tacit admission that the government cannot rid Medicare Advantage of the bad actors who threaten Medicare’s financial health. Without an overhaul, there’s no stopping bad actors.
The Biden administration also recently finalized another rule, aimed at addressing widespread and persistent delays and denials of improper care in Medicare Advantage. Among other things, the rule attempts to streamline Medicare Advantage’s pre-authorization process. It highlights and begins to address the serious risks that some Medicare Advantage plans pose to the health and well-being of their enrollees – our country’s siblings, parents and grandparents.
While it goes further than any past rule in its attempt to protect Americans from bad Medicare Advantage plans, it fails to provide the public with important information about which plans are the bad actors. Nor will it cause the government to cancel contracts with the worst-performing Medicare Advantage plans. Therefore, this will not prevent bad Medicare Advantage plans from continuing to inappropriately delay and deny critical care.
As a result, as an NBER analysis found, some 10,000 Medicare Advantage enrollees will continue to die unnecessarily every year because of lack of access to critical care in their Medicare Advantage plans. This final rule also underlines what we already know now – Medicare Advantage cannot be fixed. Without an overhaul, there’s no stopping bad actors.
Strengthening traditional health insurance by adding an out-of-pocket spending cap is the best and most cost-effective solution our government can provide. Adding the cap would give people — including the most vulnerable Americans, such as low-income people and people of color — a meaningful choice from traditional health insurance. Adding a reimbursable cap to traditional Medicare would free people from being locked into the Medicare advantage. And, according to the Congressional Budget Office, an out-of-pocket cap on traditional Medicare could save the Medicare program money, while ensuring that seniors and people with disabilities can access care they need without a Medicare Advantage company standing between them and their doctors.
