Trump Plan Imposes New Limits on Medicare Advantage Overcharges
The Centers for Medicare & Medicaid Services (CMS) has proposed significant changes to Medicare Advantage reimbursement rates, sparking controversy within the health insurance industry. This proposal aims to maintain flat payment rates in 2027, which has led to a decline in stock prices for major insurers like UnitedHealth Group and Humana.
Impact of the New CMS Proposal
On January 26, CMS officials announced adjustments to payment rates for Medicare Advantage health plans. They plan to increase these rates by less than 0.1 percent, significantly below industry expectations. The proposal has prompted warnings from industry groups that reduced funding could lead to service cuts for seniors and individuals with disabilities.
- Current projections indicate about 35 million individuals will be impacted if the rates remain flat.
- Advocates argue the plan could curb billions in overcharges that have characterized the program for over a decade.
Controversial “Chart Reviews”
In addition to the proposed payment changes, CMS aims to restrict practices involving “chart reviews.” These reviews, which can lead to new medical diagnoses, have resulted in inflated federal payments to Medicare Advantage plans. Over 99 percent of diagnoses added through chart reviews are not linked to actual treatments, according to a 2019 report from the Department of Health and Human Services inspector general.
The Justice Department recently secured a settlement of $556 million with Kaiser Permanente, revealing that the organization added approximately 500,000 diagnoses between 2009 and 2018, resulting in about $1 billion in improper payments.
Reactions from Industry Experts
Health policy analysts are divided on the proposed reforms. While some view them as a step towards improving the accuracy of Medicare Advantage payments, others express skepticism about whether insurers will find ways to circumvent these changes.
- Spencer Perlman, a healthcare policy analyst, highlights a commitment from the administration to address overpayments.
- Richard Kronick, a public health professor, notes the need for vigilance against potential loopholes.
- David Meyers from Brown University sees the restrictions on chart reviews as a promising move towards reducing inefficiencies.
Possible Consequences for Beneficiaries
According to Chris Bond from AHIP, the proposal could lead to significant benefit cuts and increased costs for Medicare Advantage beneficiaries if finalized. Critics argue that insurers often exaggerate the health conditions of their members to receive higher payments, a tactic known as “upcoding.”
CMS encourages public feedback on the proposal before a final decision is scheduled for early April. Recent history suggests that strong opposition from the insurance industry could lead to modified or delayed implementation of these changes.
Conclusion
This proposal reflects a growing commitment to regulate Medicare Advantage payments and improve the program’s integrity. The outcome will heavily influence both the financial health of the insurance providers involved and the quality of care received by millions of Americans reliant on Medicare Advantage.
