Medicare Advantage plans are upset about a recent government proposal. It suggests keeping their payment rates flat for 2027. This decision is making waves in the health insurance industry.
Experts argue that this plan could help cut down excess payments that have plagued the program for years. CMS (Centers for Medicare & Medicaid Services) announced that rates would increase by less than 0.1%, far below what insurers expected. This led to a drop in stock prices for major companies like UnitedHealth Group and Humana.
For context, Medicare Advantage is when the government pays private insurers to manage health care for people over 65 or those with disabilities. Some industry leaders warn that if these flat rates remain, seniors might face cuts in their services.
There’s more to this story. CMS also proposed limiting “chart reviews.” This practice helps insurers discover new medical diagnoses, which can increase their government payments. Critics argue chart reviews have led to billions in overcharges, over the years. The Justice Department recently settled a case with Kaiser Permanente, which reportedly inflated diagnoses to claim around $1 billion in improper payments. They did not admit wrongdoing in the settlement.
Spencer Perlman, a health policy analyst, believes the administration is genuinely trying to tackle these overpayments. The push to limit chart reviews is seen as a move to ensure that funds go toward actual health needs, not inflated claims. Richard Kronick, a former federal health policy researcher, sees the proposal as a positive sign but wonders if insurers will find a way around it.
Medicare Advantage has expanded rapidly, enrolling about 34 million members. Some experts suggest that switching seniors to these plans has cost taxpayers billions due to unnecessary payments driven by aggressive billing practices known as “upcoding.”
David Meyers from Brown University notes that health insurers often claim they need to raise costs or cut benefits when payment rates don’t meet expectations. However, he argues that the plans remain profitable, just not as lucrative as shareholders want.
Many believe this proposal could lead to real changes in how Medicare Advantage operates. The CMS is currently gathering public feedback and will make a final decision soon. This could mark a significant turning point in tackling long-standing issues in Medicare Advantage.
This discussion is part of a broader trend in the healthcare industry, where policymakers are increasingly focused on curbing unnecessary spending. A recent report from the Department of Health and Human Services revealed that over 99% of chart reviews led to added diagnoses rather than removals, demonstrating the extent of overbilling in this system.
As this situation evolves, the health insurance industry is on high alert. The outcome will reveal if the government is serious about reforming practices that potentially misuse taxpayer dollars. How this unfolds could set a precedent for the future of healthcare funding in the U.S.
