The Biden administration this week finalized a rule that it said would strengthen Medicare Advantage and crack down on “misleading marketing schemes” by insurers providing plans under the program. But The Hill’s Joseph Choi and Karl Evers-Hillstrom report that the reforms, meant to curb billions of dollars in overpayments to private insurers, were weaker than expected after an aggressive, multimillion-dollar industry lobbying blitz.
“Reforms to overbilling will phase in over a three-year period instead of immediately, and insurers will enjoy a higher reimbursement rate than expected, both key wins for the industry,” Choi and Evers-Hillstrom write.
The Medicare Advantage program contracts with private insurers to provide health coverage, often including benefits that aren’t included in the traditional Medicare program for seniors. The Advantage plans have grown in popularity in recent years and are on pace to cover more than half of all Medicare beneficiaries. They’re also extremely profitable for insurers, who have been found to exploit the program to boost their profits by adding diagnostic codes to patients, often without additional treatments, in order to get more revenue from the government. “The Medicare Payment Advisory Panel, which advises Congress on Medicare issues, estimates that nearly $124 billion in overpayments will have been made to private insurers since 2007, including $44 billion in 2022 and 2023,” The Hill notes.
Meena Seshamani, deputy administrator for the Centers for Medicare and Medicaid Services, called the decision to gradually phase in policy changes “consistent with prior practice.” Even so, The Hill notes that Raymond James analysts upgraded the outlook for UnitedHealth and Cigna, both major insurers, citing an “improving regulatory backdrop” and calling the phase-in period “a win for the industry.”