In February, Medicare Rights submitted generally positive comments in response to the 2027 Advance Notice from the Centers for Medicare & Medicaid Services (CMS). The Advance Notice is an annual document outlining how CMS plans to determine some Medicare Advantage (MA) payments for the following year, including how the agency will calculate risk scores—an important aspect of managed care.
Promising Proposal
In the notice, CMS proposed a modest pay increase of 0.9% for MA plans. In response, insurers and lobbying groups ramped up pressure, flooded the comments on the proposed rate, and claimed that such a low rate of increase would put beneficiary care at risk.
CMS proposed a modest pay increase of 0.9% for MA plans. In response, insurers and lobbying groups ramped up pressure.
As we noted at the time, the rates proposed in the Advance Notice often fall prey to industry lobbying, and a more measured raise, as proposed, was necessary to begin addressing rampant overpayment. Such overpayment costs all people with Medicare—even those without MA—billions of dollars in excess premiums. It also raises costs for taxpayers and the program.
Disappointing Results
Unfortunately, as it did last year and years prior, CMS succumbed to the pressure. Instead of 0.9%, plans will receive a 2.48% increase, totaling $13 billion. CMS notes that “When accounting for estimated risk score trend in MA due to factors such as population changes and coding practices, this amounts to a 4.98% increase.”
Instead of 0.9%, plans will receive a 2.48% increase, totaling $13 billion.
CMS also chose not to make important updates to the way it calculates payment, further bowing to industry interests, and did not go beyond the statutory minimum coding adjustment, therefore allowing plans to retain unsustainable overpayments.
One Bright Spot
CMS did move forward with a proposal to curb how plans can use one practice—unlinked chart reviews—that inflates MA payment.
This is an important step, though it is not enough.
Policymakers Must Do More
When MA plans were created, some policymakers asserted that they would save Medicare money, but that is not true. MA has never saved money. Instead, it reaps billions of dollars in overpayment each year, funneling some of that money into marketing that draws in more enrollees, bringing in more dollars. Recent changes in some payment structures have helped, but have not ended plan overpayment.
MA has never saved money. Instead, it reaps billions of dollars in overpayment each year.
Plan claims that they cannot function unless they are overpaid reveal the catastrophic mismatch between the premise of MA and the reality. Notably, this raise comes on the heels of recent policy changes that will funnel an extra $18.6 billion to plans over the next decade, and as CMS continues to contemplate changes that would prioritize MA plan profits over beneficiary wants and needs.
At Medicare Rights, we urge policymakers to rein in MA overpayment and other abuses, and to put beneficiary health, well-being, and financial security first.
Read the rate announcement.
Read more about the history of MA, how MA is paid, and the results of overpayment.
