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The Biden-Harris Administration is committed to protecting and strengthening Medicare and holding health care companies accountable to delivering quality health care for all seniors. While Congressional Republicans support measures to put Medicare on the chopping block and roll back increased benefits offered to seniors and people with disabilities through the Inflation Reduction Act, the Administration’s commitment to the 65 million Americans with Medicare, and all the beneficiaries in the future, is unwavering.
Despite industry-funded reporting indicating otherwise, the Biden-Harris Administration is not proposing cuts to Medicare Advantage. In fact, the Administration is proposing to increase Medicare Advantage payments this year by 1%, on top of an 8.5% increase in Medicare Advantage payments last year. The Administration also announced efforts to strengthen Medicare and hold industry accountable. This year, it will start recovering improper payments made to insurance companies in Medicare Advantage through audits. Recovering these improper payments and returning this money to the Medicare Trust Funds will protect the fiscal sustainability of Medicare and allow the program to better serve seniors and people with disabilities, today and in the future.
The Administration’s proposed policies to strengthen Medicare Advantage will hold health insurance companies to higher standards for America’s seniors by
These efforts to strengthen Medicare Advantage are bolstered by the Inflation Reduction Act. Because of the President’s law to lower prescription drug costs, people with prescription drug coverage through their Medicare Advantage plan can now access more preventive vaccines for free, and insulin costs are capped at $35 for a month’s supply of covered insulin. Congressional Republicans have already proposed legislation to undo the Inflation Reduction Act, which would increase the deficit and increase health care costs for America’s seniors.
Taken together, these actions will make the Medicare program stronger.
Fact v. Fiction:
Biden-Harris Administration Proposed to Increase Payments to Private Insurance Companies
2024 Medicare Advantage Advance Notice
The Centers for Medicare & Medicaid Services (CMS) contracts with private insurance companies to offer Medicare benefits as an option for seniors and people with disabilities; this option is known as Medicare Advantage. Every year, CMS is required by law to update how payments are calculated for insurance companies that offer Medicare Advantage, and every year, CMS updates payments based on current costs and trends. Through this process, CMS ensures that payments to insurance companies accurately reflect what it costs to provide services and benefits to Medicare Advantage enrollees.
On February 1, 2023, CMS released its annual proposed Medicare Advantage payment update, which included an increase in payments to insurance companies that offer Medicare Advantage for 2024. The proposals in the 2024 Advance Notice include routine technical updates that fulfill CMS’ statutory requirement to ensure accurate payments. In last year’s payment notice and in the current proposal, the Biden-Harris Administration has increased payment to insurance companies offering Medicare Advantage by nearly 10%, which far outpaces the payment updates other health care providers have received through the traditional, fee-for-service Medicare program.
Ensuring accurate payments
As required by law, CMS adjusts its payments to insurance companies offering Medicare Advantage to reflect expected health care costs of their enrollees based on disease factors and demographic characteristics through a process known as “risk adjustment.” CMS routinely makes updates to the Medicare Advantage risk adjustment model to reflect more recent utilization and cost patterns and pay accurately for sick patients.
Biden-Harris Administration Protects Medicare and Fulfills Statutory Requirements by Recovering Overpayments to Insurance Plans
Medicare Advantage Risk Adjustment Data Validation Audits Final Rule
CMS is responsible for serving as a good steward of the Medicare program, ensuring taxpayer dollars are well spent, and overseeing the financial integrity of the Medicare Trust Funds.
This year, the Biden-Harris Administration announced it will start recovering improper payments made to Medicare Advantage plans through audits for the first time since 2007. Studies and audits done by CMS and the HHS Office of Inspector General (HHS OIG) have shown that private insurance companies have charged billions of dollars in overpayments to Medicare Advantage plans and increased costs to the Medicare program – as well as taxpayers.
Eight of the 10 largest Medicare Advantage insurers — representing more than two-thirds of the market— have submitted information to inflate payments, according to the federal audits, and four of the five largest Medicare Advantage plans have faced federal lawsuits alleging fraudulent coding practices, according to the New York Times. HHS OIG has released several reports that demonstrate a high risk of improper payments to insurance companies offering Medicare Advantage, and for several years has identified Medicare Advantage as one of the top management and performance challenges facing HHS due to the high amount of improper payments.
Auditing the insurance companies that offer Medicare Advantage and recovering overpayments will put money back in the Medicare Trust Funds. This will strengthen the Medicare program’s ability to serve current beneficiaries while improving the long-term sustainability of the program.
CMS is required to conduct audits of its programs
Basic Medicare Advantage facts
Studies and Audits by the HHS Office of the Inspector General
The following 24 OIG reports identify or estimate overpayments made to Medicare Advantage plans, as well as plan behavior that may have resulted in improper payments. All 24 reports examined risk adjustment payments to Medicare Advantage plans. These reports were issued from 2019 thru January 2023. The plan years covered by the reports vary, but the coverage goes as far back as the 2012 plan year.
*These are identified overpayments in the audit sample and do not reflect extrapolated amounts
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