Nearly 20 Democratic lawmakers are urging the Centers for Medicare and Medicaid Services to reconsider the 8.5% payment increase to Medicare Advantage plans for 2023. In a letter last week to CMS Administrator Chiquita Brooks-LaSure, the lawmakers said they were concerned about overpayments to MA plans that “line the pockets of big insurance companies.”
“The record profit margins of health insurers participating in the Medicare Advantage program in 2021 indicate that insurance companies are generating significant revenue from excess Medicare Advantage payments,” the lawmakers wrote in the letter. “Unless CMS addresses overpayments, public funds will continue to finance private profits at the expense of taxpayers, as well as older adults and disabled individuals on Medicare.”
The team of lawmakers led by Rep. Katie Porter (D-CA), Rep. Rosa DeLauro (D-CT), Rep. Jan Schakowsky (D-IL) and Sen. Elizabeth Warren (D-MA) said the excess payments threaten to bankrupt the Medicare Hospital Insurance Trust Fund. They also charged that MA plans spend less on care, requiring taxpayers to spend more.
“Medicare Advantage coverage was originally designed to achieve savings by paying insurers rates set at 95 percent of those used by traditional Medicare,” the lawmakers said. “But Medicare Advantage has failed to achieve savings in any year since its inception.”
Approximately, 45% of Medicare beneficiaries are enrolled in Medicare Advantage plans. The plans are expected to make up half the market by the end of the decade. The plans are attractive to consumers because they tend to cost less and offer a variety of supplemental benefits, such as transportation, home care and meals. A recent report by ATI Advisory and the Better Medicare Alliance found that seniors enrolled in MA plans are saving nearly $2,000 annually on premiums and out-of-pocket costs compared to seniors enrolled in traditional fee-for-service plans.
But, Medicare Advantage plans recently came under fire by a senior advisor to the Centers for Medicare and Medicaid Innovation. J. Michael McWilliams, M.D., PhD, wrote in a Health Affairs article that growth in MA plans is unsustainable and could deplete the Medicare Part A Trust Fund by 2026. Home care agencies also have charged that MA plans pay far less than traditional Medicare.
Just last week, insurance giant Anthem disclosed it made a handsome profit in the first quarter, in part due to the growth of Medicare Advantage.
