Biden Just Took the First Step to Overhaul Medicare Advantage. Many More Must Be Taken

The corporations that run Medicare Advantage plans are engaged in widespread waste, fraud and abuse, resulting in tens of billions of dollars of overpayments to them every year. The advocates and government agencies overseeing Medicare Advantage have spent nearly two decades reporting on this fraud and waste and urging Congress to overhaul the program. Few in Congress or the administration were listening. Now, the Biden administration is finally taking action, but it’s only a first step.

The Biden administration has just finalized a rule that begins to rein in these overpayments, at last putting a spotlight on an issue that Congress and the public have long overlooked. The new rule addresses some of the overpayments to the Medicare Advantage plans and protects the integrity of the Medicare Trust Fund, though it is not nearly enough.

The insurance industry’s fierce opposition and the multi-million dollar fear campaign the health insurance corporations launched against the proposed rule was their admission that Medicare Advantage plans can’t provide coverage at a reasonable cost. Medicare Advantage only works for the insurers if they are wildly overpaid and profiting exorbitantly. It was their admission that they cannot do what they were created to do and are legally obligated to do. They cannot deliver Medicare coverage anywhere near as cost-effectively as traditional Medicare, let alone at lower cost, as they had promised.

The fight over small improvements to the flawed Medicare Advantage payment system reveals how challenging it is to fix Medicare Advantage and free it of the bad actors who are engaged in massive — sometimes fraudulent — overbilling of Medicare. Medicare Advantage is in need of a substantial overhaul, as the advocates, along with the Medicare Payment Advisory Commission, the Government Accountability Office and the Office of the Inspector General, have all been saying for years.

The Biden administration’s final rule — which includes good technical fixes to the payment model but allows tens of billions a year in overpayments to continue — is a small step forward, and at the same time a tacit admission that the government cannot rid Medicare Advantage of the bad actors who are threatening Medicare’s financial health. Without an overhaul, there’s no stopping the bad actors.

The Biden administration also recently finalized another rule, aimed at addressing widespread and persistent inappropriate delays and denials of care in Medicare Advantage. Among other things, the rule attempts to streamline the Medicare Advantage prior authorization process. It spotlights and begins to address the serious risks some Medicare Advantage plans pose to the health and well-being of their enrollees — our nation’s sisters and brothers, parents and grandparents.

Though it goes further than any past rule in its attempt to protect Americans from the bad actor Medicare Advantage plans, it does not provide the public with important information as to which plans are the bad actors. Nor will it lead to the government’s cancellation of contracts with the worst-performing Medicare Advantage plans. Therefore, it will not keep the bad actor Medicare Advantage plans from continuing to inappropriately delay and deny critical care.

Consequently, as one NBER analysis found, some 10,000 Medicare Advantage enrollees will continue to die needlessly each year for lack of access to critical care in their bad actor Medicare Advantage plans. This final rule also underscores what we already now know — Medicare Advantage cannot be fixed. Without an overhaul, there’s no stopping the bad actors.

Strengthening traditional Medicare by adding an out-of-pocket cap is the best and most cost-effective fix our government could make. Adding the cap would give people — including the most vulnerable Americans, such as people with low incomes and people of color — a meaningful choice of traditional Medicare. Adding an out-of-pocket cap to traditional Medicare would free people from being locked into Medicare Advantage. And, according to the Congressional Budget Office, an out-of-pocket cap in traditional Medicare could save the Medicare program money, while ensuring older adults and people with disabilities can access the care they need without a Medicare Advantage corporation coming between them and their doctors.