The Hill, JOSEPH CHOI, KARL EVERS-HILLSTROM, April 7, 2023

The Biden administration this week finalized a highly anticipated rule to rein in billions of dollars in overpayments to private insurers through the federal government’s Medicare Advantage program.

But the overhauls were weaker than expected following an aggressive lobbying blitz from private health insurers. 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. 

About half of all eligible Medicare beneficiaries are currently enrolled in Medicare Advantage, which contracts with private insurers to provide benefits that aren’t included in traditional Medicare, such as vision and dental coverage. 

Throughout Medicare Advantage’s 20 years, private insurers have been accused of “upcoding” beneficiaries, tacking diagnosis codes on to patients for conditions they may not even be treated for, in order to boost the revenue they earn from Medicare.

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. 

New rule takes aim at excessive charges

The Centers for Medicare and Medicaid Services (CMS) is essentially aiming to reduce the number of factors that could result in a beneficiary’s risk score being improperly or excessively raised through its new plan. 

The effects of these actions will go into effect over three years, which could give insurers time to push for additional changes.

CMS originally proposed changes it estimated would result in a 1 percent increase to Medicare Advantage payments for next year, but the final number rose to 3.2 percent after insurers warned the measure could raise premiums for seniors. 

Read More: The Hill