Warren, Jayapal Call for Action Against Private Medicare Advantage Insurers that Waste Taxpayer Dollars and Unlawfully Deny Care | U.S. Senator Elizabeth Warren of Massachusetts

January 26, 2024

Centers for Medicare and Medicaid Services Has Authority to Curb Billions in Overpayments to Private Medicare Advantage Insurers 

Text of Letter (PDF)

Washington, D.C.  – U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Finance Committee, and U.S. Representative Pramila Jayapal (D-Wash.) sent a letter to the Centers for Medicare and Medicaid Services (CMS) urging the agency to take administrative action to curb billions in overpayments to Medicare Advantage (MA) insurers. The lawmakers called on CMS to (1) address perverse incentives in MA’s payment system, including favorable selection and risk code gaming, (2) reform the flawed Quality Bonus Program, and (3) crack down on private insurers that unlawfully deny care. The letter comes as CMS is expected to release its 2025 advance notice of methodological changes for MA payment rates and policies. 

“I appreciate the important steps CMS has already taken to limit overpayments, such as increasing audit rates of MA insurers and finalizing necessary adjustments to MA’s risk adjustment model. Yet, despite your agency’s efforts to date, the Committee for a Responsible Federal Budget projects that CMS will overpay MA insurers by as much as $1.56 trillion over the next decade. As enrollment in MA continues to grow,  CMS must take more aggressive action to ensure Medicare’s sustainability, protect taxpayer dollars, and curb abusive practices in MA,” wrote the lawmakers. 

The MA program was founded on the premise that private insurance companies would administer Medicare coverage more cost-effectively, saving taxpayer dollars. However, the MA program has failed to deliver savings in any year since its inception. The Medicare Payment Advisory Commission estimates that CMS pays MA plans 6 percent more per enrollee than what it would cost to cover the same enrollee in Traditional Medicare (TM), even though MA plans spend up to 25 percent less on health care per enrollee.

“As a result of these factors, the MA program has jeopardized the solvency of Medicare’s Hospital Insurance Trust Fund, raised Part B premiums for all Medicare beneficiaries by as much as $140 billion over ten years, and created significant barriers to care for vulnerable enrollees. It is imperative for CMS to rein in these abuses and protect Medicare coverage for the seniors and people with disabilities who rely on it,” continued the lawmakers. 

As CMS prepares its 2025 advance notice of MA payment policies, the lawmakers urged the agency to pursue the following actions: 

• Reform base payments to offset favorable selection

  • Modify benchmarks to offset favorable selection.
  • Modify calculation of United States Annual Per Capita Costs to account for favorable selection. 

• Risk adjustment

  • Increase the coding intensity adjustment factor.
  • Increase recoupment of overpayments.
  • Restrict the use of chart reviews and health risk assessments.
  • Eliminate the use of provider incentives that contribute to increased coding.

• Reform the Quality Bonus Program (QBP)

  • Raise the standard for QBP.
  • Apply a network quality measure to MA plans’ star rating.

• Strengthen enforcement against MA insurers that illegally deny care

  • Investigate abuse of AI models.
  • Terminate contracts that are in violation of Medicare coverage rules.

“To protect Medicare beneficiaries and curb billions in overpayments driven by for-profit insurers, I respectfully urge you to take the actions outlined in this letter. Doing so will save hundreds of billions of taxpayer dollars, ensure Medicare’s sustainability, and improve health outcomes for Medicare enrollees. I also request that you provide a staff-level briefing on CMS’s plan to limit overpayments and hold MA insurers accountable for widespread delays and denials by February 8, 2024,” concluded the lawmakers.

Senator Warren is a leading voice on reining in abuses in Medicare Advantage and protecting patients:

• In December 2023, Senators Warren, Catherine Cortez Masto (D-Nev.), Bill Cassidy (R-La.), and Marsha Blackburn (R-Tenn.) sent a letter to the CMS Administrator Chiquita Brooks-LaSure, raising concerns about shortfalls in CMS’s data collection and reporting practices for MA plans, and urging CMS to close data gaps  to strengthen oversight of MA plans and improve care for Medicare beneficiaries. 
• In November 2023, Senators Warren, Cortez Masto, Cassidy, and Blackburn introduced bipartisan legislation to improve transparency of MA plans and ensure these plans are best serving the health care needs of America’s seniors. The Encounter Data Enhancement Act would require Medicare Advantage plans to report important information about how much they are actually paying for patient services and how much patients are responsible for paying out-of-pocket. 
• In November 2023, at a Senate Finance Committee markup of the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act, Senator Warren highlighted the need to do more to prioritize hearing health for seniors and strengthen transparency in Medicare Advantage, and secured commitments from Senate Finance Committee leadership to prioritize these proposals in future packages. 
• In October 2023, at a hearing of the Senate Finance Committee, Senator Warren called out giant MA insurers for using deceptive marketing tactics to lure seniors into the wrong plans and drown out competition from smaller insurers that may offer better coverage. Senator Warren called on CMS to act within the fullest extent of its authority to crack down on MA insurers that game the system to overcharge the government and to ensure insurers publish accurate data on patient care and out-of-pocket costs. 
• In May 2023, at a hearing of the Senate Finance Committee, Senator Warren highlighted the prevalence of ghost networks in Medicare Advantage plans and called for stronger oversight of the program.
• In March 2023, Senator Warren sounded the alarm on a new analysis by policy experts showing that all Medicare beneficiaries – including those enrolled in Traditional Medicare – are paying higher premiums due to overpayments in MA. She sent a letter to CMS and called on the agency to finalize its proposed rule to ensure payments to MA plans accurately reflect the cost of care. 
• In March 2023, U.S. Senators Warren and Jeff Merkley (D-Ore.) sent letters to the top seven MA insurers – Humana, Centene, UnitedHealthcare, CVS/Aetna, Molina, Elevance Health, and Cigna – regarding their questionable claims that CMS’s 2024 proposed Medicare Advantage payment rules would hurt beneficiaries.
• In March 2023, at a hearing of the Senate Finance Committee, Senator Warren defended CMS’s proposed adjustments to the Calendar Year 2024 MA payment rates, pushing back against giant insurance companies and their lobbyists who are peddling misinformation to protect their billions in profits and scare beneficiaries into opposing the rule. 
• In April 2022, Senator Warren and Representatives Katie Porter (D-Calif.), Rosa DeLauro (D-Conn.), and Jan Schakowsky (D-Ill.) led their colleagues in sending a letter to CMS Administrator Chiquita Brooks-LaSure highlighting concerns about overpayments to Medicare Advantage plans that line the pockets of big insurance companies.
• In February 2022, chairing a hearing of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth, Senator Warren delivered remarks about strengthening Medicare and cracking down on pharmaceutical and insurance companies’ corporate greed to pay for expanded coverage.

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