Troubling Signs from Administration’s Weak Medicare Advantage Oversight

By Julie Carter | April 10, 2025

In recent months, several alarming developments have emerged regarding the administration’s approach to overseeing Medicare Advantage (MA) plans, raising serious concerns about the potential implications for both beneficiaries and taxpayers. This situation is underscored by a series of decisions made under the Trump administration, particularly following the nomination of Dr. Mehmet Oz to lead the Centers for Medicare & Medicaid Services (CMS).

Leadership Changes and Regulatory Decisions

Dr. Oz, a public figure known for his advocacy of Medicare Advantage and proposals like “Medicare Advantage for All,” was confirmed to head CMS, the agency responsible for the oversight of Medicare Advantage. Shortly after his confirmation, the administration finalized its first significant health regulation, the annual MA and Part D rule for 2026. Unfortunately, this new rule fell short of including many provisions that would enhance transparency, limit prior authorization processes, and impose stricter regulations on marketing practices for Medicare plans.

Adding to the concern, the final 2026 rate notice—which details upcoming payment policies for MA and Part D—was released, and it reflected a troubling trend. Although some necessary adjustments in risk adjustment processes were implemented, the Trump administration boosted MA payment rates significantly beyond projections made while President Biden was in office. This increase is expected to cost taxpayers an estimated additional $25 billion, benefiting larger insurance companies at a time when Medicare funding is already under scrutiny.

Excess Spending and Impacts on Beneficiaries

Recent research from the Medicare Payment Advisory Commission (MedPAC) accompanies these decisions, shedding light on the financial ramifications of the current MA structure. Their latest report indicates that Medicare is projected to spend approximately 20 percent more on MA enrollees than it would for those in traditional fee-for-service (FFS) Medicare. This disparity translates to an anticipated $84 billion increase in costs stemming from the higher payments to MA plans.

This excessive spending is felt by all Medicare beneficiaries, even those who do not participate in MA. An estimated $13 billion increase in Part B premiums for 2025 alone is attributed directly to inflated payments to MA plans, costing beneficiaries roughly $198 each annually.

Challenges of Risk Adjustment and Coding Practices

A significant factor contributing to the rising costs within the MA system is the aggressive coding practices employed by providers. Unlike Original Medicare, which compensates based on specific services rendered, MA utilizes a risk-adjustment payment model that pays plans more for enrollees classified with higher risk. This incentivizes healthcare providers to aggressively report diagnoses to secure larger payments.

According to analyses, plans potentially received about $33 billion in payments during 2021 due to this aggressive coding. In some instances, the line between aggressive coding and outright fraud, known as "upcoding," blurs, leading to substantial losses for Medicare. Such practices not only inflate costs but also strain public resources by diverting funds from essential services.

Implications for Medicare’s Future

The culmination of these policies is seen as a troubling indication for the sustainability of the Medicare program, as noted by the Medicare Rights Center, which warns that the administration’s current course contradicts its supposed commitment to ending fraud and waste within Medicare. Overspending in MA plans not only undermines the program’s financial viability but also poses risks for beneficiaries facing aggressive marketing strategies from insurers seeking to expand their enrollee base.

In light of these challenges, the Medicare Rights Center emphasizes the need for increased accountability from plans and policymakers to ensure that beneficiaries have access to affordable and high-quality healthcare, both now and in the future.

Further Reading:

• Learn more about MA overpayments.
• Read the final MA and Part D rule for 2026 and associated comments.
• Access the press release and the congressional report from MedPAC.

As policymakers and stakeholders continue to navigate these issues, advocacy efforts will be crucial in holding insurance plans accountable and safeguarding the interests of Medicare beneficiaries.