White House proposes nearly flat Medicare Advantage rates

"CMS officials said the proposal is intended to improve the accuracy of payments and simplify the billing system. We do not want risk adjustment to be a source of competitive advantage for health plans, Chris Klomp, CMS deputy administrator and director of Medicare, told the Journal. Medicare Advantage is a major revenue driver for insurers and federal payment policies can have substantial financial impacts. The proposed 0.09% increase would translate to roughly $700 million in additional payments across the industry, the report said."

"CMS would eliminate payments tied to certain medical chart reviews that document diagnoses without being linked to a specific medical encounter such as a doctor's visit. Under Medicare Advantage's risk adjustment system, insurers receive higher payments when patients are documented as having certain medical conditions. Critics have argued that insurers use chart reviews to identify diagnoses that boost payments without necessarily reflecting active treatment."

"The Wall Street Journal report cited several government investigators including the Office of Inspector General (OIG) for the Department of Health and Human Services that say such practices lead to questionable payments that disproportionately benefit certain insurers. A 2021 OIG report singled out UnitedHealth Group as a major beneficiary, though the company said its program was transparent and compliant with Medicare rules. CMS officials said the proposed chart review change reduced the projected 2027 payment rate by 1.53 percentage points."

CMS proposed changes to Medicare Advantage payments to improve payment accuracy and simplify billing. Officials stated that risk adjustment should not create a competitive advantage for health plans. The proposal includes a 0.09% increase in payments, roughly $700 million industry-wide, and would eliminate payments tied to medical chart reviews that document diagnoses without linked encounters. Critics and government investigators say chart-review practices can produce questionable payments and may disproportionately benefit certain insurers; a 2021 OIG report highlighted UnitedHealth Group. CMS estimated the chart-review change reduced the projected 2027 payment rate by 1.53 percentage points and used a 4.97% traditional Medicare growth figure.

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