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The current state of Medicare Advantage

In their efforts to live up to their continuing promises to reduce the deficit, Washington, DC lawmakers are focusing on Medicare Advantage. Specifically, they are investigating billions of dollars that were purportedly generated by overdiagnoses targeting older patients.

The Medicare Payment Advisory Panel speculated that overpayments from 2008 to 2023 currently number $124 billion. Collections from 2022 to 2023 alone are estimated to be $44 billion based on data from MedPAC. Simply put, many in the know believe that Medicare is traveling down the path of insolvency.

Medicare Advantage vs. Traditional Models

Medicare Advantage is not in line with the traditional fee-for-service model. Instead of the common fee-for-service, Medicare plans are offered by private companies financed by taxpayers through general revenues, payroll taxes, and beneficiary premiums.

Still, Advantage remains immensely popular. The Kaiser Family Foundation found that the number of Americans enrolled in the program has doubled over the previous 12 years. Standing in their way are higher-ups in the insurance industry who are members of the most powerful special interest groups. Their opposition could affect the future of the program.

The objective seems to be narrowing disparities in assessments between traditional Medicare and Medicare Advantage. Accusations surround financial incentives for beneficiaries to appear sicker, resulting in payments of standard rates based on individual patient health. The legislation would mandate risk models based on in-depth diagnostics over the course of two years.

Critics conclude that some senators are in spin mode, citing reductions in overpayments akin to Medicare Advantage cuts, with drops of $540 per member per year.