This One Bipartisan Bill Would Cut Billions in Medicare Waste

 Lawmakers in Washington talk a good game about rooting out wasteful government spending, especially in parts of the federal budget that fuel the national debt. Now, Congress has a chance to turn talk into action.

A bipartisan bill introduced by Senators Bill Cassidy (R-LA) and Jeff Merkley (D-OR) called the No Unreasonable Payments, Coding, or Diagnoses for the Elderly, or “No UPCODE Act” takes aim at one of the most expensive and abused programs in the federal government: Medicare Advantage. This legislation targets a long-running scheme by private insurance companies that allows them to bleed Medicare and taxpayers dry through systematic overbilling.

Medicare Advantage allows seniors to receive their Medicare benefits through private insurance plans. The government pays insurers a fixed, per enrollee amount each month to cover all medical services. In theory, this is supposed to save money by reducing incentives for unnecessary healthcare utilization.

In reality, this system rewards insurance companies not for delivering better care for seniors, but for exaggerating patient diagnoses on paper, with taxpayers left footing the bill. In 2025 alone, the government spent an estimated $84 billion more on Medicare Advantage beneficiaries than it would have if those same seniors were enrolled in the traditional Medicare program. Unfortunately, that year was not an outlier.

A shocking 2024 report by the nonpartisan agency that advises Congress on Medicare found that over an 18-year period, the additional government spending associated with Medicare Advantage reached a gargantuan $591 billion. That's roughly $4,300 per tax filer when adjusting for inflation, according to the Wall Street Journal.

This isn’t the result of a few isolated payment mishaps. The sheer scale of the money squandered points to a systemic problem with the Medicare Advantage payment structure itself.

These billions in wasted spending are the result of clever schemes by private insurers to make their beneficiaries appear sicker than they really are. This is made possible by the government’s payment formula, which increases monthly payments for patients with higher reported health risks.

It wasn’t long before insurance companies figured out they could game the system and boost their profit margins by fiddling with their patients’ medical codes to maximize payments from Medicare. Known as “upcoding,” this scheme inflates patient diagnoses while providing no additional medical care. For example, a patient with mild diabetes might be coded as having uncontrolled diabetes, which, in turn, allows the insurer to pocket a higher monthly payment without offering any extra treatment.

With more than half of Medicare’s 68 million beneficiaries now enrolled in private Medicare Advantage plans, allowing upcoding to continue unabated is a fiscal time bomb. Every inflated diagnosis chips away at the fund that pays for seniors’ hospital stays, which is currently projected to run out of money by 2033 if no reforms are enacted.

What makes this abuse so infuriating is how long it has been allowed to fester under lawmakers’ noses. Federal watchdogs such as the Department of Health and Human Services’s Office of Inspector General have repeatedly warned that insurers use chart reviews and in-home health assessments to inflate diagnoses that aren’t supported by follow-up doctor visits or treatment.

Addressing this issue does not require completely dismantling Medicare Advantage or limiting choice for seniors. It simply requires aligning the program’s reimbursement formula with reality. Including the No UPCODE Act in a second reconciliation package would allow Congress to strengthen Medicare’s finances without cutting care for seniors.

Currently, payments are based on just one year of patient diagnoses, which makes it easy for insurance plans to quickly exaggerate medical risks. By mandating two years of diagnostic data, this legislation provides a more accurate way to assess the efficacy of diagnoses and subsequent treatments.

The Senators’ proposal also prohibits insurers from adding diagnoses that come solely from chart reviews or in-home health assessments without supporting doctor visits. According to the Congressional Budget Office, the targeted reforms in this legislation could save taxpayers more than $100 billion over 10 years.

Making Medicare sustainable for future generations doesn’t mean taking away benefits from seniors. It does, however, require stopping large insurance companies from padding their profit margins with taxpayer dollars. With commonsense reforms like the No UPCODE Act, lawmakers can ensure that federal health programs reward care, not clever accounting gimmicks.

Alexander Ciccone is the Policy and Government Affairs Manager for the National Taxpayers Union

https://www.realclearhealth.com/articles/2026/02/02/this_one_bipartisan_bill_would_cut_billions_in_medicare_waste_1162370.html