$13.4B premium hike due to Medicare Advantage overpayments: Report

 The committee relied on Medicare Payment Advisory Commission estimates. Overpayments refer to the difference between what the federal government spends on MA versus traditional Medicare beneficiaries, not errors and improper payments.

“Because Part B premiums are set nationally, higher Part B spending in MA raises premiums for all Part B payers, including beneficiaries who remain in [traditional Medicare],” the report said. 

Medicare premiums are set to cover about one-quarter of anticipated costs. MA typically costs 120% of traditional Medicare, according to MedPAC.

“Aligning MA payments with traditional Medicare would prevent unnecessary premium growth, increase the affordability of Medicare and protect net Social Security checks,” the report recommended.

Here are four notes from the report:

1. The group estimates MA overpayments prompted Part B premiums to rise by $212 per beneficiary in 2025, resulting in the $13.4 billion boost in premiums. Since 44% of Medicare enrollees are traditional beneficiaries, they covered roughly $6 billion of this excess.

2. Over the past decade, MA overpayments contributed $82 billion to Part B premiums.

3. Individuals usually handle 84.9% of the higher premiums, whereas state and federal taxpayers cover 9.1% and 6%, respectively. Generally, Part B premiums are directly deducted from Social Security checks.

4. By 2035, per-person premiums are expected to double and reach about $5,000. About $450 could be attributable to overpayments, if they increase at the same rate.

The Better Medicare Alliance, backed by insurers, responded to earlier coverage from The Wall Street Journal before the committee released the analysis.

“Today’s Wall Street Journal article repeats long-debated claims about Medicare Advantage that rely heavily on disputed estimates from the Medicare Payment Advisory Commission. … Presenting those estimates as settled fact misrepresents how the program works and risks misleading policymakers and seniors about a program that more than half of Medicare beneficiaries now choose,” the March 10 statement said. 

“MedPAC’s projections rely on assumptions and methodologies that many experts have questioned for years. … Claims that Medicare Advantage ‘overpayments’ significantly increase seniors’ Part B premiums stem directly from those disputed assumptions,” the statement continued. “When more current data and updated risk-adjustment models are used, the magnitude of those claims falls dramatically.”

https://www.beckershospitalreview.com/finance/13-4b-premium-hike-due-to-medicare-advantage-overpayments-report/