Oz Is Cracking Down on Waste, Fraud, and Abuse. Medicare Advantage Should Be Next

 Centers for Medicare & Medicaid Services Administrator Mehmet Oz has made reducing waste, fraud, and abuse a central focus of the Trump administration's healthcare agenda. No program needs it more than Medicare Advantage.

Medicare Advantage helps millions of seniors and people with disabilities find flexible health insurance plans that traditional Medicare can’t provide. But broken incentives in the program have allowed insurers to extract billions of taxpayer dollars in improper payments, with no corresponding improvement in care. 

If U.S. Department of Health and Human Services and CMS Administrator Oz are serious about tackling waste and fraud, they should work with Congress to reform Medicare Advantage.

While traditional Medicare works well for many Americans, its one-size-fits-all structure is not right for everyone. Medicare Advantage was created to offer beneficiaries more options and flexibility through privately administered health plans.

Less discussed, however, is how Medicare Advantage's reimbursement structure incentivizes practices that unnecessarily increase taxpayer spending and erode trust in the healthcare system.

When patients first enroll in an MA plan, insurance representatives often meet with them to conduct in-depth health questionnaires that detail their medical history and daily habits. Insurers then use these questionnaires to assign patients “risk scores,” which determine how much CMS reimburses private insurers for care.

If this sounds like a conflict of interest, it is. Insurers receive higher reimbursement payments from the government for patients deemed sicker or more medically complex, creating a strong financial incentive to inflate patient "risk scores." And research has found that insurers routinely assign risk scores that overstate patient risk. 

Then, when patients get sick, insurance representatives also perform at-home visits called “health risk assessments” to update a patient’s risk score. Insurers are prone to “upcoding” in these situations – exaggerating the severity of a medical issue to further inflate the patient's risk score.

For example, an investigation from STAT revealed that UnitedHealthcare diagnosed Medicare Advantage patients with peripheral artery disease at nearly three times the rate seen among those with traditional Medicare. The resulting higher risk scores allowed UnitedHealthcare to extract an additional $3,600 in government payments per patient.

Upcoding isn’t a new phenomenon. According to a 2023 Inspector General report, over $7.5 billion of Medicare Advantage’s risk-adjusted payments came from health risk assessments alone. In 2025, Medicare Advantage’s improper payment rate exceeded 6% – totalling over $23.5 billion in lost taxpayer money. If this pattern continues, Medicare Advantage overpayments could cost taxpayers up to $1.2 trillion over the next decade.

It would be unfair to place the blame entirely on insurers. They are simply responding to the financial incentives embedded in a program created by Congress. Still, many insurers have continued to exploit the system through aggressive and dishonest coding practices, even after multiple high-profile insurers settled upcoding cases with the federal government for hundreds of millions of dollars.

The broader consequence is a growing distrust in the healthcare system. Patients lose faith in insurers that prioritize reimbursement over care, while taxpayers rightly question where their tax dollars are going. Policymakers must act fast to restore this trust, as millions more patients are expected to enroll in MA plans by 2030.

Thankfully, leaders in the White House are taking this issue seriously. But meaningful reform requires more than just executive action that can shift from administration to administration. Bills like the NO UPCODE Act are a stronger long-term solution. The legislation would address perverse incentives in Medicare Advantage's risk-adjustment system by requiring two years of diagnostic data rather than one and limiting the use of old or unrelated medical conditions when determining reimbursements.

Medicare Advantage works, but only when incentives are properly aligned. Fraud and waste have no place in our healthcare. Congress should join the White House in restoring accountability to the program and protecting patients and taxpayers.

Charles Sauer is president of the Market Institute and author of “Profit Motive: What Drives the Things We Do.”

https://www.realclearhealth.com/articles/2026/05/25/oz_is_cracking_down_on_waste_fraud_and_abuse_medicare_advantage_should_be_next_1184767.html