If Vance Is Serious About Healthcare Waste, He Should Look At Medicare Advantage Next

A White House task force led by Vice President JD Vance recently announced that the Trump Administration is eliminating about 315,000 unauthorized Obamacare enrollments, estimated to save $2.2 billion in government spending.

If the Trump Administration and Congress want to continue rooting out government waste to cut spending, they do not need to look far for the next target: Medicare Advantage.

Medicare Advantage is the popular alternative to traditional Medicare, where enrollees can choose from a selection of competing private plans. While it is popular with Medicare beneficiaries, the program hemorrhages taxpayer dollars. The program’s payment incentives encourage insurers to make patients appear sicker than they are by adding or exaggerating diagnoses, generating higher reimbursements that do not correspond to the medical care they received. The practice of documenting additional diagnoses to raise patient risk scores and reimbursements will cost taxpayers an estimated $22 billion in 2026, roughly ten times the size of the Obamacare savings the administration just announced.

If the White House wants to continue its government-waste crackdown beyond Obamacare, it should seriously consider a two-pronged approach to fix Medicare Advantage. First, the administration could make fraudulent Medicare Advantage coding a higher priority with the Departments of Justice (DOJ) and Health and Human Services (HHS), building on its recent enforcement efforts against Obamacare broker fraud. Second, Congress should pass bills like the No UPCODE Act that would reform the program’s incentives. Doing both would help cut costs for taxpayers and preserve Medicare Advantage’s long-term stability.

The White House and Congress cannot meaningfully reduce healthcare spending without addressing the incentives in Medicare Advantage that drive excess payments. Since insurers are paid more for sicker patients, Medicare Advantage’s insurers utilize specific tactics to increase medical coding. One of these tactics is conducting health risk assessments, where insurers send nurses and other health professionals to patients’ homes and add diagnoses to patients’ charts solely to increase reimbursements.

Many of these tactics have contributed to billions in excess spending. An Inspector General’s report found that $7.5 billion in Medicare Advantage payments in 2023 were attached to diagnoses from 2022 that received no follow-up visits, procedures, or tests. Last month, two Inspector General reports detailed that Humana and UnitedHealthcare overcharged the government by nearly $180 million in their Medicare Advantage plans, with a similar lack of medical evidence to back these payments up.

Medicare Advantage’s faulty incentives that encourage upcoding have consequences beyond taxpayers’ wallets. As insurers upcode and inflate their Medicare Advantage reimbursements, they contribute to the insolvency of the Medicare hospital insurance trust fund, which finances Medicare’s hospital and skilled nursing care. That trust fund could become insolvent by 2033, according to the program’s trustees. Absent congressional action, depletion of the trust fund would trigger an estimated 11% cut in Medicare Part A payments, which could disrupt patient access to hospital care.

Patients and taxpayers deserve swift action to address the waste, fraud, and abuse. On the White House side, Vice President Vance’s task force could apply its artificial intelligence-assisted, proactive approach to identify improper Medicare Advantage coding, assisting DOJ and HHS enforcement efforts. In Congress, lawmakers should work to pass the No UPCODE Act without delay. The bill would address Medicare Advantage’s poor incentives by banning diagnoses added during health risk assessments and chart reviews, and tightening oversight of Medicare Advantage’s reimbursement practices.

If Vice President Vance is looking for a next step to build on his task force’s momentum, Medicare Advantage is the logical next target. The administration doesn’t need to build a new case. It simply needs to close the one that both Congress and the White House have already started.

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

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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