Opinion: To cut ‘waste and fraud,’ reform Medicare Advantage

The Washington Post – Tuesday, April 22, 2025
By Editorial Board

Editorials represent the views of The Post as an institution, as determined through discussion among members of the Editorial Board, based in the Opinions section and separate from the newsroom.

Republicans in Congress have made a lot of noise about eliminating “waste and fraud” in federal health-care spending. If they were serious about this goal, they would start by overhauling something they long have championed: Medicare Advantage.

The program, in which private insurers oversee older people’s health benefits, was designed on the idea that the private sector could deliver medical coverage more efficiently than government-run, fee-for-service Medicare. But it has proved to be a boondoggle.

Costs have exploded for the Advantage program, which now insures most Medicare beneficiaries. This year, the government is expected to pay about $84 billion more for people using Medicare Advantage than if they had used traditional Medicare, according to a report from the Medicare Payment Advisory Commission.

This is partly a result of the complicated way the government pays Medicare Advantage companies. People on these plans are typically healthier than those on traditional Medicare, so if they were on a fee-for-service model, they would be less expensive for the government to cover. Instead, with Medicare Advantage, the government pays insurers a flat fee based on the average cost of (more expensive) traditional Medicare patients.

Another big reason for the higher cost is exactly the sort of “waste and fraud” that everyone wishes to excise from government. The government developed a formula to incentivize insurers to cover sick patients by paying the companies more for patients with greater health risks. Insurers responded as might have been expected: They started playing with patients’ medical codes to make them seem less healthy than they were — and therefore more profitable.

This practice — known as “upcoding” — has been well-known for decades, but insurers have become ever more brazen in gaming the system. In 2023, Cigna Group agreed to a $172 million settlement with the Justice Department over claims that it submitted inaccurate diagnosis codes to increase its Medicare Advantage payments. (Cigna did not admit any liability as part of the settlement.) Meanwhile, an investigation last year by Stat, a health news site, showed how UnitedHealth Group, the largest Medicare Advantage insurer, pressured doctors in its network of providers to maximize payments from Medicare, often with questionable diagnoses.

UnitedHealth defends its practices: “Our clinicians use their independent judgment,” it said in a statement, “and our coding practices are strictly regulated and audited by [the Centers for Medicare and Medicaid Services].” Like other Medicare Advantage insurers, it has argued that by coding more ailments, it might nudge doctors to provide care before the conditions become more expensive to treat. But this preventive care is often not being provided: A Wall Street Journal investigation found that in 2021, insurer-driven diagnoses that were not treated generated $8.7 billion for UnitedHealth, roughly half of its net income that year.

Reforming Medicare Advantage to eliminate such abuses would be a significant departure from GOP orthodoxy. Traditionally, Republicans have defended Medicare Advantage as a victory for private over public insurance. In fact, Project 2025 proposed making it the default coverage option for seniors.

But Republican lawmakers — especially those with backgrounds in the medical field — are increasingly fed up with upcoding. The practice is a “terrible waste of the taxpayer dollar,” Rep. Mike Kennedy (R-Utah) said in a recent interview with Stat. Sen. Bill Cassidy (R-Louisiana) also pressed the issue during confirmation hearings for Mehmet Oz, the new director of the Centers for Medicare and Medicaid Services. Oz responded by promising to crack down on abusive practices, calling himself “a new sheriff in town.”

These are heartening signals. CMS under the Biden administration had already sought to reform its risk model for Medicare Advantage plans to limit abusive practices, and the Trump administration has indicated it will keep these changes in place. But more can be done. Some insurers, for instance, give health-care providers financial incentives to enter more codes for a patient. Oz should consider outlawing this practice.

Meanwhile, Congress should take up reforms, such as the No Upcode Act. This bipartisan bill would change how CMS’s risk model works while also barring insurers from adding diagnoses to a patient’s risk score based on retrospective “chart reviews” of their medical records or health risk assessments they set up, often at patients’ homes. The goal, in short, is to pay insurance companies only for diagnoses that patients are actually treated for.

Too often the Trump administration’s efforts to root out “waste and fraud” — especially by its U.S. DOGE Service — are fishing expeditions for reasons to slash spending it doesn’t like. But the need to end the gaming of government programs is real, as Medicare Advantage shows. If Republicans want to show they can govern seriously, they should tackle this problem head-on.

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