CMS Administrator Dr. Mehmet Oz highlighted areas where Medicare Advantage could improve — while reaffirming his support for the privatized Medicare program — during an event organized by the top MA lobby on Wednesday.
Oz’s comments reflect the difficult tightrope regulators in the Trump administration walk as they pursue MA reform, especially in the areas of improper overpayments and prior authorizations, without offending the powerful insurance industry.
“I came both to celebrate what you’re trying to do, but also be honest about some of the issues that we’re seeing at CMS,” Oz said during the Better Medicare Alliance’s forum in Washington, D.C. “The opportunities we have if we do this correctly are massive. I see Medicare Advantage as this essential lever arm, this tool that we can use for good — and sometimes not — but if we use it correctly and nimbly, we can do all kinds of things to refine and improve the system.”
In MA, the government pays health insurers a per-member, per-month fee for covering the care of Medicare seniors, with the hope that will incentivize insurers to invest in preventative care and improve members’ health outcomes, while saving the government money.
MA has grown to cover roughly 35 million people, or more than half of all Medicare enrollees, as seniors are attracted by the additional benefits the program allows, often at a cheaper cost to them. Some research suggests that MA does lead to better health outcomes.
But the privatized Medicare program has notable drawbacks. Insurers in MA can curtail beneficiaries’ access to care through narrower networks and utilization management strategies like prior authorizations, leading to concerning reports of seniors not being able to access medical services that they need. And though costs might be lower for enrollees themselves, MA costs the federal government much more than traditional Medicare — to the tune of $84 billion more this year alone, according to congressional advisory group MedPAC.
A major driver of that delta is a practice called upcoding. MA plans’ payments are adjusted higher based on the sicknesses of their members, a policy meant to prevent adverse selection and ensure that insurers covering sicker members are adequately compensated. However, it’s also created an incentive for payers to find and code as many medical conditions as possible, whether or not they necessitated treatment.
Regulators in the Biden administration enacted multiple policies meant to stop insurers from gaming MA’s payment system to artificially hike their reimbursement, a legacy that — despite his pro-business bent and historical support for the MA program — Oz has continued in the top post in CMS.
“We want to reward insurers for providing ideal care, optimal care, but we don’t want to have it cost more than fee-for-service Medicare,” the administrator said at the BMA event.
This spring, the CMS announced it would more aggressively audit MA insurers to find and claw back overpayments — a plan that Oz remains bullish on despite a setback in federal court last month when a judge tossed out a Biden-era rule underpinning Oz’s audit plan.
“You want to trust but verify … Sometimes folks don’t do their best, and you want to be there to attack that,” Oz said. “By not checking, you allow things to happen that pervert the system.”
The CMS did not respond to a request for comment on whether it plans to repromulgate the audit rule.
Oz also outlined his issues with home health risk assessments, surveys of beneficiaries’ health statuses that take place in the home. Insurers contend that at-home assessments are a key way to find and address members’ needs that may not show up during a doctor’s appointment, such as food insecurity. However, the assessments are also a contributor to inflated coding intensity, studies show.
Oz said generally he’s supportive of the visits as a lever for improving preventative care. But “what I’m not supportive of is coding problems that don’t get treatment or aren’t the focus of treatment,” the administrator added.
“If I identify a problem that I don’t treat and I don’t think warrants getting involved in, should I get paid extra for it?” Oz said. “I think that’s part of the dance that’s occurring here.”
Still, Oz said that MA is an important program for addressing mounting health costs and improving health outcomes. The regulator also stressed that the Trump administration plans to work with the private sector on solutions instead of pursuing unilateral reform, in line with a voluntary pledge to roll back prior authorization practices that it secured from health insurers earlier this year.
“If you want to be fast and effective and more nimble, you’ll use industry and have them do it, recognizing we’re here watching and we have the ability to take action when necessary,” Oz said, adding later: “This is a generational opportunity to make some of these changes that are better for the industry.”
