(Bloomberg) -- Democratic Senator Elizabeth Warren urged the Biden administration to advance a proposed rule before Donald Trump takes office to crack down on insurance companies that she says are overcharging Medicare by more than $80 billion.
At issue is Medicare Advantage, the private version of the health program for seniors that’s been a fast-growing market for insurance companies such as Humana Inc., UnitedHealth Group Inc. and CVS Health Corp.’s Aetna unit. Warren said excessive payments to private insurers will put more financial stress on Medicare during Trump’s second term, according to a letter seen by Bloomberg News.
“Without your swift action, the situation will only worsen,” with Trump policies set to cut taxes at the expense of social programs, Warren wrote in a letter to Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure. The letter was also signed by Lloyd Doggett, a Democratic congressman from Texas.
Representatives for CMS didn’t respond to requests for comment late Tuesday.
Warren argued that private Medicare insurers have been found to block access to care and defraud taxpayers. She asked the Biden administration to accelerate policies intended to limit abuses of the program.
Insurers broadly defend the system and say they’re paid appropriately for the risk they take on, but a growing number of watchdog reports and whistleblower lawsuits allege widespread abuses.
The letter said that Trump’s nominee to lead CMS, Mehmet Oz, has promoted expanding Medicare Advantage, including in a 2020 article suggesting that it could replace both traditional Medicare coverage and employer-sponsored coverage for younger people. Warren said such a plan would result in higher costs for patients and taxpayers, as well as more denials of care.
Under Biden, CMS proposed changes meant to limit abuses of the system in 2023. After pushback from the industry, CMS agreed to phase the policy in over three years, softening the financial blow. The changes would take place through separate regulations taking effect each year in 2024, 2025 and 2026.
Typically, the government issues the rules in late January for the following year. Warren’s letter is asking for the 2026 regulation to be adopted this month to make sure it’s in place before the Trump administration begins. A rule proposed before the end of Biden’s term would still need to be finalized under Trump.
Facing Restrictions
More than half of people on Medicare now get their coverage through private plans. Medicare Advantage plans often limit people’s out-of-pocket expenses, but in exchange patients may face restrictions on what doctors they can see and how they can access care.
Even as enrollment has grown, Medicare Advantage faces a growing drumbeat of criticism. The Medicare Payment Advisory Commission, a panel of experts that advises Congress, estimates the program pays 22% more to cover people through private plans than it would spend for the same beneficiaries in traditional Medicare, a difference of $83 billion this year. The group has called for an urgent overhaul.
Private Medicare plans get a fixed monthly payment from the government for each member they enroll. The amount is adjusted based on the expected medical costs of that person, with higher payments for plans with sicker members. If insurers record additional diagnoses like diabetes or heart disease, they get more money to cover associated medical expenses.
Warren’s letter cited “upcoding” strategies insurers use to boost their payments in Medicare Advantage plans, even when patients don’t receive treatment for those conditions.
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