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Health Insurance · Medicare Advantage · Overpayments · Regulation
The Centers for Medicare & Medicaid Services (CMS) proposed flat reimbursement rates for 2027 and restricted "chart reviews" for Medicare Advantage (MA) plans, directly impacting major insurers like UnitedHealth Group and Humana, whose stock prices plummeted following the announcement.
This proposal aims to reduce billions of dollars in overcharges that have been common in the MA program for over a decade, as government auditors and the Justice Department, which recently settled a $556 million case with Kaiser Permanente, have criticized the practice of adding diagnoses to increase government payments. Health policy experts Spencer Perlman, Richard Kronick, and David Meyers support the administration's move, viewing it as a serious effort to crack down on overpayments and inefficiencies, with CMS Administrator Mehmet Oz stating it ensures accurate payments and protects taxpayers.
However, industry groups, represented by AHIP spokesperson Chris Bond, quickly voiced strong opposition, warning that the proposal could result in benefit cuts and higher costs for 35 million seniors and people with disabilities. CMS is accepting public comments until early April, and while past attempts to restrict chart reviews faced industry "uproar" and were withdrawn, analysts suggest CMS might partially backtrack or phase in changes, though plans are expected to remain profitable.
