CMS Proposes Flat Medicare Advantage Rate Increase and Chart Review Restrictions
The Centers for Medicare & Medicaid Services (CMS) has proposed a series of adjustments for Medicare Advantage health plans for 2027. These proposals include a nearly flat increase in reimbursement rates and new restrictions on "chart reviews," aiming to ensure accurate payments within the program that serves approximately 35 million beneficiaries. The announcement has drawn opposition from the health insurance industry and led to a significant public comment campaign, with a final decision from CMS expected by early April.
Proposed Changes for 2027
On January 26, CMS officials announced a planned rate increase of less than 0.1% for Medicare Advantage plans in 2027. This proposed adjustment was below the expectations of the health insurance industry and reportedly resulted in declines in stock prices for major publicly traded insurers, including UnitedHealth Group and Humana.
Additionally, CMS proposed restricting plans from conducting "chart reviews," a practice where plans can add new medical diagnoses for patients, which subsequently increases government payments to Medicare Advantage plans.
Concerns Regarding Overpayments and Past Actions
The Problem with Chart Reviews
Government auditors have raised concerns about the practice of chart reviews for over a decade, citing billions of dollars in alleged overpayments.
"The federal government pays Medicare Advantage plans higher rates for sicker patients, leading to frequent allegations, often referred to as "upcoding," where health plans are accused of exaggerating patient sickness to secure higher payments."
Auditor Findings and Settlements
A December 2019 report by the Department of Health and Human Services inspector general found that chart reviews "almost always" resulted in the addition of diagnoses, with over 99% of reviews reportedly adding rather than deleting them. Diagnoses reported solely through chart reviews, without corresponding service records, were estimated to account for $6.7 billion in payments in 2017.
Earlier this month, the Justice Department announced a $556 million settlement with Kaiser Permanente. The settlement addressed allegations that the company added approximately 500,000 diagnoses to its Advantage patients' charts between 2009 and 2018, which reportedly resulted in about $1 billion in alleged improper payments. Kaiser Permanente did not admit wrongdoing as part of the settlement.
Administration's Stance
Experts in healthcare policy, such as Spencer Perlman and Richard Kronick, have indicated that the current administration appears committed to addressing these payment practices.
A CMS official stated that curbing such practices would help ensure accurate payments and protect taxpayer funds.
CMS previously attempted to restrict chart reviews in January 2014 but withdrew the plan months later following industry opposition.
Industry Reaction and Advocacy Group Campaign
Industry Opposition
The health insurance industry has voiced opposition to the proposed payment rates.
Chris Bond, a spokesperson for AHIP (America's Health Insurance Plans), suggested the proposal could lead to benefit cuts and higher costs for beneficiaries.
Conversely, David Meyers, an associate professor at the Brown University School of Public Health, noted that such claims are common from health plans, which often remain profitable even with less favorable payment adjustments. Matthew Fiedler from the Brookings Institution also suggested that industry groups tend to overstate the negative impacts of rate decisions.
Coordinated Public Comment Campaign
During the public comment period, a significant portion of submissions supported higher Medicare Advantage payments. Data analysis by KFF Health News found that approximately 83% of over 16,300 comments posted on a federal website were identical to a template provided by Medicare Advantage Majority.
This advocacy group, which states it is "dedicated to protecting and strengthening Medicare Advantage" and does not disclose its funders, accounted for at least 13,519 of the 16,324 comments published by CMS as of March 11.
Medicare Advantage Majority's Campaign
Medicare Advantage Majority has spent over $3.1 million on Facebook ads since September 2024 to promote its campaign. The group characterizes the proposed rate plan as a "cut" that "puts access to care at risk," warning of potential loss of benefits such as affordable prescriptions, capped out-of-pocket costs, and access to doctors and specialists for seniors.
Concerns Over Grassroots Support
Critics, including Michael Beckel of Issue One, argue that campaigns with undisclosed funders can create a misleading impression of widespread grassroots support. While some beneficiaries, like EsterAlicia Rose, 75, and Kathy Lovely-Marshall, 66, confirmed signing the group's form letter due to appreciation for benefits like dental care and prescription coverage, another beneficiary, Corenia Branham, 90, denied signing, despite a form letter appearing under her name online.
Next Steps
CMS stated that it focuses on reviewing the substance of timely public submissions. The agency is scheduled to announce its final decision on the rate proposal by early April.