Lawmakers on Tuesday expressed concerns with Medicare Advantage (MA) during a joint hearing of the House Ways & Means Subcommittee on Health & Oversight. Indeed, one representative referred to the alternative to traditional Medicare as “Medicare Disadvantage.” And several have introduced legislation aimed at improving and protecting the program.
The four-hour hearing focused on lessons learned over the past 20 years, challenges and opportunities associated with the rapid growth in MA enrollment, and necessary improvements needed to ensure quality outcomes and value.
‘A broken risk adjustment system’
Matthew Fiedler, a health economist and a senior fellow at the Brookings Institution, one of several health care experts who testified before the committee, said one necessary improvement is to fix what he described as MA’s “broken risk adjustment system.”
It costs approximately 20 percent more to cover an MA member compared to a traditional Medicare enrollee, according to Fiedler. As a result, he said, plans received $84 billion in additional payments in 2025. He encouraged lawmakers to align payments to MA plans with the cost of covering comparable enrollees under traditional Medicare.
“Plans are paid more, mostly because of problems with the program's risk adjustment system,” he said in oral and written testimony. “Risk adjustment aims to align payments to plans with enrollees health care needs as predicted by their health conditions and other characteristics. However, the current system overstates the needs of MA enrollees because plans report more health conditions for their enrollees than would be reported for the same enrollees if they were enrolled in traditional Medicare, where the same incentives to record every possible diagnosis do not exist. This makes MA enrollees look more costly than they actually are.”
While it will require multiple reforms to fix the current risk adjustment system, Fiedler said one important step would be for lawmakers to specify how the Centers for Medicare & Medicaid Services (CMS) should calculate the coding intensity adjustment it uses to offset MA’s more intensive diagnosis coding; this adjustment is currently much too small, he said.
Sachin H. Jain, M.D., president and CEO of the SCAN group, noted in his written testimony that the current system allows for “gaming” of risk adjustment. Risk adjustment, he said, should reflect actual complexity, not aggressive documentation practices.
‘Distorted’ Star rating system
When asked during the hearing about policy changes affecting supplemental benefits, Dr. Jain said some of the difficulty involves the changes the CMS has made to Star ratings and the methodologies it uses to calculate cut points. As a result, he said, there has been a decline in the number of 4-star plans across the industry, which means plans receive fewer quality bonus dollars and less revenue. The bonus dollars are what Medicare Advantage plans use to fund supplemental benefits.
“I would submit that one of the challenges has been that the Star rating system has gotten more and more distorted,” he said, noting that SCAN sued CMS in federal courts because of its downgraded score and won. “I would just say we have Star rating system that is not necessarily doing what we hoped it would do, which is to reward quality in a robust measure of quality.”
He told lawmakers that they have an opportunity to grade plans more on a continuum as opposed to what he described as a “cliff rating system,” which ultimately results in lower benefits to MA members.
Prior authorization denials
Republican Rep. Barry Moore said that prior authorization is the number one complaint that he hears about from his constituents in Alabama. “It’s mind-boggling that the denial rate is so high,” he said. Moore asked Dawn Maroney, CEO of Alignment Health Plan and president of Alignment Health, how her organization has been able to get its prior authorization denial rate to below 2 percent.
Maroney said there are a lot of referrals that should be automatically approved with no hold timse. At Alignment, she said, more than 90 percent of prior authorizations that go through the system are automatically approved. In addition, she said prevention is critical. Every new member enrolled in its Jumpstart Assessment program is seen within the first 90 to 120 days to make sure there are no continuity of care issues.
Brian Miller, M.D., associate professor of medicine, Johns Hopkins University, and a practicing hospital medicine physician, noted in his written testimony that prior authorization was intended to curb low-value care, but too often it delays high-value, necessary treatments, especially for the most vulnerable.
He recommended “transparent, auditable, national, evidence-based standards for utilization management; ‘gold carding’ for trusted providers; and consumer transparency in denial and delay metrics.”
During the hearing, he said that artificial intelligence could be used to make the process more efficient. “If I can automate prior approval for a drug, a surgery, or an imaging study, that is a win, and we need to make that the default,” he said.
Potential legislative action
To address MA reform, senators and House representatives have introduced the following bills:
Prior authorization: Rep. Mike Kelly (R-Penn.) said during the hearing that the bipartisan Improving Seniors’ Timely Access to Care Act would address prior authorization concerns and streamline the process.
RELATED: Lawmakers take another stab at MA prior authorization reform
In a press release issued after the hearing, Kelly said the bill would establish an electronic prior authorization process for MA plans, increase transparency around MA prior authorization requirements, and require federal agencies to report to Congress on program integrity efforts.
Adequate provider payments: Rep. Lloyd Doggett (D-Texas), who referred to MA as “Medicare Disadvantage” during the hearing and later on social media, and Greg Murphy, M.D. (R-N.C.), have introduced bipartisan legislation to require MA plans to adequately reimburse health care providers for services.
The Prompt and Fair Pay Act establishes a floor requiring MA plans to reimburse for all covered health care items and services at least what would have been paid under Medicare Parts A and B; plans and providers may continue to negotiate higher reimbursement rates. The legislation establishes prompt payment rules for clean in-network claims, which are requirements that would mirror those under Medicare Part D.
New risk adjustment model: In March, Senators Bill Cassidy, M.D. (R-La.) and Jeff Merkley (D-Ore.) introduced the No Unreasonable Payments, Coding, or Diagnoses for the Elderly (No UPCODE) Act to improve the way MA plans assess patients’ health risks and reduce overpayments for care.
The bill would develop a risk-adjustment model that uses two years of diagnostic data instead of just one year; limit the ability to use old or unrelated medical conditions when determining the cost of care; ensure Medicare is only charged for treatment related to relevant medical conditions; and close the gap between how a patient is assessed under traditional Medicare and MA.