Congressional leaders from both parties called for major reforms to Medicare Advantage after a joint House hearing revealed the popular program is costing taxpayers $84 billion more per year than it should, with most of that excess going to insurance company profits rather than patient care. The House Ways and Means Subcommittees on Health and Oversight heard testimony showing that while 54% of Medicare beneficiaries now choose Medicare Advantage over traditional Medicare, insurance companies are systematically gaming the payment system and denying necessary care to boost profits.
“If we expect beneficiaries to trust these plans with their health and financial security, then those of us who lead them should be willing to do the same,” testified Dr. Sachin Jain, CEO of SCAN Health, proposing that Medicare Advantage executives should be required to enroll in their own companies’ plans.
Four Major Problems Identified
The hearing, led by Chairman Jason Smith (R-MO) and Ranking Member Lloyd Doggett (D-TX), focused on four critical issues plaguing the $400 billion program:
- Payment System Gaming: Insurance companies receive higher payments for sicker patients, but they’ve learned to artificially inflate patient “risk scores” on paper. The same patient typically receives a 10% higher risk score in Medicare Advantage compared to traditional Medicare. UnitedHealth patients, for example, are diagnosed with diabetic cataracts at 15 times the rate of traditional Medicare patients.
- Prior Authorization Abuse: Denial volumes have doubled since 2022, with 70% of denials overturned on appeal—indicating most were inappropriate. The Cleveland Clinic spends $25 million annually just managing these requests, while rural hospitals struggle with the administrative burden.
- Fake Provider Networks: Medicare Advantage plans routinely list doctors who aren’t available, accepting new patients, or even practicing anymore. Dr. Brian Miller of Johns Hopkins, one of the hearing’s expert witnesses, was stuck with an $8,000 bill due to inaccurate provider directories.
- Marketing Waste: Plans spend up to 20% of their budgets on advertising and broker commissions instead of patient care, paying brokers up to $780 for new enrollments plus $390 annually for retention.
Bipartisan Solutions Emerge
Despite political divisions, lawmakers found common ground on several reform proposals:
- AI-powered prior authorization that would instantly approve obviously appropriate care
- “Gold card” programs exempting doctors with good track records from pre-approval requirements
- Annual provider directory verification with penalties for inaccurate listings
- Caps on marketing spending to redirect funds toward patient benefits
Chairman David Schweikert (R-AZ) pushed for broader technology integration, including wearable health devices and connected medical records to prevent problems before they occur. Dr. Jain proposed allowing multi-year enrollment periods so plans would have incentives to invest in long-term patient health rather than focusing on annual enrollment cycles.
Political Reality
While Republicans emphasized making Medicare Advantage more efficient, Democrats called for bigger cuts to overpayments and increased oversight. However, the hearing demonstrated unusual bipartisan agreement on specific solutions. “The hearing showed that the question isn’t whether Medicare Advantage needs fixing—it’s whether Congress will make small tweaks or major changes,” said health economist Matthew Fiedler of the Brookings Institution. Several bills are already moving forward, including prior authorization reform with 220 House co-sponsors and provider directory accuracy requirements.
Urgent Timeline
The reform push comes as Medicare faces a funding crisis, with the Part A trust fund set to be depleted in seven years. With fewer than 2.5 workers supporting each Medicare beneficiary, automatic cuts of 11% to Medicare and 24% to Social Security loom without congressional action. Expert witnesses emphasized that while Medicare Advantage provides valuable benefits like coordinated care and lower out-of-pocket costs, the current system’s inefficiencies threaten both taxpayers and beneficiaries.” Only about 50 cents of every extra dollar actually helps patients,” testified Dawn Maroney, CEO of Alignment Health, highlighting the urgency for reform. The subcommittees plan additional hearings this fall as lawmakers work to balance preserving Medicare Advantage’s popular benefits while eliminating costly abuses that drain the system of resources meant for patient care.