Deceptive billing practices from big insurance companies may be driving up costs for all seniors on Medicare, according to a new report from the Congressional Joint Economic Committee out this week.
The report specifically examined billing practices for Medicare Advantage, the private insurance alternative to traditional Medicare used by tens of millions of seniors. The report does not dispute that the program provides valuable benefits – including dental, vision, hearing coverage, and prescription drug plans – but raises concerns that certain payment practices within the system may be forcing seniors to pay more out of pocket for care.
About 55 percent of Medicare beneficiaries are now enrolled in Medicare Advantage plans, reflecting the program’s growing popularity. But the report estimates that Medicare Advantage payments averaged roughly 120 percent of what it would cost to cover the same beneficiaries under traditional Medicare in 2025, resulting in an estimated $84 billion in additional federal spending.
Because Medicare Part B premiums are tied to program costs, those higher payments can ripple outward and affect all beneficiaries. According to the report, Medicare Advantage overpayments increased Part B premiums by about $212 per enrollee in 2025, totaling $13.4 billion in higher premiums nationwide.
Over the past decade, the cumulative effect has been even larger. Since 2016, these additional costs have added an estimated $82 billion to Part B premiums, meaning seniors and taxpayers alike have borne the financial impact. For some families, the added costs could be even higher – potentially hundreds of dollars extra each year due to inefficiencies in the system.
Those costs could grow in the years ahead if reforms are not implemented.
The report warns that if current payment trends continue, the additional premium burden could reach about $450 per beneficiary annually by 2035, at the same time that overall Medicare costs are projected to rise. Baseline Part B premiums themselves are expected to climb sharply – from roughly $2,200 per year in 2025 to about $4,500 annually within a decade.
That matters for millions of seniors because Medicare premiums are typically deducted directly from Social Security checks, meaning higher premiums translate into lower take-home benefits.
The report notes that the vast majority of this added burden ultimately falls on individuals rather than government programs. Roughly 85 percent of the increased premiums are paid directly by beneficiaries, while the remainder is covered by federal and state taxpayers.
Several factors appear to be contributing to these higher costs.
Rep. David Schweikert (R-AZ), who chairs the Joint Economic Committee, pointed to “aggressive upcoding, questionable quality bonuses, and structural overpayments” as key drivers.
Risk-adjusted payments in Medicare Advantage are designed to ensure that plans covering sicker patients receive more funding. In theory, this system helps guarantee that seniors with chronic conditions receive adequate care.
However, the system can also create incentives for insurers to document more diagnoses.
As The Wall Street Journal explained, Medicare Advantage plans receive higher reimbursements “to cover enrollees who have more health conditions.” While that structure can help protect patients with complex medical needs, it may also encourage insurers to record additional diagnoses that increase reimbursement levels.
A 2024 investigation by the paper highlighted one area where this dynamic may be occurring: in-home health visits conducted by nurses working with insurance plans.
While home visits can offer convenient care for seniors, the investigation found that nurses were sometimes encouraged to conduct extensive diagnostic screenings during visits and add additional diagnoses.
Between 2019 and 2021, the Journal reported, insurers received an extra $1,818 per visit on average, translating into roughly $15 billion in additional payments during that period.
Many of the diagnoses recorded during those visits appeared only on in-home assessments and were sometimes generated using automated software suggestions rather than confirmed through follow-up medical evaluation.
Medicare and Medicare Advantage remain important programs that support America’s seniors – many of whom spent decades paying into the system and continue to contribute through premiums during retirement.
For that reason, policymakers from both parties increasingly agree that the system must ensure funds are spent wisely and that payment structures do not unintentionally drive up costs for beneficiaries.
Controlling unnecessary spending is particularly important because Medicare’s financing structure means that higher program costs often translate directly into higher premiums for seniors.
AMAC Action has previously supported efforts in Congress to address these concerns. Last November, AMAC Action backed the No UPCODE Act, legislation designed to reduce incentives for aggressive diagnostic coding in Medicare Advantage.
The bill would require Medicare officials to adjust risk scores to account for differences in coding between Medicare Advantage and traditional Medicare. By limiting the ability of plans to inflate risk scores through additional diagnoses, the legislation aims to ensure that payments more accurately reflect patients’ actual health conditions.
Supporters say the measure would help protect both taxpayers and seniors while preserving the benefits and choices that Medicare Advantage offers millions of Americans.
As Rep. Schweikert put it, Congress must continue examining the program to ensure “affordability, fiscal responsibility, and fairness” for the seniors who rely on Medicare.
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