Congressional Joint Economic Committee Pegs Medicare Advantage Overpayments at $7 Billion Annually and Rising

Medicare Advantage overpays insurers by $212 per enrollee, which scales to roughly $7 billion a year in excess payments when applied to about 33 million enrollees. Medicare Advantage covers more than half of Medicare beneficiaries, so the overpayment affects the program broadly rather than only a small segment. Excess payments flow into insurer margins and into supplemental benefits used to attract enrollees, including dental, vision, hearing, gym memberships, and grocery cards. The overpayment is structural, stemming from risk adjustment coding incentives, county-level benchmark methodology used by CMS, and upcoding that generates diagnoses not produced under traditional fee-for-service claims. Industry reporting links extra payments to coding intensity and notes major insurer exposure to risk adjustment audits and investigations.

"Multiply $212 against roughly 33 million Medicare Advantage enrollees and the system is leaking about $7 billion a year in excess payments to private insurers. Medicare Advantage now covers more than half of all Medicare beneficiaries, which puts the overpayment in the middle of the program rather than at its edges."

"Where does the $7 billion go? Some flows into insurer margins, helping explain why publicly traded MA carriers rank among the largest U.S. healthcare companies. The rest funds supplemental benefits that drive MA marketing: dental, vision, hearing, gym memberships, and grocery cards traditional Medicare excludes."

"The overpayment is structural. It originates in three mechanics: risk adjustment coding incentives that reward plans for documenting more diagnoses, the benchmark methodology CMS uses to set county-level payment rates, and upcoding, where plans capture diagnoses traditional fee-for-service claims would never have generated."

"CMS announced a 2.48% average increase in Medicare Advantage payments for 2027, sending $13 billion in additional funding to private insurers, well above the 0.09% rate originally proposed in January 2026 that briefly k"

Read at 24/7 Wall St.