Confirmation hearings for Mehmet Oz, President Trump’s choice to lead the Centers for Medicaid & Medicare Services (CMS), have begun. Since CMS administers the Medicare program, Oz’s stance on the expansion of Medicare Advantage (MA)—a privately-operated alternative to traditional Medicare—could exacerbate existing issues in the American healthcare system and open new doors for healthcare fraud.
Medicare Advantage has grown steadily in popularity over the last few decades, with over half of all Medicare beneficiaries opting into an MA plan in 2023. These plans differ from traditional Medicare because they don’t operate on a “fee-for-service” model, which is when healthcare providers are paid based on the services they provide. Instead, CMS pays fixed, monthly payments to private insurers for each Medicare beneficiary. The amount of the payment is determined through a “risk adjustment” process that is designed to ensure that CMS pays more for certain individuals who are likely to incur higher healthcare costs based on their demographics and health status.
Oz has been a big proponent of MA as an alternative to traditional Medicare. In his 2022 Senate campaign, he ran ads promoting “Medicare Advantage for All,” his plan to offer MA plans to every American not on Medicaid. Years earlier, he penned an OpEd with a former Kaiser Permanente CEO—one of the many insurance companies that operate MA plans—advocating for the same. While Oz will technically report to the head of HHS, Robert Kennedy Jr., he is likely to have a lot of latitude to implement his own policy priorities for MA since Kennedy seems to be focusing elsewhere.
Advocates argue that Medicare Advantage offers enticing benefits, such as vision care and capped out-of-pocket expenses. However, MA plans face scrutiny for high error rates in prior authorizations, resulting in delayed or denied care, which can have devastating consequences for patients with critical conditions. They also limit beneficiaries to networks of approved medical providers, unlike traditional Medicare which is more widely accepted by hospitals and doctors.
Moreover, a troubling trend has emerged: according to the Wall Street Journal, MA beneficiaries nearing end-of-life are twice as likely as other enrollees to switch back to traditional Medicare due to access issues just as their healthcare needs and associated costs surge. This pattern suggests that MA plans may profit from enrollees when they are relatively healthy while passing costly patients back to traditional Medicare when their needs intensify. For seniors forced to make this switch later in life, the financial burden can be overwhelming, as Medigap companies often charge substantially higher premiums—or deny coverage altogether—when beneficiaries enroll after the age of 65, leaving elderly, fixed-income individuals to shoulder Medicare copays and other out-of-pocket costs on their own.
If this wasn’t troubling enough, MA—which is often lauded as a public-private partnership with the aim of cost savings—has proven significantly more expensive to taxpayers than traditional Medicare. The government is projected to pay $88 billion more in 2024 alone for MA enrollees than if they were in traditional Medicare. That’s nearly a 23% delta in costs, which for scale, is more than the GDP for the entire state of Maine, or as a recent government report calculates, nearly $200 of taxpayer money per beneficiary per year. The drastic increase in costs is difficult to reconcile with the fact that MA beneficiaries tend to be younger and healthier than traditional Medicare beneficiaries.
The high cost of Medicare Advantage to taxpayers warrants a reckoning for a system that is especially vulnerable to fraud, waste, and abuse. CMS estimated over $19 billion in improper payments for MA beneficiaries in fiscal year 2024 alone. Targeted audits of MA data have shown a similar, concerning trend, including one recent audit that estimated one New York health plan was overpaid by $130 million in 2015 alone. Nearly every large insurer participating in the program has been, or is being, sued, in lawsuits that have recovered hundreds of millions of taxpayer dollars, including a recent settlement of up to $100 million by one of our clients, Teresa Ross.
Oz, in his confirmation hearings, recognized the surprising cost discrepancies and promised enforcement actions against fraudsters. But while Medicare Advantage’s private-public partnership model continues to outpace traditional Medicare, it’s not clear whether this shift genuinely benefits patients or if it simply drives up costs and limits choices. While reforming Medicare Advantage’s flaws may prove challenging, the federal and state False Claims Acts (FCA) remain potent tools in preventing the escalation of fraud within the program. These laws allow whistleblowers to sue MA organizations and other healthcare entities that they allege are defrauding the government and recover damages and penalties on the government’s behalf. They also incentivize whistleblowers to act by offering financial awards and retaliation protections.
By empowering whistleblowers to report deceptive practices, the FCA not only recovers government funds but also deters organizations from engaging in fraud, helping to protect taxpayer dollars and direct resources to patients who need them. In fact, whistleblower cases involving the MA program have already led to hundreds of millions of dollars in recouped taxpayer money. The FCA’s role in holding managed care accountable is crucial to preserving Medicare’s integrity and ensuring that public funds genuinely serve those who rely on this vital program.
The attorneys at Whistleblower Partners have significant experience representing whistleblowers in cases alleging fraud against the Medicare Advantage program. If you would like more information or wish to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.
