Senate considers bill to tackle Medicare Advantage upcoding costs Image By HPN Staff Key Points The No UPCODE Act, introduced by Sens. Bill Cassidy (R-La.) and Jeff Merkley (D-Ore.), aims to change how Medicare Advantage (MA) payments are calculated by using two years of diagnostic data, excluding certain diagnoses, and requiring CMS to account for coding differences between MA and traditional Medicare. Proponents argue that inflated diagnostic coding has led to $50 billion in MA overpayments in 2024, threatening Medicare’s long-term solvency, while critics warn the bill could reduce benefits, increase costs for seniors, and lead to underdiagnosis. With more than half of Medicare beneficiaries now enrolled in MA and the Medicare Hospital Insurance Trust Fund projected to be insolvent by 2033, the debate underscores the program’s financial and political importance. The U.S. Senate is considering a bipartisan bill that proponents say will improve the way Medicare Advantage (MA) plans evaluate patients’ health risks, reduce overpayments and eliminate incentives for overcharging. It could save the federal government and taxpayers millions of dollars. Opponents say that the bill amounts to a Medicare cut and will significantly damage the popular MA plans. The No Unreasonable Payments, Coding and Diagnoses for the Elderly (No UPCODE) Act was introduced by Sen. Bill Cassidy (R-La.) and Jeff Merkley (D-Ore.) in March. The bill proposes adjusting how MA payments are determined by making three structural changes: Require the Centers for Medicare & Medicaid Services (CMS) to use two years of diagnostic data in its risk adjustment methodology for MA payments rather than the current one year of data Exclude diagnoses that are collected from chart reviews or health risk assessments from the risk assessment model Require the CMS to publicly account for any differences in coding patterns between MA and traditional Medicare when determining MA payment adjustments. Why it matters “Upcoding” — inflating the diagnostic codes submitted to CMS — has resulted in MA being overpaid by CMS by $50 billion in 2024, according to the Medicare Payment Advisory Commission. In a press release, Cassidy said, “Medicare is going insolvent, and our budget deficit is expanding. We need to stop overpaying where we can if we’re to preserve Medicare for Americans who rely on it.” Merkley was quoted in the release saying, “Fraud, waste and abuse by bad actors are destroying the stability of both Medicare Advantage and traditional Medicare — this must end. Our bipartisan bill cracks down on the fraudsters overcharging taxpayers by billions of dollars every year, closing the loopholes they use to turn sick patients into healthy profits.” While proponents say that addressing concerns over “upcoding” could save the government billions of dollars, others opine that reforms to the MA system will undercut it and amount to a reduction in Medicare benefits. Some industry experts predict that the bill’s provisions could reduce doctor visits and result in underdiagnosis and underpayment. Mike Tuffin, president and CEO of America’s Health Insurance Plans (AHIP) said in a statement released on June 9 opposing the measure that “Last-minute attempts to cut Medicare Advantage to fund other priorities would directly undermine that promise and lead to higher costs and reductions in benefits for more than 34 million seniors and people living with disabilities.” The bigger picture Traditional Medicare operates on a fee-for-service model, paying providers for services as they are delivered. Medicare Advantage is a Medicare-approved plan offered by a private company that contracts with the CMS for a standard fee, adjusted by a risk assessment model. The privately administered alternative to traditional Medicare is extremely popular, with more than half of the nation’s 68.6 million eligible Medicare beneficiaries enrolled in MA. The Medicare program is projected to cost $13 trillion over the next 10 years, and according to the 2025 Medicare Trustees Report, the Medicare Hospital Insurance Trust Fund will be insolvent by 2033, three years sooner than the previous prediction in the 2024 report.
