Former CMS administrator: Medicare Advantage is a 'money machine'

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An opinion piece co-authored by Donald Berwick, MD, former CMS administrator, chalks up the surge of Medicare Advantage offerings in recent years to the system being a "money machine" for payers. 

Dubbed the "Medicare Gold Rush," Dr. Berwick and former CMS Deputy Administrator Richard Gilfillan, MD, cites current per-life valuations for Medicare Advantage beneficiaries at $87,000 on average — a steep increase over valuations between $4,000 and $10,500 in the past, according to the Sept. 29 piece.

What drives the gold rush is the anticipated growth of Medicare spending, historic CMS overpayments to Medicare Advantage plans, heavy marked subsidies and the Direct Contracting Model, which privatizes the landscape, according to the authors.

The authors also focus on "risk-score gaming," which allows payers to drive overpayments by inaccurately pricing coming from CMS's Hierarchical Condition Category. The practice, which is at the heart of the Medicare Advantage model, results in driving taxpayer dollars straight to payer pockets, the authors argue.

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