About 500,000 Louisianans use Medicare Advantage. But critics say it's overcharging.

WASHINGTON — Medicare Advantage, the privately run insurance on which roughly 500,000 older Louisiana residents rely for health care, is facing calls for change in Congress.

Though hugely popular, critics say Medicare Advantage programs exaggerate patients' health conditions to receive more money from the federal government. They argue that it is draining the Medicare Trust Fund, which will run out of money in 2033, according to the fund's report released two weeks ago.

"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," said U.S. Sen Bill Cassidy, R-Baton Rouge.

Cassidy has proposed changes he says would limit the practice called "upcoding." The Congressional Budget Office estimated that changes to upcoding would save about $124 billion over 10 years.

AARP, the nationwide interest group that advocates for seniors, backs Cassidy's push.

"Upcoding leads to both inflated payments and higher premiums," said Denise Bottcher, state director of AARP Louisiana in Baton Rouge. "You're just driving up the costs of health care."

But America's Health Insurance Plans, the Washington-based trade association that represents the health insurance industry, opposes the bill.

"We oppose cuts to Medicare Advantage, including the No UPCODE Act, and urge Congress to keep the promise to America's seniors," AHIP President Mike Tuffin said in a statement.

Louisiana has more than 932,000 residents who are part of Medicare, 59% of whom are enrolled in one of the 112 Medicare Advantage plans available in the state. In the largest metropolitan areas, the percentages are higher — 69% in Baton Rouge, 75% in New Orleans; a little less in the smaller cities — 42% in Lafayette and 54% in Shreveport.

President Donald Trump, his backers and many enrollees praise Medicare Advantage, which has 33 million beneficiaries. And Project 2025, the conservative blueprint that has guided much of the administration's actions, advocates making Medicare Advantage the main option for senior health care.

Still, Republicans and Democrats on Capitol Hill are moving to revamp not just the way private insurers calculate payments but the procedures they use, such as pre-authorization of some medical services.

How it works

For 60 years, traditional Medicare has been available to every American on their 65th birthday and some younger people who are disabled. It directly pays medical care providers for the cost of treatments.

While more expensive for many, patients can go to any physician, clinic, hospital and hospice they like that accepts Medicare — and most do.

Seniors who choose Medicare Advantage generally pay lower premiums and can receive some services not offered in the government program, such as dental and vision coverage. But patients are limited to providers in the insurer's network.

In Medicare Advantage, private insurers pay providers for services rendered and the government pays the companies per patient, based on that person's health status. Higher-risk patients net the company more money.

The insurers themselves are responsible for diagnosing how sick the patients are.

Critics allege the private insurers are upcoding those diagnoses, including possible, perhaps likely, ailments to show the patient's condition as more severe and thus require higher payments.

The U.S. Department of Justice is investigating UnitedHealth Group, the nation's largest Medicare Advantage insurer, on allegations of upcoding and for denying too many claims. The company denies the allegations and states that it is cooperating.

Reining in "upcoding"

On Capitol Hill, both the House and Senate are looking at changing the upcoding system, which they argue incentivizes Medicare Advantage companies to over-diagnose.

The Medicare Payment Advisory Commission — experts charged with advising the federal government on policy — reported that the Medicare Advantage plans cost taxpayers about 22% more than traditional Medicare in 2024.

Limiting upcoding would save $124 billion over 10 years, according to the Congressional Budget Office, which calculates the financial impacts of legislation. Some experts espouse figures up to $270 billion, maybe more.

That's a large part of the roughly $470 billion the federal government paid private Medicare Advantage insurers last year, according to KFF, a San Francisco-based nonpartisan organization that researches health policy.

Cassidy joined four senators in December asking the Department of Health & Human Services to act against overpayments.

This year, Cassidy teamed with Democratic Sen. Jeff Merkley, of Oregon, to propose legislation that would change the system.

Their No UPCODE Act would use two years of diagnostic data instead of one to develop a patient's risk assessment. The bill also limits the ability to use old or unrelated medical conditions when determining the cost of care for individual beneficiaries.

Cassidy attempted to attach the bill's language to the recently enacted One Big Beautiful Bill Act, but was rebuffed by conservatives who felt Trump's budget reconciliation measure already was too unwieldy. They were also concerned that the addition of upcoding changes would attract ire enough from insurance companies to stall passage.

Cassidy now is negotiating inserting the legislation into a potential health package that some in Congress are trying to hammer out.

Change is not that easy

Opponents of the legislation counter that the proposed changes in patient diagnosis processes are fraught with problems.

For instance, the secretary of the Department of Health & Human Services would have to establish procedures to provide for identification and verification of diagnoses, "but it does not give any other details, so it is unclear how these processes will be defined moving forward," wrote Matthew Sprankle, Jason E. Christ and Teresa A. Mason of Epstein Becker & Green, P.C., a Washington law firm, in an analysis for The National Law Review.

A little more sanguine was Mike Hoak, vice president of public policy at Humana, another large Medicare Advantage insurer, on a panel at the AHIP 2025 Conference in Las Vegas that was covered by Fierce Healthcare, a New York City trade publication.

"There is a really bipartisan feeling amongst policymakers: 'I love the program,' and — for some of them, at least — 'I'd like to see it grow, but it is time for some nips and tucks'," Hoak was quoted as saying. "I think Medicare Advantage is at that inflection point right now."

Bill Sweeney, AARP senior vice president for government affairs, says Cassidy's bill would make Medicaid Advantage more fair.

"If someone comes in and they've got a heart condition, treat the heart condition, get paid fair for what that costs. But don't diagnose them with additional things that people who have heart conditions would have so that you can make it look like that person is sicker."

Plans still popular

Medicare Advantage plans remain popular.

Better Medicare Alliance, a Washington-based coalition that promotes Medicare Advantage, conducted a poll in June. The survey found 70% of voters thought the proposals would raise costs and reduce benefits. The survey included testimonials from seniors.

"Together, the polling and these real stories make clear: Medicare Advantage is not just the most popular coverage option for seniors — it is indispensable," the group concluded.

A JD Power study in 2024 found similar customer satisfaction results.

But the results of a February analysis that surveyed 76,557 Medicare Advantage beneficiaries found many did not fully understand their policies.

The study determined that Medicare Advantage enrollees often don't use the additional services offered and many aren't aware they exist, according to Mass General Brigham of Boston, the nation's largest hospital-based research enterprise. For instance, only 54.2% of Medicare Advantage beneficiaries were aware of having Medicare Advantage dental coverage, the analysis concluded.

"Medicare Advantage plans receive more money per beneficiary than traditional Medicare plans, but our findings add to the evidence that this increased cost is not justified," said author Christopher L. Cai, M.D.

Other concerns about Medicare Advantage

Congress is looking at more than upcoding in the health package being negotiated.

Other bills in the health care mélange would address prior authorizations — advance reviews to ensure proposed care meets coverage guidelines and is medically necessary — that lead to denial of claims and prescription benefit managers that lead to higher prices for drugs.

Each piece of legislation has different constituents.

For instance, the Louisiana Hospital Association and Louisiana Surgeon General Ralph Abraham are concerned about delays caused by Medicare Advantage's prior authorization processes.

"When used appropriately, prior authorization helps patients receive safe, timely, and affordable access to evidence-based care, but when used inappropriately, patients face delays that can jeopardize medical outcomes," Abraham and Paul Salles, head of the Louisiana Hospital Association, wrote in a letter to the Trump Administration.