Dr. Mehmet Oz, President Donald Trump’s pick to lead the CMS, pledged to scrutinize Medicare Advantage insurers in an effort to rein in costs during a confirmation hearing last week.
“We’re actually apparently paying more for Medicare Advantage than we’re paying for regular Medicare. So it’s upside down,” he said in front of the Senate Finance Committee Friday.
If confirmed, Oz, a physician and TV personality, would manage the federal agency that provides coverage to more than 160 million people through Medicare, Medicaid, the Children’s Health Insurance Program and the Affordable Care Act exchanges.
Oz has previously advocated for expanding the MA program and worked as a broker for the plans, according to the New York Times. Additionally, he owns stock in UnitedHealth Group, the nation’s largest MA insurer — though he has said he would divest his stake in some healthcare and pharmaceutical companies if confirmed as CMS administrator.
Oz could join the agency as MA, where private insurers contract with the federal government to manage beneficiaries’ care, has become an increasingly popular option for seniors and other enrollees.
However, the coverage option isn’t driving down costs for the government. Medicare will spend $84 billion more on MA enrollees this year than it would if those beneficiaries were in the traditional fee-for-service program, according to a report published last week by congressional advisory MedPAC.
One way to tackle higher costs in MA is through cutting down on upcoding, Oz told the committee Friday. MA plans are paid a fixed amount each month per member, adjusted for enrollees’ health risks.
But beneficiaries in the privatized plans tend to rack up more diagnosis codes than those in traditional Medicare, driving up their health risks and thus payments to insurers. Increased coding intensity and favorable selection of less expensive beneficiaries are the main reasons MA plans cost more, according to MedPAC.
During the hearing, Oz noted plans sometimes conduct health assessments to find new diagnoses to add to their medical records, even if those conditions wouldn’t require any additional healthcare services.
“If someone’s showing up at your home to figure out if you have a small plaque in your carotid [artery], because they’re going to charge a lot more for the care of your plaque — which they’re not actually going to do anything for — that’s wrong,” he said.
The nominee also argued the CMS could cut down the amount of prior authorization requests, where providers have to receive approval from patients’ insurers before they perform a service. Claims denials by MA plans, including through the use of artificial intelligence tools, has become a concern for lawmakers and regulators.
Oz suggested the CMS could limit the number of procedures subject to prior authorization to 1,000, compared to about 5,500 procedures today.
“A part of this is just recognizing there’s a new sheriff in town,” he said. “We actually have to go after places and areas where we’re not managing the American peoples’ money well.”
