Improving Medicare Advantage By Accounting For Large Differences In Upcoding Across Plans

As a result of insurers “upcoding” patient diagnoses, the Centers for Medicare and Medicaid Services (CMS) overpaid Medicare Advantage (MA) by $50 billion (or 13 percent) in 2024, according to the Medicare Payment Advisory Commission (MedPAC). Upcoding in this context refers to the practice of reporting diagnostic codes for more serious—and more expensive—conditions than would have been included on a fee-for-service bill had the same patient been in traditional Medicare (TM).

The degree of upcoding varies a great deal across Medicare Advantage organizations (MAOs), the insurers sponsoring one or more MA plans. MedPAC estimated a 15-percentage-point variation in coding intensity among the eight largest MAOs and found 10 MAOs with coding intensity more than 20 percent higher than levels...

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