US government intends to take $4.7 billion from health insurance companies

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A new Medicare regulation will aggressively audit Advantage plans for indications of overbilling.

The Biden administration has announced a new rule designed to crack down in Medicare private plans that have allowed insurance companies to overcharge the US government.

The regulation is seeking a more aggressive approach to auditing the Medicare Advantage program’s plans.

The Medicare Advantage program enrolls almost 50 percent of all the beneficiaries of Medicare. According to the Biden administration, it is expecting to recoup as much as $4.7 billion from insurance companies that have overcharged the federal government over the last ten years. This new oversight is also expected to act as a deterrent against future overpayments.

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This represents the strongest action the US government has taken against overbilling in over ten years. The new rule provides the government with the ability to conduct a more thorough audit after which it can recover funds from overpayments.

Medicare has faced heavy criticism for failing to defend itself from overcharges from insurance companies.

Health and Human Services Secretary Xavier Becerra announced the change at a news conference. There, Becerra acknowledged that Medicare has experienced considerable criticism for its weak stance against the ongoing issue of overcharging plans.

“Today, we are taking some long-overdue steps to move us in the direction of accountability,” said Becerra at the conference.

Medicare Advantage has been growing in popularity in recent years, particularly among older Americans, said Becerra. As a result, he said it is important for the agency to be certain that the private plans have proper oversight. “We want to encourage correct reporting across the program.”

Health insurance companies have been heavily lobbying against the rule’s policies, as they relate to a risk adjustment system. Therefore, it is expected that insurers will be filing legal actions against the federal government to fight the change. Becerra state that he would not be able to speculate on the size or nature of any possible litigation, but he underscored that he felt that the newly announced rule was ready for “prime time.”

“This rule is unlawful and fatally flawed, and it should have been withdrawn instead of finalized,” said large insurer trade group AHIP’s President Matt Eyles in a prepared statement.

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