---
type: source
title: "MedPAC March 2025 Report: Medicare Advantage Status Report (Chapter 11)"
author: "Medicare Payment Advisory Commission (MedPAC)"
url: https://www.medpac.gov/document/march-2025-report-to-the-congress-medicare-payment-policy/
date: 2025-03-13
domain: health
secondary_domains: []
format: report
status: null-result
last_attempted: 2026-03-11
priority: high
tags: [medicare-advantage, risk-adjustment, overpayment, coding-intensity, favorable-selection, medpac]
processed_by: vida
processed_date: 2025-03-13
enrichments_applied: ["value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk.md", "CMS 2027 chart review exclusion targets vertical integration profit arbitrage by removing upcoded diagnoses from MA risk scoring.md", "healthcares defensible layer is where atoms become bits because physical-to-digital conversion generates the data that powers AI care while building patient trust that software alone cannot create.md"]
extraction_model: "anthropic/claude-sonnet-4.5"
extraction_notes: "Three new claims extracted covering the dual-mechanism overpayment structure, the inadequacy of current coding adjustment, and the underappreciated role of favorable selection. Three enrichments applied: extending the VBC payment boundary claim with empirical foundation, confirming the chart review arbitrage claim with specific dollar figures, and extending the atoms-to-bits defensibility claim with the dark mirror case of physical touchpoints enabling digital extraction. This is the authoritative source on MA's structural economics—MedPAC is the statutory advisory body to Congress, making this the most credible data available."
---

## Content

### Key Findings on MA Overpayments (2025)

- In 2025, federal government will spend **$84 billion more** for MA enrollees than if those same patients were in traditional FFS Medicare
- MA plans will receive **$538 billion** total — 20% more than FFS equivalent
- Two primary drivers of overpayment:
  - **Coding intensity: $40 billion** — MA enrollees' risk scores ~16% higher than similar FFS enrollees due to elevated coding intensity
  - **Favorable selection: $44 billion** — MA enrollees generally healthier than FFS despite similar risk scores; plans spend less per beneficiary than predicted
- Current CMS coding intensity adjustment: 5.9% reduction (deemed insufficient by MedPAC — actual coding differential is ~16%)

### 10-Year Overpayment Projections (2025-2034, per CRFB analysis of MedPAC data)

- **Total: $1.2 trillion** in overpayments over 2025-2034
  - Coding intensity: $600 billion ($260B HI Trust Fund impact, $110B beneficiary premiums)
  - Favorable selection: $580 billion ($250B HI Trust Fund impact, $110B beneficiary premiums)

### Coding Intensity Variation Across Plans

- Among largest MA organizations, coding intensity differences reach **26 percentage points**
- 16 organizations exceed FFS coding by over 20%
- In-home visits and chart reviews generated **$7.3 billion in "questionable" payments** during 2023 (per HHS OIG)
- Of 44 managed care audits by HHS OIG since 2017, **42 focused on diagnosis coding issues**
- OIG audits found **70% of diagnosis codes were not supported by medical records**

### Policy Recommendations

- MedPAC urges Congress to restructure risk-adjustment models
- Establish new benchmark payment policies
- CBO estimates reducing benchmarks could save $489 billion
- Increasing coding adjustment minimum from 5.9% to 20% could reduce deficits by over $1 trillion

### Year-Over-Year Consistency

- 2025 estimates mirror 2024 projections of ~$88 billion in additional overpayments
- Pattern is structural, not episodic

## Agent Notes
**Why this matters:** This is the most authoritative data source on MA's fundamental economic structure. The $84B/year overpayment figure — driven by coding intensity and favorable selection — is the empirical foundation for evaluating whether MA's "better outcomes" narrative is genuine efficiency or financial engineering. Directly challenges the claim that MA plans deliver better value.
**What surprised me:** The magnitude of favorable selection ($44B) nearly equals coding intensity ($40B). The narrative focuses on upcoding, but healthier-than-predicted enrollees are almost as large a driver. This suggests MA's economics depend on attracting healthier beneficiaries AND coding them sicker — a double extraction.
**KB connections:** [[value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk]], [[CMS 2027 chart review exclusion targets vertical integration profit arbitrage by removing upcoded diagnoses from MA risk scoring]]
**Extraction hints:** Claims about: (1) magnitude of MA overpayment as structural feature not aberration, (2) dual mechanism of overpayment (coding + selection), (3) inadequacy of current coding intensity adjustment, (4) 10-year fiscal trajectory of unreformed MA

## Curator Notes
PRIMARY CONNECTION: [[value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk]]
WHY ARCHIVED: Fills critical gap — KB has claims about VBC transition mechanics but no grounded data on the scale of MA's financial gaming. This is the empirical foundation.
EXTRACTION HINT: Focus on the structural economics (not individual fraud cases) — the $84B overpayment is a feature of the system design, not bad actors.


## Key Facts
- MA plans will receive $538 billion total in 2025
- Current CMS coding intensity adjustment: 5.9%
- Of 44 HHS OIG managed care audits since 2017, 42 focused on diagnosis coding
- CBO estimates reducing MA benchmarks could save $489 billion
- HI Trust Fund impact from coding intensity: $260B over 10 years
- HI Trust Fund impact from favorable selection: $250B over 10 years
- Beneficiary premium impact from both mechanisms: $220B over 10 years ($110B each)
