---
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: unprocessed
priority: high
tags: [medicare-advantage, risk-adjustment, overpayment, coding-intensity, favorable-selection, medpac]
---

## 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.
