OIG Report Exposes Medicare Advantage Overpayments and Legislative Ignoring of Favorable Selection

UnitedHealth Group, with a market capitalization of around $336 billion, dwarfs even the $219.7 billion budget for Medi-Cal in California. Yet, a recent report from the Office of the Inspector General (OIG) at the U.S. Department of Health and Human Services suggests that financial scale may not equate to financial integrity in Medicare Advantage (MA) financing.

The OIG examined data from 11 high-risk groups served by UnitedHealthcare of Wisconsin and found that most of the diagnosis codes submitted by UnitedHealthcare did not comply with federal requirements. The OIG estimated that this resulted in at least $46.9 million in overpayments for 2020 and 2021, though UnitedHealthcare disputes some of the findings. This alleged miscoding is part of a larger issue, as MA insurers are expected to cost 14% more per beneficiary than traditional fee-for-service Medicare by 2026, driven by practices like cherry-picking healthier seniors and upcoding risk.

The extra cost for MA enrollees is estimated to be $76 billion in 2026, with the Republican-led House Ways & Means Committee passing the "Apples to Apples Act" to ignore favorable selection differences, effectively erasing $57 billion of the cost difference. Critics argue this ignores reality and could lead to further abuses, such as delayed or denied care for beneficiaries with serious healthcare needs.

Despite bipartisan efforts to curb these abuses, such as the Improving Seniors’ Timely Access to Care Act of 2025, there is little legislative effort to limit upcoding abuses. The Save MEDICARE Act of 2026, which requires strict scrutiny of MA coding, has only Democratic sponsorship and is politically unlikely to pass. Brendan Williams, president & CEO of the New Hampshire Health Care Association, warns that ignoring favorable selection could relegate the sickest Medicare beneficiaries to fee-for-service plans, creating a system reminiscent of pre-Affordable Care Act high-risk pools.