Federal government may be overpaying for veterans’ health care in Medicare Advantage plans

Key points:

• Approximately one in five of the veterans enrolled in a high-veteran Medicare Advantage (MA) plan did not incur any Medicare services paid by MA within a given year and instead received their health care through the Department of Veterans Affairs (VA).
• In 2020, the Centers for Medicare and Medicaid Services (CMS) paid more $1 billion to MA plans for enrolling VA-enrollees who did not utilize Medicare services, with nearly 20% of that funding directed disproportionately to high-veteran MA plans.
• The findings call for improved coordination between the VA and CMS in order to mitigate wasteful duplication of payments, especially amid VA budget constraints and growing veteran enrollment in MA plans.

Boston, MA—Medicare Advantage (MA) plans receive billions of federal dollars for enrolling veterans who receive no Medicare services, according to a new study led by Harvard T.H. Chan School of Public Health. The study highlights the growing prevalence of high-veteran MA plans—defined as plans where 20% or more of enrollees are veterans—and their implications for veteran care, suggesting that the federal government is paying for health care twice for an increasing number of veterans.

The study will be published Monday, November 4, in Health Affairs.

“As veterans navigate the increasing complexities of health care options, our research aims to inform policymakers and stakeholders about the urgent need to optimize the use of federal resources in veteran care,” said corresponding author Jose Figueroa, associate professor of health policy and management. “This is particularly important given the substantial budget constraints that the Veterans Affairs system is currently facing.”

The researchers used a variety of data from the Centers for Medicare and Medicaid Services (CMS) and Veterans Health Administration (VHA) to examine veterans’ health care enrollment and usage and the cost to the federal government. They found that between 2016 and 2022, the number of veterans enrolling in MA plans increased, with a notable rise in those joining high-veteran MA plans. Approximately one in five veterans enrolled in these high-veteran MA plans did not incur any Medicare services paid by MA within a given year, a rate more than double that of veterans in other MA plans and nearly six times greater than the general MA population. Instead, the veteran-enrollees were much more likely to receive their health care at VHA facilities. 

In 2020 alone, CMS paid more than $1.32 billion to MA plans for enrolling VA-enrollees who did not utilize Medicare services, which represents nearly a 60% increase from 2016. Nearly 20% of that funding was directed disproportionately to high-veteran MA plans. According to the researchers, this finding raises concerns about the efficiency of federal health care spending, given that MA plans are paid full capitated payments—set amounts of money per patient, regardless of their use of services—to cover comprehensive medical care. Meanwhile, the VA is prohibited from billing MA plans for Medicare-covered services.

“Our study holds important policy implications for leadership interested in improving the efficiency of federal resources for veteran care,” said Figueroa. “The results highlight the substantial extent of wasteful and duplicative federal spending on MA plans for enrolling veterans who do not receive any Medicare services.”

“The growth of high-veteran MA plans underscores the necessity to mitigate potentially wasteful payments and enhance care coordination between CMS and the VHA, especially amid ongoing enrollment growth in MA plans,” added first author Yanlei Ma, research associate in the Department of Health Policy and Management.

Other Harvard Chan authors included Jessica Phelan, Thomas Tsai, and Austin Frakt.

“Medicare Advantage Plans With High Numbers Of Veterans: Enrollment, Utilization, And Potential Wasteful Spending.” Yanlei Ma, Jessica Phelan, Kathleen Yoojin Jeong, Thomas C. Tsai, Austin B. Frakt, Steven D. Pizer, Melissa M. Garrido, Allison Dorneo, Jose F. Figueroa, Health Affairs, November 4, 2024, doi: 10.1377/ hlthaff.2024.00302

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Harvard T.H. Chan School of Public Health brings together dedicated experts from many disciplines to educate new generations of global health leaders and produce powerful ideas that improve the lives and health of people everywhere. As a community of leading scientists, educators, and students, we work together to take innovative ideas from the laboratory to people’s lives—not only making scientific breakthroughs, but also working to change individual behaviors, public policies, and health care practices. Each year, more than 400 faculty members at Harvard Chan School teach 1,000-plus full-time students from around the world and train thousands more through online and executive education courses. Founded in 1913 as the Harvard-MIT School of Health Officers, the School is recognized as America’s oldest professional training program in public health.