Medicare Advantage Plans Receive Billions in Excess Funding for Veterans Health, Harvard Researchers Find

Medicare Advantage plans may receive as much as $1.3 billion in excess funding for veterans who receive nearly no care through Medicare, researchers reported in a Monday study.

Published in “Health Affairs,” the study — conducted by scientists from the Harvard School of Public Health, Boston School of Public Health, and the Veteran Affairs Administration — suggests that the federal government may be overpaying for veterans’ health care through programs like Medicare Advantage.

“Because MA plans receive full capitated payments regardless of whether or not veterans use Medicare services, the federal government can incur substantial duplicative, wasteful spending by veterans,” the paper’s abstract reads.

The study centered on veterans’ usage of Medicare Advantage, a type of Medicare coverage that offers slightly more services than the original plan. Since about 9 million American veterans are also covered by Veterans Affairs Health Care, researchers sought to determine how much excess federal funding was going to Medicare Advantage to serve veterans already covered by VA Care.

“We were seeing a broader phenomenon of what we were called affinity plans of Medicare Advantage, health plans marketing towards specific demographic groups,” Thomas C. Tsai ’05, a co-author on the paper and assistant professor in the HSPH Department of Health Policy and Management, said.

Per Tsai, High Veteran MA plans specifically targeted veterans but — more often than not — veterans under these plans still received the majority of their care from VA systems.

“Almost one in five of these veterans had received no Medicare services despite the Medicare Advantage health plans receiving payments,” Tsai said. “What this means is that it may be as much as $1.3 billion in duplicative or wasteful Medicare spending to health plans for essentially providing no care to veterans.”

Tsai said this federal overspending arises from a disconnect between the services and funding between VA Care and Medicare.

“The Veteran Affairs Administration is functionally, potentially being overcharged for care that the veterans could otherwise receive under their Medicare Advantage health plan coverage,” he said. “The other side of the coin is that Medicare is overpaying these health plans for care that they didn’t provide.”

While the paper calls into question the unused federal funding to Medicare Advantage, Dana Montalto — a clinical instructor in the Harvard Law School’s Veterans Legal Clinic — said having more health care options for veterans isn’t necessarily a bad thing.

“People often have the ability to access multiple health care systems and make that choice about which one is the right one for them, given their background and their health needs,” she said.

“Some veterans are eligible for VA health care, but might choose not to use that system for some very legitimate reasons,” she added. “There are also many people who wish they had access to VA health care, but don’t meet the restrictive eligibility criteria.”

Tsai said the federal government should intervene to streamline care for veterans, ensuring that they receive the proper care without financial exploitation.

“There’s an opportunity, I think, to work collaboratively across the agencies,” he said. It “may need congressional authority to change some of the regulations and statutes that guide the way that these Medicare Advantage plans are being paid — especially for veterans that may not be receiving any care.”