Saturday, July 11, 2026

Medicare Advantage Companies Bank Billions in Bonuses



July 10, 2026

After stealing hundreds of billions of dollars from taxpayers, insurance companies in the Medicare Advantage program are going to face significant government action. And significant government action, in this case, means that the federal government is going to award an estimated $13 billion to the insurers in bonus payments.

These bonuses are not officially a direct reward for insurance companies exploiting taxpayers, but they are emblematic of a completely broken system.

Quality bonuses in the Medicare Advantage program are meant to reward insurers for providing high-quality plans to seniors and others who qualify for Medicare. The Centers for Medicare & Medicaid Services (CMS) maintains a five-star quality rating system, and the agency awards bonuses for plans that earn at least four out of five stars. As currently structured, this system was created by the Affordable Care Act in 2012.

For 2026, the stars themselves are meant to reflect 43 or 33 measures of clinical quality, patient experience, and administrative performance (there are more measures if the Medicare Advantage plan includes a prescription drug benefit).

However, the Medicare Payment Advisory Commission (MedPAC) has repeatedlyover the years lambasted the quality star program—even calling for its abolishment—due to it being inaccurate, unreliable, and significantly increasing government spending. For example, in March 2026, MedPAC summarized in their report:

An excessive number of measures are assessed, and many administrative and process measures are not reflective of the quality of care and/or experience that plan enrollees can expect to receive.

MedPAC is not alone as several published analyses found that the measures underlying the star ratings do not adequately and meaningfully separate the quality of different plans, and the creation of the quality star system did not improve key quality measures of plans.

To highlight some examples of glaring issues with the quality bonus program: CMS awards bonus payments at the contract level, and insurers can include several, even hundreds, of plans in a single contract. This effectively means, as MedPAC has noted, that the star rating for an entire contract can bear little to no resemblance to patients’ experiences with their specific plans. Additionally, the government has allowed insurers to combine contracts in a manner that inflates their star rating and enables them to rake in higher bonus payments.

Additionally, the measures of “quality” are curious when zooming out to the larger view of what constitutes successful health care coverage. Quality measures includebut are not limited to whether patients get their annual flu vaccine, whether they are screened for breast or colorectal cancer, and how much they adhere to taking specific prescribed medications (ex: statins). Another measure is whether they received advice from a doctor in the past year on starting, increasing, or maintaining their level of exercise.

These measures do not directly account for widely known quality issues with Medicare Advantage and private insurance in the United States more generally. Unlike traditional Medicare, private plans operate in restricted networks, meaning that patients have much less choice in what doctors they can see. Many providers have stopped accepting Medicare Advantage plans due to lower reimbursements and the administrative hassle of dealing with private insurers. Administrative bloat is a feature of private insurance in the United States, as both publicly-administered Medicare and Medicaid have far lower administrative costs than their private counterparts.

Insurance companies use prior authorization to delay and deny important care, to the extent that 93 percent of 1,000 surveyed physicians in 2024 reported that prior authorizations delayed access to necessary care always (15 percent), often (42 percent), or sometimes (36 percent). Additionally, 82 percent of physicians reported abandoning recommended care always (2 percent), often (20 percent), or sometimes (60 percent).

Also, there is little to no evidence that Medicare Advantage plans use the quality bonus payments to improve their coverage. This reality is not surprising. MA plans are significantly more profitable for insurance companies than their other types of offerings; yet, insurers have repeatedly threatened to, and have actually, cut benefits and plan offerings when the government has moved to rein in overpayments.

Overpayments are a massive issue in the Medicare Advantage program, with MedPAC estimating $76 billion in taxpayer money unnecessarily going to insurance companies in 2026. This follows $84 billion in estimated overpayments in 2025, and MedPAC additionally estimated nearly half a trillion in overpayments for the period from 2020 to 2026.

These overpayments are a result of intentional strategies by insurance companies to rip off taxpayers. Insurers make patients seem sicker than they actually are — a practice called upcoding — which results in the government giving them higher payments for each seemingly sicker patient. At the same time, these companies engage in favorable selection: the practice of intentionally choosing healthier patients that will require less money to cover. Insurers profit in Medicare Advantage by getting as much money per patient as possible from taxpayers and then spending as little as possible in covering care.

When patients need to utilize health care services more, or the government potentially reins in overpayments to the extent that profits are reduced, insurance companies can and have responded by eliminating plans and decreasing the quality of others by offering fewer, worse benefits.

Simultaneously, the insurance lobby has been very effective in stopping Congress and the Trump administration from legislatively ending or even just limiting the tens of billions of dollars in annual waste, fraud, and abuse. Congress has never voted on existing bipartisan legislation to address upcoding, and this bill was excluded from the One Big Beautiful Bill in 2025 even though it was introduced by Republican Senator Bill Cassidy. When CMS proposed to only increase the payment rate to insurers by 0.09 percent given the massive overpayments, insurance lobbyists got the Department of Health and Human Services (HHS) to reverse course, increasing the payment rate by 2.48 percent. In Congressional testimony, HHS Secretary Robert Kennedy, Jr. publicly admitted to such industry influence.

This industry lobbying campaign succeeded even though both Secretary Kennedyand CMS administrator Dr. Mehmet Oz have castigated the practice of upcoding, with Oz even calling companies that upcode “scoundrels.” A clear indication as to why this campaign succeeded is that seven of the largest insurance companies that offer MA plans spent more than $330 million lobbying between 2020 and 2024. Public reporting has revealed that this lobbying barrage included a focus on preventing the government from cutting overpayments.

Given the reality of industry control of the federal government, it comes as no surprise that CMS will hand an estimated $13.4 billion in quality bonuses to Medicare Advantage plans in 2026, meaning that the government will have given industry $50.7 billion in such bonuses from just 2023 to 2026.

Ultimately, bipartisan members of Congress, MedPAC, the HHS Secretary, the head of CMS, and independent researchers across the political spectrum have all recognized the massive waste, fraud, and abuse in the Medicare Advantage program. The only powerful actor in support of the current system is the insurance industry itself. Yet, “somehow” policymakers have not fundamentally changed any aspect of the Medicare Advantage program that would do away with billions in stolen taxpayer dollars.

This first appeared on CEPR.

Brandon Novick is a Program Outreach Assistant for the Domestic Team at the Center for Economic and Policy Research in Washington, D.C.

The Fraudulent War on Medicaid Fraud


 July 10, 2026

Photo by Markus Spiske

The Trump Administration has launched a novel attack on Medicaid accusing blue state Attorneys General (AGs) of not cracking down on fraud — and using that as an excuse to cut funding for New York State’s Medicaid fraud agency, which has a strong record of stopping fraud.

To be clear, allegations of Medicaid fraud do not claim that individual Medicaid beneficiaries have cheated the government and enriched themselves. States have in place rigorous protocols for verifying the eligibility of individuals for enrollment in their Medicaid programs. While an individual who is not eligible may occasionally slip through and receive health care that they are not entitled to, this is fairly rare and does not result in cash payments to the individual.

The real Medicaid fraudsters are insurance companies whose Medicaid Managed Care Organizations (MCOs) overbill the Medicaid program, cheating states and the federal government to enhance corporate profits. And they are vendors and service providers that hatch schemes to falsely bill Medicaid to line their own profits. And by all available evidence, state Attorneys General – most notably New York’s – have successfully pursued these cases, returning billions in recovered funds to the Medicaid program.

This type of corporate fraud is well-documented. Centene Corporation, the insurance company that is the largest provider of Medicaid MCOs by number of Medicaid recipients enrolled, has settled with at least 20 states that accused it of overbilling Medicaid for its in-house pharmacy benefit operations. Centene allegedly overcharged Medicaid for prescription drugs and, in some states, double-billed state Medicaid programs for fees and services related to dispensing the drugs. In total, Centene has settled these claims for more than $1 billion. California, which had the largest publicly reported settlement, recovered more than $215 million – more than twice the value of Centene’s inflated price charges – which it split with the federal government.

Molina Healthcare, the insurance company that enrolls the second largest number of Medicaid beneficiaries, has paid tens of millions of dollars to multiple states to resolve False Claims Act violations. Molina, which previously owned mental health services provider Pathways of Massachusetts, agreed to pay $4.6 million to resolve allegations that it wrongly submitted claims for services provided by mental health staff that were not properly licensed and supervised.  Texas Attorney General Ken Paxton brought an enforcement action against Molina for failing to assess Medicaid beneficiaries in the state who were eligible for services because they were blind, disabled or elderly and concealing its noncompliance so it could continue collecting payment for managing the care of these individuals. Molina settled these charges for $40 million.

Hospital and health system Universal Health Services (UHS) and its subsidiary Turning Point Care Center have settled with the Department of Justice for allegedly billing Medicaid inappropriately for inpatient behavioral health services that were not medically necessary while failing to provide needed services for adults and children treated in UHS facilities. UHS will pay $117 million to the federal government and states that participated in the settlement; Turning Point will pay $5 million. State Attorneys General, state Medicaid fraud agencies, and the Department of Justice participated in the investigation.

Vendors of durable medical equipment, suppliers of skilled nursing services, providers of nonresidential mental health services, personal care service providers or agencies, and even management consultant firms are examples of serviceproviders who have been investigated for abuse of Medicaid patients or fraudulently billing Medicaid.

In the consulting company case, the Virginia Medicaid fraud unit (in collaboration with multiple federal agencies) pursued a criminal investigation. The global consulting firm had advised its client, an opioid manufacturer, about sales and marketing of the client’s extended release product. The firm was held to be criminally responsible for advice resulting in the commission of a crime by the client. The case led to a $650 million settlement.

Existing State Anti-Fraud Strategies Appear to Be Working

MCOs have been encouraged to report Medicaid fraud by providers to their state Medicaid fraud investigation agencies. In 2025, they reported 5,991 cases of suspected fraud; investigations were opened in 1,114 of these suspected cases. This is up from 2,971 suspected cases referred to state fraud units in 2021.

A total of $2 billion was recovered for Medicaid in 2025 by investigations conducted by state Medicaid fraud investigators, either on their own or in collaboration with other state and federal investigation units. Civil settlements accounted for $706 million, of which $506 million resulted from state investigations without federal participation. Indiana, New York, Colorado, and Georgia were responsible for half of the total civil settlements in 2025. Criminal investigations resulted in the recovery of $1.3 billion for Medicaid, $1.2 billion for fraud and $17 million for abuse and neglect. The $2 billion does not include the Centene settlements that were made between 2022 and 2024.

In New York, the AG’s Medicaid fraud unit has recovered almost $828 million for New York’s Medicaid program over 2019 through 2025 through its criminal and civil investigations. A statewide investigation into medical transportation companies in 2025 found that they used fake billing schemes to cheat Medicaid of millions of dollars. More than $13 million was recovered and there were ten criminal convictions. While the number of criminal indictments and investigations may be lower in New York than in some other states, this is the result of the state’s decision to focus enforcement on fewer but larger instances of fraud and recover large amounts of money for the state’s Medicaid program.

In light of the importance of New York’s AG and its Medicaid fraud unit in prosecuting major civil and criminal fraud cases, it is shocking that the Trump administration has accused the state of failing to secure enough criminal convictions. In a letter dated June 30, the administration announced its intention to suspend millions of dollars in funding for the state’s fraud investigation unit through at least September 30. This will have the effect of reducing criminal indictments and delaying recoveries of funds stolen from the state’s Medicaid program.

What could have motivated this action? It appears that a math mistake by Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services, may have set the stage for this ill-considered move to weaken New York’s prosecution of Medicaid fraud. In a formal letter sent to New York’s governor in March 2026, Oz claimed that New York’s Medicaid program provided some 5 million people with personal care services in the first six months of 2025, which clearly would have been fraudulent, and threatened to withdraw billions of dollars in federal matching funds from New York’s Medicaid program.

New York has 6.8 million Medicaid enrollees, so 5 million receiving personal care services would mean that agencies and providers billed Medicaid for providing these services to nearly 75 percent of Medicaid beneficiaries. But no corresponding evidence of this billing bonanza exists. The Fiscal Policy Institute provides an analysis of how the lack of familiarity with both the Medicaid program and Medicaid data led Dr. Oz to arrive at this faulty figure. The true number of New York Medicaid enrollees that utilized personal care services in 2025, as CMS acknowledged in April, was about 400,000. This is between 6 and 7 percent of enrollees, not 75 percent – a glaring error. But the damage was done.

The June 30 letter accuses New York’s Attorney General Letitia James of neglecting to ferret out instances of abuse and fraud in the state’s Medicaid program and denies the state’s request to recertify its fraud investigation unit, ending funding for the program until at least September pending evidence of remedial steps by the state. New York officials have said they will fight this denial, noting that New York is a recognized leader in investigating and prosecuting Medicaid fraud. The fraud unit’s criminal convictions focus on owners, executives, and corporations that yield large amounts of money recovered for Medicaid.

It is inescapable that Trump has been bashing states, especially those led by Democrats, claiming they are lax on fraud in Medicaid and other public programs. Four of the five states that have been asked to share information with CMS showing how they identify and address fraud – New York, Minnesota, Maine, California, and Florida – are governed by Democrats. Medicaid funding has been withheld in Minnesota and California. In Minnesota, the program has become chaotic. Medicaid beneficiaries are being denied essential health services as thousands of providers are unable to bill Medicaid pending the Trump administration’s revalidation of the program.

From the start, the administration’s plan to place Vice President JD Vance in charge of Trump’s new anti-fraud task force that will be investigating Medicaid fraud was intended as a political weapon to attack Democratic states. The administration is clearly seeking to counter voter disapproval of its handling of health care and distract from the administration’s deep cuts to Medicaid.

This first appeared on CEPR.



The Deadly Costs of Misguided US Wildfire Policy


 July 10, 2026

Smoke from the Riverside fire, Mt Hood National Forest. Photo: Jeffrey St. Clair.

At the end of June, the deaths of three firefighters near the Colorado-Utah border put Trump’s new Wildland Fire Service into focus. The firefighters had been deployed by helicopter to a remote area to put out a brush fire and were overwhelmed. But among the tributes and reminders of how wildland firefighters put their lives on the line to protect communities was the question from Timothy Ingalsbee, a former federal firefighter and founder of the group Firefighters United For Safety, Ethics and Ecology:  “Why were they attacking that fire in the first place?”

The reason is that the Trump administration has reinstated a full suppression strategy applied to every wildfire, resurrecting an almost 100-year-old debate over how to handle wildfires — a debate that science and long-standing indigenous practices had settled by the late 1970s. Combined with the establishment of the US Wildland Fire Service, such policies could cost more lives.

But first, you may be asking: what is the US Wildland Fire Service? In January, the administration announced it was taking steps to create the service, which unifies wildland fire management programs across the Department of the Interior (DOI). Previously, responsibilities were distributed among offices within the Bureau of Indian Affairs, the Bureau of Land Management, the Fish and Wildlife Service, the National Park Service, the Office of Aviation Services, and the Office of Wildland Fire.

The reorganization, however, does not include the US Forest Service (USFS) within the US Department of Agriculture, which is responsible for national forests and grasslands and oversees more than two-thirds of the nation’s federal wildland firefighting resources. But USFS and the Wildland Fire Service still coordinate through the National Wildfire Coordinating Group and the National Interagency Fire Center. The administration is also looking into merging USFS fire management into the newly formed Wildland Fire Service.

If you find all of this confusing, the National Smokejumper Association created an organizational flowchart (Figure 1).

Figure 1

Source: National Smokejumper Association Facebook post, April 11, 2026.

To be clear, streamlining is not a bad thing. The mix of federal, state, and local firefighting agencies can present issues depending on where a fire starts and determining which entity is responsible, and when the command structure within one entity, such as the federal government, looks like a bowl of spaghetti after a toddler gets hold of it, that can create confusion. However, restructuring like this requires more thought and care. Under the new structure, for which the administration did not obtain Congressional approval or funding, the Wildland Fire Service is separating firefighters from land management experts.

In a letter to DOI Secretary Doug Bergum, ranking Democrats on committees that fund the department wrote: “While consolidation could be an effective strategy to improve efficiency and coordination, the Administration’s approach risks diverting critical resources and funding away from land management agencies without any public plan to replace those capabilities.” For example, the Bureau of Land Management requires a team of scientists, land managers, field staff, and firefighters to handle tasks like vegetation management, protecting endangered habitats, managing grazing, and helping the land recover after a fire. But the Department of Government Efficiency (DOGE) has eliminated a lot of those positions, and now, by removing the firefighters, various bureaus and services within DOI will suffer even more staffing shortages. As a result of these concerns, lawmakers have blocked funding and authorization for a Wildland Fire Service and USFS merger until a feasibility study can be conducted.

Then there are the current suppression policies of the Wildland Fire Service and USFS. In April, DOI Secretary Doug Burgum sent a memo to the heads of the various bureaus and services under the department calling for “the presumption of a full suppression strategy applied to every wildfire under DOI management.” In an oversight hearing by the House  Committee on Natural Resources, Subcommittee on Federal Lands, USFS Chief Tom Schultz also confirmed and defended the new full-suppression policy.

To be blunt, full suppression is a product of settler colonialism that has no basis in science. Established in the West under various European colonizers and later adopted by the Mexican and American governments, full suppression initially was used to silence indigenous groups’ cultural practices, which often used fire. European colonizers saw fire as a nuisance. Driven by land expansion and an effort to assimilate indigenous groups through projects like Spanish missions and boarding schools, colonizers enacted strict laws to discourage these burning practices. This suppression directly targeted the cultural foundations that maintained native identity and hindered the ability to organize marginalized groups.

Though these measures originated as a means to erase indigenous culture, by the 1930s the USFS had pivoted to an economic justification, implementing the “10 a.m. rule,“ which mandated that every fire be suppressed by 10:00 the next morning. After several disastrous fire seasons, the government had determined that full suppression as policy would be cost-effective. It wasn’t. Research from the 1960s to the present, along with indigenous land practices, has long shown that failing to allow fire to naturally remove overgrown vegetation or insect-infested trees leaves more fuel for future fires. It’s not hyperbole to say that a major reason we have so many massive wildfires today is the 10 a.m. policy.

What is happening with federal wildfire management is another example of a recurring pattern with the administration: the marriage of hastily executed structural overhauls with a blatant disregard for established historical and scientific evidence. Other examples include the dismantling of federal support for renewable energy and the current debate over restructuring the Federal Emergency Management Agency. And the question is always: to what end? If the goal is to actually make DOI more efficient, such a restructuring needs to be carefully implemented to ensure changes don’t affect its capabilities, including its evidence-based fire management practices.

Instead, the US is stumbling blindly ahead, and it’s the American people who suffer as a result.

This first appeared on CEPR.