Harvard Study Suggests Overspending on Veterans’ Medicare Advantage Plans

BOSTON—A new study led by the Harvard T.H. Chan School of Public Health revealed Medicare Advantage (MA) plans receive billions of federal dollars for enrolling veterans who receive no Medicare services. The study highlighted 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. The study’s authors said the prevalence of high-veteran MA plans suggests the federal government is paying for health care twice for an increasing number of veterans. 

“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 Jose Figueroa, corresponding author and 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, usage and its cost to the federal government. The study found that between 2016 and 2022, the number of veterans enrolling in MA plans increased, with a 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. This rate is more than double that of veterans in other MA plans and nearly six times greater than the general MA population. Instead of receiving Medicare services, the veteran-enrollees were more likely to receive their health care at VHA facilities. 

“Our study holds important policy implications for leadership interested in improving the efficiency of federal resources for veteran care,” Figueroa said. “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.”

In 2020 alone, the study revealed that CMS paid more than $1.32 billion to MA plans for enrolling VA-enrollees who did not utilize Medicare services, which represents a nearly 60% increase from 2016. Additionally, the study found 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.

“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,” said Yanlei Ma, first author and research associate in the Harvard Department of Health Policy and Management.