Top Ten 2026: Medicare Advantage in Uncertain Times

Based on AHLA's annual Health Law Connections article, this special ten-part series brings together thought leaders from across the health law field to discuss the top ten issues of 2026. In the ninth episode, Kathy Roe, Managing Attorney, Health Law Consultancy, speaks with Judy Waltz, Partner, Foley & Lardner LLP, about the current areas of uncertainty surrounding Medicare Advantage (MA). They discuss why some MA Organizations (MAOs) are withdrawing plans, Humana v. Becerra and the potential impact on Risk Adjustment Data Validation audit processes and calculation of overpayment recoveries for MAOs, potential MAO network provider exposure under the False Claims Act, and what potential changes to MA might be on the horizon. From AHLA’s Payers, Plans, and Managed Care and Regulation, Accreditation, and Payment Practice Groups.

Watch this episode: https://www.youtube.com/watch?v=Az0cUVAjnFI

Read AHLA's Top Ten 2026 article: https://www.americanhealthlaw.org/content-library/connections-magazine/article/a879dda5-35f9-46fb-ad45-1b0799343d74/Health-Law-Forecast-2026

Access all episodes in AHLA's Top Ten 2026 podcast series: https://www.americanhealthlaw.org/education-events/speaking-of-health-law-podcasts/top-ten-issues-in-health-law-podcast-series

Learn more about AHLA’s Payers, Plans, and Managed Care Practice Group: https://www.americanhealthlaw.org/practice-groups/practice-groups/payers-plans-and-managed-care 

Learn more about AHLA’s Regulation, Accreditation, and Payment Practice Group: https://www.americanhealthlaw.org/practice-groups/practice-groups/regulation-accreditation-and-payment 

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Transcript

SPEAKER_00 0:01

Welcome to AHLA's annual top 10 series, where we discuss the major health law trends and developments of 2026. Learn more about AHLA at americanhealthlaw.org.

SPEAKER_01 0:16

Welcome back, everybody, to the latest episode of the American Health Law Association's speaking of health law podcasts. I'm Kathy Rowe with Health Law Consultancy in Chicago. Health Law Consultancy is a boutique health law firm that I co-founded over 15 years ago. We focus our practice on regulatory counseling and contracting related to health care payment and operations in the managed care space. So in particular, Medicare Advantage, Medicaid Managed Care, Exchange Business, and so forth. I am here today representing the Payers Plans and Managed Care Practice Group, of which I am the chair, and I'm joined by Judy Waltz. Judy, do you want to introduce yourself?

SPEAKER_02 1:16

Of course. So first of all, uh note my beautiful background here. My um my last office in San Francisco, my current one has just as beautiful a view, but I just haven't caught the light quite right yet. And then I'll I'll update my picture. So I'm Judy Waltz, I chair the healthcare practice at Foley, and I am housed in San Francisco. Um I in my past served as chair of HLA's regulatory accreditation and payment practice group, otherwise known as RAP. And just um want to encourage everyone who's listening to this podcast to think about getting involved in a practice group because as long as my involvement has been with HLA at this point, I found the practice group to be the most fun and the most educational and also the most lasting. We still um get together as a group, me as the alone now. Um and it's it's just very fun. We refer to each other sometimes as our brain trust. Um, and it's really nice to have people who who also focus in kind of esoteric um parts of healthcare law that you can call on to discuss various issues. So thank you, Kathy.

SPEAKER_01 2:31

You're welcome. And the thanks is echo back to you, Judy, because the reason we are here today is to talk about your contribution to the 2026 forecast that AHLA published earlier this year in Health Log Connections, a little old school here with the hard copy. And you focus on Medicare Advantage with the Psychology Medicare Advantage in Uncertain Time. So what we want to do in the next few minutes is to share with folks who haven't yet had a chance to read the piece, which I commend to you. We're gonna ask a few questions and share some insight from the article. So one thing that you do in the article do you use at this stage, and you talk about Medicare Advantage as a whole and howception enrollment in Medicare Advantage has grown. But you also speak to the fact that in recent years, for example, last year, Medicare Advantage organizations began to withdraw some of their plans from the marketplace. And last year that decrease measured six percent versus in terms of the MA plan count versus 2024. So can you speak to why it is that Medicare Advantage organizations are withdrawing plans from the market and what those withdrawals mean for MA members?

SPEAKER_02 4:26

So yeah, the the numbers are going down a bit. They are still quite high. And more than half of Medicare beneficiaries are in managed care plans now, as opposed to the older days when um a bigger proportion were in fee for service. But as time has gone on, some Medicare Advantage plans, and it it's when I first started doing this work back when I was a government lawyer, there were Medicare Advantage had not um actually been created yet. There were other variations of managed care plans, and there's a few of those that are still left around. They, from my perspective, aren't making significant contributions, but they are out there, and every now and again you see some twist that applies only to a particular plan. But Medicare Advantage, once it started, um, and then shortly thereafter, part D and often joined at the hip with the Medicare Advantage plan, has grown very quickly, uh, which was the original goal, of course, of Medicare Advantage. The the idea that we could control costs and provide better care and be a little more imaginative in how we provide care, all of those designed to address some um some inadequacies of the fee for service side. So all that was good. Um but some Medicare advantage plans are realizing now that with certain constraints that have been imposed as the program grew larger, and we're going to talk about one of those constraints in a moment. Um, but as they've grown larger, some plans have realized that the profit that was originally there at the beginning and was hoped for to continue is harder to come by. And so some plans have um decided this is not for them. That doesn't, from my experience, hasn't meant they are leaving Medicare Advantage altogether, but that they're honing plans in certain ways and dropping those that are less less profitable. It's also important to remember, and this was the point of my article was to just sort of put the pieces together that Medicare Advantage isn't just about the plans, it's about patients at beneficiaries' lives, however you describe them. And it's about the vendors to the Medicare plans, and it's about the government trying to regulate. And so there are many stakeholders in these plans. And one trend that that I've been following very closely for one of my clients, but actually more because I was just interested, is that some providers are deciding that they will not accept um particular plans now for one reason or another. And surprisingly, um, for a while I was reading like every single article I could find on this topic. So surprisingly, it's not the biggest complaint and the biggest reason that people refuse to deal with a particular plan or um Medicare Advantage organization that provides that plan is not the payment. Um, although that, you know, people aren't happy in many situations about the amount of payment they're getting, but it's usually more things that that make them difficult to deal with, you know.

SPEAKER_01 8:00

Right, relate relational issues is what you're saying.

SPEAKER_02 8:04

Yeah, so many um in my case, my client was just finding that the payments were were so far below what their costs were and everything else that they were uh they were done for certain plants and were going to tell tell their patients that they needed to get a better plan if they wanted to continue treatment with them.

SPEAKER_01 8:28

So, what does it mean though for the MA members in those plants that are being pulled from the market?

SPEAKER_02 8:35

Yeah, well, that's a consideration for sure. Um, there are places where plans are limited. Uh so most beneficiaries, and I've forgotten the exact number, but I think it's something like 30. Most beneficiaries um have a choice of like 30 plans in their area and in their circumstances. But there are some places like rural America where you don't have those many choices, or where you know it's it's ex-county government employees plan or whatever specialized plan it is. So in those cases, um, there is a problem, you know, and and I think that providers, at least the provider I was working with, was considering making exceptions to their usual um practice so that they could accommodate and that that patients would not be, you know, left out in the cold, so to speak. But it is, yeah, lots of moving pieces in all of this for sure.

SPEAKER_01 9:31

Well, another moving piece that ties into the financials of being in the Medicare Advantage space is uh piece of litigation that you talked about in your article, Humana versus the Zero, which was which was involved in a Medicare Advantage organization suing the government and challenging CMS's rule that would allow for the application of extrapolation to CMS's calculation of overpayments based on risk adjustment, data validation, audits. And the court came down in favor of developing plan. So tell us more about this case and tell us how the government is responding.

SPEAKER_02 10:36

So the the last part is the the easiest part. The government has appealed um that decision, and uh cases on appeal move very slowly. Um in most cases. There have been a few that we've seen in for this administration that that followed what is called a shadow document, but we won't get into those. So the the underlying issue has to do with how Medicare Advantage plans are paid. And as that system has evolved, um, and the idea of Medicare Advantage one core concept is that the Medicare Advantage organization is taking some risk. You know, they're saying uh they they file a bid every year and say, you know, we can we can provide all the necessary care and the the additional services that we can provide um and uh do it for this amount of money. I I'm just flashing back. I handled a FOIA request, an objection at one point, where I was working with with my client who had like this huge spreadsheet, um, which was what had been requested as by some professor, I think at Georgetown. He was requesting everybody's. And and so we're looking at this spreadsheet with you know a million numbers on it. Uh, and I that's not my skill set really, or any spreadsheet.

SPEAKER_01 11:59

But he's got a lot of lawyers' skill sets, so you're not alone.

SPEAKER_02 12:03

Yeah, he he said, you know, somebody looking at this spreadsheet could tell our whole strategy for the next five years. And I wasn't saying, I mean, what I said was something like, really, but I think it's actually true, you know, these bids reflect where where people are going to move, how they they anticipate, you know, providing care with inpatient and outpatient. So anyway, these bids come about, and at one time Medicare was treating basically all patients the same, you know, you get you have X beneficiaries and you get X amount of money, so X beneficiaries times Y amount of money. I mean, that's an oversimplification, but it it didn't work because um some patients need a lot more care or a lot more expensive care, or they're at a higher expense area. And so CMS came up with a system where this this based primarily on diagnoses. So these are called the RAD V I'm forgetting what the rate adjustment. Kathy, I'm sure you know what is RAD V is risk adjustment, data validation, RAD V.

SPEAKER_01 13:13

Everybody just says RAD V. Everybody says RAD V.

SPEAKER_02 13:17

So anyway, CMS came up with this um concept that people who are sicker, based on diagnoses that are reported, um, should get more money. And that goes into the bids and all the and chugs out a number at the end of the day. So, what the government thinks happened is that there was an incentive to basically upcode some um of the diagnoses codes so that that you got a bigger score, a bigger Radvi score. So we throw out a few more diagnoses or make them worse than some providers, upcoded or identified diagnoses that were not supported by the documentation, or um, for other reasons, these RADV scores were based on data that wasn't reliable. And so the government challenged those and have had some pretty significant settlements. The idea of then how to go back and figure out what the overpayments were presented a real challenge. And so extrapolation is used and and has been used for a very long time in the fee for service side. It's in many respects a shortcut. So you look at a sample and then you extrapolate from there, extrapolate against the universe. So you say you've got an error rate of 10%, then you take 10% again, and again, this is an oversimplification, but 10% against the universe and come up with an overpayment. So this was challenged, you know, on many grounds, and that it was not going to produce a reliable number for you know for various reasons, and also um that basically these numbers going back years would would cause significant financial hardship for uh for the plans because the numbers were going to be huge. Um, CMS had agreed that they would limit how many years they look back, the numbers were still huge. And so the court um, in looking at that, found that extrapolation was not an adequate um approach to determining these overpayments. The government has appealed. Um I think they're playing around with some ideas for variations, but right now that is a big um the the proverbial thousand-pound gorilla in the room with respect to plants and and what they'll have to pay back for these RATV audits.

SPEAKER_01 15:50

Depending upon how things play out relative to whether extrapolation applies or not.

SPEAKER_02 15:58

Yeah, and I mean, in my dream world, maybe the government would just say, okay, you know, this is we're just gonna move on. Because uh one thing about plans is that they um they have a medical loss ratio, and I want to get into all the details there, but but basically their profit is uh capped in many respects, and so you know, a huge payback at the end of the day, it punishes the plans, but the plans are the ones who are providing service. So in my dream world, CMS would just say, okay, this is move on. We'll see if that if that happens.

SPEAKER_01 16:40

All right, so stay tuned on on that front. Uh another area of litigation that you talked about in your piece is about the potential not only for Medicare Advantage organizations as the contracting party with CMS to be subject to false claims action. You also talk about the potential for providers participating in a Medicare Advantage organization's network facing false claims act exposure. Tell us more. How how can that be? As a provider, a provider say, How could that be? I'm down, I'm down.

SPEAKER_02 17:30

Right, right. So it's a strange world we live in. Um, I guess that's the short answer. The false claims act um is very broad and it's it's designed. There has to be a claim to the government. That's about the what one of the very few constraints there, and it has to be intentional, but the intentional is um this the bar basically is anything above a whatever, you know, just sending something in and saying whatever. So the intention level is pretty um pretty minimal in terms of what has to be shown. The uh the real kicker is that there is a recovery for the relators, which is the person who um files the uh case and claims to have. You can probably tell I'm a defense lawyer here, I'm using a lot of words that I'm realizing are more caveated than than I used to when I was a government lawyer. Um the so there's an incentive for people who who feel that they've seen something wrong and that it's it is false and and it results in a claim to the government. So, in terms of Medicare advantage, um, the RAV audits that we just talked about, so we have we have in some respects a cause and effect, right? We have a the government now is looking at these diagnoses codes, and in retrospect is saying, you know, that one was weak, you know, that one was from 40 years ago, and nobody's mentioned it since. Why is that in there? And so, you know, and then their arguments to be made as part of their history, you know, increases their risk, um, and you know, those kinds of issues can can be subject to a lot of debate. Um, so along the way, though, if you have a pattern in practice of suddenly everybody has this same diagnosis from 40 years ago, you know, that things start to look a little off, and then it starts to look like things were intentional or at least above the whatever um standard. And so you have a relator, maybe someone in the coders. More recently, it's even been people in the compliance departments who see something and then file a false claims act uh case, and then most of these are settled. I would say I don't have the exact percentages, but probably at least 95% of these are subtle because it's so expensive to litigate, and litigation is always such a such an unknown in terms of results. So the cases subtle. We don't have court precedent, but we certainly see the dollar amounts, and everybody's worried about the risk. So we have those on the plan side, the plan saying, you know, I don't think I did anything wrong, but you know, just get this is what I usually hear, just get me out of this and do it like my next, you know, next month before I have to to do some sort of um accounting statement. So that's where the plans come in. They the plans receive the money, and typically in these false claims that cases, that's what you're looking at. Where did how did the money flow? Money started with government, the government paid whom, and that would be the plan here. But the government has also been looking at providers who actually do the coding. So the the Radvi system is based on diagnoses codes, those come from the doctors, and so there starts to be a suspicion. Like, why did the doctors do this? And didn't that enable the the plan then to charge more? And then where what was the benefit to the provider then? You know, the is there a kickback there? Right. Kickbacks can lead to false claims act statements. So that's there haven't been as many cases against providers, meaning physicians, as there have been against plans, but it certainly is a risk, and it's it's something that um you know needs. I'm sure we're gonna see more of this. I I'm not saying that that providers or physicians don't code appropriately, but it is it's just an additional risk that they may not have thought of.

SPEAKER_01 21:54

Well, it seems like with the fraud focus of the current administration, it's An area to which providers ought to give attention if they are contracting in the MA space.

SPEAKER_02 22:09

Yeah, for sure.

SPEAKER_01 22:11

Okay, final question. Your article was entitled, if memory serves me correctly, MA in Uncertain Times. So do these uncertain times portend changes to Medicare Advantage as we've known it? And if so, what changes might be, emphasis on might be on the horizon?

SPEAKER_02 22:40

Yeah, that's a really tough question. So, first of all, I feel like the last year I haven't been able to predict anything. And I have been surprised on it almost every every day by something that's happened. So where um where things will go is an open question. Our health system, though, is facing a real crisis on several fronts, um, including just making sure that you know, from a public health perspective, that people are sick who are sick get treatment that they need and don't make the rest of us sick and things of that sort. So Medicare Advantage, as originally conceived, was designed to provide for more traditional or less traditional, more innovative um approaches to healthcare, which right now it seems like the timing is perfect, but the infrastructure for for MA is big and clunky. And so it's hard to it's hard to move quickly. But I think we will see um, particularly with uh with more stress on the plans. I we may be getting more creative ideas from the plans as opposed to from the government, and hopefully, and and I think this administration is pretty committed to um more imaginative provision of healthcare. So I think there's real opportunity for the plans to come up with some really good ideas and uh see how they they play out.

SPEAKER_01 24:25

So it's kind of like the pandemic era where external pressures may force movement and evolution that might otherwise have taken longer to get here.

SPEAKER_02 24:41

Yeah, Kathy, I'd be interested in your thoughts on that too, where where things will ahead.

SPEAKER_01 24:47

I I too am not comfortable making a prediction. I just look across our healthcare system and it seems like there's just so much stress relative to the financing of it, not unique to Medicare Advantage. We're spending five trillion or so as a nation, and there's just not the feeling that we're getting the care results, and we're running out of places to turn to afford that financing. Everyday Americans don't have the ability to absorb where premiums are going or deductibles are are going, and the government is facing challenges relative to its own financial posture as well. So I I do go back to what I said that it seems like it's a time that is ripe for innovation, that we've got an administration, particularly with respect to tech structured innovations, are open and receptive to it. It'll be interesting to see what some of the public comments have been relative to the federal government's recent request for information about ways to apply AI in the healthcare space.

SPEAKER_02 26:31

Yeah, that's a that's a hot topic. Yes, yes.

SPEAKER_01 26:36

Well, AI and in tech generally, but the focus certainly seems to be on the potential of AI to bring greater efficiency and effectiveness to our healthcare system. But bottom line, I think it it's an environment that creates the opening for you to probably come back next year and write a forecast for 2027.

SPEAKER_02 27:08

Maybe. At least I think we'll see where that Radby litigation goes. I think that's gonna be very, very interesting and give us a lot of insights about more than that particular legal issue. So we'll see.

SPEAKER_01 27:24

All right. Well, with those closing remarks, I thank everybody for tuning in for this episode of AHLA Speaking with Health Law. And if you haven't had a chance yet to check out the top 10 for 2026 to which Judy contributed, please track that down online or in your mailbox and take a read.

SPEAKER_02 27:53

Thank you, Kathy.

SPEAKER_00 27:59

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