If you're one of the 33 million Americans enrolled in a Medicare Advantage plan in 2025, you've probably noticed the marketing: zero-dollar premiums, dental coverage, gym memberships, even grocery allowances. What you may not know is that the federal government has been quietly — and now not so quietly — trying to figure out how to stop paying insurers far more than those benefits actually cost. The effort to rein in Medicare Advantage spending is one of the most consequential policy fights in healthcare right now, and it has direct implications for what your plan covers, what it costs, and whether it even stays in your market.
Medicare Advantage, also called Medicare Part C, is the private insurance alternative to Original Medicare. Instead of the government paying your doctors and hospitals directly, it pays a private insurer a fixed monthly amount — called a capitation payment — to cover your care. That payment is adjusted upward if you have serious health conditions, a system called risk adjustment. The idea is sound: sicker patients cost more to treat, so insurers covering sicker populations should receive more money. The problem is that many large insurers have aggressively gamed this system through a practice known as 'upcoding' — documenting diagnoses that make their enrollees appear sicker than they actually are, without any corresponding increase in treatment or care. The result is that the government pays more, the insurer pockets the difference, and you may never notice a thing — until the bill comes due for taxpayers and the program itself.
The scale of the problem is significant. The Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare spending, has estimated that Medicare Advantage plans are overpaid by roughly $83 billion annually compared to what Original Medicare would spend on the same beneficiaries. A substantial portion of that gap is attributable to risk score inflation — diagnoses added through chart reviews and health risk assessments that don't reflect actual clinical encounters or treatment changes. The Centers for Medicare & Medicaid Services (CMS) has been conducting Risk Adjustment Data Validation (RADV) audits for years, but enforcement has been slow, legally contested, and financially modest relative to the size of the problem.
In recent years, CMS has moved to tighten the rules. A major regulatory change finalized in 2023 updated the methodology used to calculate risk scores, phasing in a new model — called the V28 risk adjustment model — over three years starting in 2024. The V28 model removes or reduces the weight of hundreds of diagnosis codes that were frequently upcoded, including many mental health and chronic condition codes that insurers had been adding liberally. For 2024, one-third of the transition to V28 applied; for 2025, two-thirds; and by 2026, the full model is in effect. This is not a minor tweak. Analysts at KFF estimated that the V28 transition, combined with other payment adjustments, represented a meaningful reduction in the revenue insurers could expect per enrollee — particularly for plans that had built their business models around aggressive risk coding.
So what does this mean for you as a beneficiary? In the short term, the most visible effect has been a pullback in supplemental benefits. Those extras — the dental, vision, hearing, over-the-counter allowances, and transportation benefits that made Medicare Advantage so attractive — were largely funded by the excess payments insurers were collecting above their actual medical costs. As payment rates tighten, insurers have been trimming these benefits. In 2025, KFF analysis found that the average Medicare Advantage enrollee saw reductions in over-the-counter allowances and dental coverage compared to 2024. Some plans that offered $500 or more annually in OTC benefits dropped to $200 or eliminated the benefit entirely. Flex cards, which had become a popular marketing tool, became less common. This trend is likely to continue into 2026 as the full V28 model takes effect.
Beyond benefit reductions, some insurers have responded by exiting markets entirely. When a plan exits your county, you receive a Special Enrollment Period (SEP) that allows you to join another Medicare Advantage plan or return to Original Medicare, but you may face challenges getting a Medigap (Medicare Supplement) policy if you've been in Medicare Advantage for more than 12 months. In most states, Medigap insurers can use medical underwriting to deny coverage or charge higher premiums based on your health history if you're outside a guaranteed issue window. The exceptions are states with stronger consumer protections: New York and Connecticut, for example, require guaranteed issue for Medigap year-round regardless of health status. If you live in California, Oregon, Nevada, or one of the other birthday rule states, you have a 30-day window around your birthday each year to switch Medigap plans without underwriting — a valuable protection if your Medicare Advantage plan becomes unstable.
The deeper question — will the government's cost controls actually work? — is genuinely uncertain, and the answer matters for the long-term viability of the program. Insurers have significant financial and legal resources to push back. Several major plans challenged the RADV audit methodology in court, arguing that CMS was applying extrapolation methods retroactively that weren't clearly established when the audits began. CMS has had to revise its approach multiple times. Meanwhile, the largest Medicare Advantage insurers — UnitedHealthcare, Humana, CVS/Aetna, and Elevance — collectively cover the majority of Medicare Advantage enrollees and have sophisticated coding operations that can adapt to new rules faster than regulators can write them. The V28 model addresses known upcoding patterns, but insurers are already identifying new diagnosis codes and documentation strategies that may inflate risk scores under the new framework.
There's also a political dimension that beneficiaries should understand. Medicare Advantage has become deeply popular — enrollment has grown from about 13 million in 2010 to over 33 million in 2025, representing more than half of all Medicare beneficiaries. That popularity creates political pressure to protect the program even when it's costing taxpayers more than it should. Any administration that aggressively cuts Medicare Advantage payments risks a backlash from tens of millions of enrolled voters and from the insurance industry, which spends heavily on lobbying and advertising. This dynamic has historically moderated how far CMS is willing to push payment reductions in any given year, even when the evidence of overpayment is clear.
For beneficiaries navigating this environment, the practical guidance is straightforward but requires active attention. Every fall, your Medicare Advantage plan is required to send you an Annual Notice of Change (ANOC) by September 30, detailing any changes to premiums, cost-sharing, and benefits for the coming year. Read it carefully — don't set it aside. If your plan is cutting benefits you rely on, raising your out-of-pocket maximum (which in 2025 was capped at $9,350 for in-network services under CMS rules), or narrowing its provider network, the Annual Enrollment Period running from October 15 through December 7 is your window to switch. Changes made during AEP take effect January 1.
If you miss AEP, the Open Enrollment Period from January 1 through March 31 allows you to make one switch from one Medicare Advantage plan to another, or to drop Medicare Advantage and return to Original Medicare (with Part D drug coverage). You cannot use OEP to switch from Original Medicare into a Medicare Advantage plan. If you return to Original Medicare during OEP, you'll want to apply for a Medigap policy promptly — and check your state's rules on guaranteed issue, because your eligibility for coverage without medical underwriting may be time-limited.
When comparing Medicare Advantage plans during enrollment, look beyond the premium. A zero-dollar premium plan with a $9,000 out-of-pocket maximum is a very different financial proposition than a $50/month plan with a $4,500 maximum, especially if you have ongoing health needs. Check whether your specific doctors and hospitals are in-network — and verify directly with the provider, not just the plan's online directory, which can be outdated. Review the drug formulary for your specific medications, including which tier they're on and whether prior authorization is required. The Medicare Plan Finder at Medicare.gov allows you to enter your drugs and providers to compare total estimated annual costs across plans in your zip code, which is the most useful single tool available for this decision.
The broader story here is that Medicare Advantage is at an inflection point. The program has delivered genuine value to many beneficiaries — particularly those who benefit from care coordination and supplemental benefits — but it has also cost the federal government significantly more than the traditional Medicare alternative. The government's attempt to correct that imbalance is real and ongoing, but whether it succeeds depends on regulatory persistence, legal outcomes, and political will that remain genuinely uncertain. What is certain is that the era of ever-expanding supplemental benefits funded by excess payments is ending. Beneficiaries who chose Medicare Advantage primarily for those extras should be actively reassessing whether their plan still delivers value — and whether Original Medicare plus a Medigap policy might now be the more financially stable choice for their situation.