Medicare Delays a Full Crackdown on Private Health Plans

“While we appreciate that C.M.S. moved to a phased-in approach, the underlying policy is fundamentally unchanged,” said Mary Beth Donahue, the president of the Better Medicare Alliance, an industry group that spent eight figures on television ads fighting the policy. “We remain concerned about the unintended consequences for seniors of this risk-adjustment policy.”

But the Alliance of Community Health Plans, a group representing nonprofit insurers, said in a statement that it approved of the new approach: “We support the risk-adjustment model changes to focus on delivering results for consumers and address underlying incentives to aggressively document.”

Insurers have often challenged the agency’s Medicare actions in court, but it is unclear whether any insurers will contest this policy.

Some advocates and experts said they found the new formula too timid. The Medicare Payment Advisory Commission (MedPAC), which recommends policies to Congress, wrote in a comment letter that the proposed changes, while “directionally correct, are insufficient to address the magnitude of excess Medicare spending.”

Mark Miller, a former executive director at MedPAC, had urged Medicare to go even further than its initial proposal. He is now an executive vice president at Arnold Ventures, a policy and advocacy organization closely affiliated with a group that funded television ads defending the change. He described the final approach as a disappointment. “They are essentially bowing to the plans,” he said in an email.

In February, a few weeks after issuing their proposal, top health officials in the Biden administration vigorously defended the change. In a series of tweets, Secretary Xavier Becerra of Health and Human Services characterized criticisms of the policy as “disinformation being pushed out by high-paid industry hacks and their allies.” In an interview with The New York Times, Dr. Meena Seshamani, Medicare’s top official, said she was committed to “holding the industry accountable for gaming the system.”

Ms. Brooks-LaSure’s comments Friday were more measured, emphasizing the perspectives of “stakeholders” in the Medicare program. She said she did not feel that Medicare was folding to industry pressure.