Experts call for investigation into $86 billion in Medicare Advantage 'ghost benefits'

By Tom Joyce
The Center Square 

As Congress debates how to rein in federal spending, some experts say aspects of Medicare Advantage should be on the chopping block, starting with $86 billion a year in taxpayer-funded supplemental benefits that often go unused or unverified.

The federal government pays Medicare Advantage plans rebate dollars to cover extra services, including dental, vision, hearing, and over-the-counter drugs. However, a 2024 study published by JAMA Network Open found that only $3.9 billion of that money went toward dental, vision and hearing benefits.

Meanwhile, the industry spent an estimated $16 billion on $1,000 “Flex Cards” for new enrollees – prepaid cash cards often used for groceries, utility bills and even cable TV. Critics say the cards are mostly a marketing gimmick and don’t improve health outcomes.

“Amazingly, Medicare plans aren't required to tell regulators how much they spend on medical and prescription drug claims,” health policy expert Mark Merritt said in a statement. “This is a recipe for ghost benefits that look good on paper but can’t be accessed due to red tape and high out-of-pocket costs.”

Medicare requires insurers to project how they will spend their rebates, but not to report how they spend them. The Centers for Medicare & Medicaid Services (CMS) doesn’t verify whether the benefits are used or delivered.

The Medicare Payment Advisory Commission (MedPAC) flagged the issue in its June 2025 report to Congress.

It found a “fundamental lack of transparency” around how rebate dollars are spent and questioned whether these benefits improve outcomes or just boost insurance company profits.

Medicare Advantage plans also receive $40 billion this year in risk-adjusted payments and $12.7 billion in quality bonus payments. However, oversight is limited. A Wall Street Journal report found that $50 billion from 2018 to 2021 was paid based on diagnoses submitted by the plans themselves, not by doctors.

Plans are required to spend at least 85% of revenue on care and “quality improvements,” but CMS allows the $86 billion in supplemental rebates to count toward that number – even though most of it funds non-medical perks. That includes programs that restrict care, like prior authorization and AI-based claims denial systems.

Congress recently cut $9 billion through a rescissions measure – primarily foreign aid and public broadcasting money. The Medicare Advantage program alone gets nearly 10 times that in unverified perks.

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