Agency Will Begin Auditing All Eligible Medicare Advantage Contracts Each Payment Year and Add Resources to Expedite Completion of 2018 to 2024 Audits
Today, the Centers for Medicare & Medicaid Services (CMS) announced a significant expansion of its auditing efforts for Medicare Advantage (MA) plans. Beginning immediately, CMS will audit all eligible MA contracts for each payment year in all newly initiated audits and invest additional resources to expedite the completion of audits for payment years 2018 through 2024.
“We are committed to crushing fraud, waste and abuse across all federal healthcare programs,” said Dr. Mehmet Oz, CMS Administrator. “While the Administration values the work that Medicare Advantage plans do, it is time CMS faithfully executes its duty to audit these plans and ensure they are billing the government accurately for the coverage they provide to Medicare patients.”
Medicare Advantage plans receive risk-adjusted payments based on the diagnoses they submit for enrollees—meaning higher payments for patients with more serious or chronic conditions. To verify the accuracy of these claims, CMS conducts Risk Adjustment Data Validation (RADV) audits to confirm that diagnoses used for payment are supported by medical records.
Currently, CMS is several years behind in completing these audits. The last significant recovery of MA overpayments occurred following the audit of payment year (PY) 2007, despite federal estimates suggesting MA plans may overbill the government by approximately $17 billion annually. The Medicare Payment Advisory Commission (MedPAC) estimates this figure could be as high as $43 billion per year. CMS’s completed audits for PYs 2011–2013 found between 5% and 8% in overpayments.
To address this backlog, the Trump Administration has introduced a plan to complete all remaining RADV audits for PY 2018 to PY 2024 by early 2026. Key elements of the plan include:
- Enhanced Technology: CMS will deploy advanced systems to efficiently review medical records and flag unsupported diagnoses.
- Workforce Expansion: CMS will increase its team of medical coders from 40 to approximately 2,000 by September 1, 2025. These coders will manually verify flagged diagnoses to ensure accuracy.
- Increased Audit Volume: By leveraging technology, CMS will be able to increase its audits from ~60 MA plans a year to all eligible MA plans each year in all newly initiated audits (approximately 550 MA plans). CMS will also be able to increase from auditing 35 records per health plan per year to between 35 and 200 records per health plan per year in all newly initiated audits based on the size of the health plan. This will help ensure CMS’s audit findings are more reliable and can be appropriately extrapolated as allowed under the RADV final rule.
In addition to these efforts, CMS will collaborate with the Department of Health and Human Services Office of Inspector General (HHS-OIG) to recover uncollected overpayments identified in past audits. CMS reaffirms its commitment to ensuring all Medicare Advantage plans comply with federal requirements and accurately report patient diagnoses used for payment.
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