Medicare Advantage Audit: Humana's Compliance Challenges in Louisiana
On December 16, 2025, the Office of Inspector General (OIG) within the U.S. Department of Health and Human Services released its audit findings of a Medicare Advantage contract managed by Humana in Louisiana. This audit is part of ongoing efforts to address AI-driven prior authorization delays and scrutinize high-risk diagnosis codes reported by Medicare Advantage Organizations (MAOs) for payments from the Centers for Medicare & Medicaid Services (CMS).
The audit focused on the accuracy of certain diagnosis codes submitted by Humana, following a prior identification by the OIG of codes that often lead to incorrect payments. These high-risk codes include conditions such as strokes, heart attacks, and various cancers. The audit revealed that most of the diagnosis codes were unsupported by the requisite medical documentation, highlighting significant issues within payer and carrier systems.
Key findings of the audit include the rejection of many diagnosis codes due to inadequate medical evidence, leading to estimated overpayments exceeding $10 million for the two payment years reviewed. However, due to regulatory compliance requirements and limitations on CMS's ability, OIG recommended recovering approximately $5 million. This situation underscores the challenges in the industry's underwriting and claims processes.
Challenges and Discrepancies in Evaluations
This audit highlights ongoing debates over methodologies used in evaluating MAO data, especially the use of extrapolation without adjustments for discrepancies between traditional Medicare and MAO claims data. These discrepancies raise questions about ensuring actuarial equivalence, as mandated by statute. Such challenges demand detailed attention to risk management and regulatory compliance within the industry.
In its response, Humana maintained that excluding a necessary Fee-for-Service Adjuster in the Risk Adjustment Data Validation (RADV) audit process compromises the findings by potentially ignoring underpayments. This stance highlights the need for consistency in audit practices with CMS guidelines. These issues remain central to ongoing litigation concerning CMS’s RADV audit rules, impacting provider and payer interactions.
Implications for Compliance and Operational Practices
MAOs should actively monitor these developments, as the implications of such audits could significantly influence compliance strategies and operational practices. The ongoing legal challenges necessitate careful navigation in claims and underwriting. A robust documentation strategy during audit proceedings is crucial to preserve potential objections for future litigation.
By staying informed on these regulatory and audit processes, MAOs can better manage their compliance risks and align with evolving industry standards. Engaging with the complexities of regulatory compliance requirements and leveraging detailed risk management frameworks will be key for maintaining operational efficiency and integrity.