CMS Expands Medicare Advantage Audits to Address $43B Overpayments

CMS has announced the expansion of its Risk Adjustment Data Validation (RADV) audits for Medicare Advantage (MA) plans to address significant overpayments estimated at $43 billion annually. These audits verify the accuracy of diagnoses submitted by MA plans, which affect risk-adjusted payments.

CMS plans to complete all RADV audits for the period 2018-2024 by early 2026, marking the most comprehensive audit effort since 2007. This increase in oversight is expected to have extensive implications for Medicare Advantage providers, particularly those operating under global capitation contracts, as financial risk transfer to providers may expose them to greater liability for overpayments.

The approach to recover overpayments, including the use of extrapolation in audits, may result in disputes and necessitate renegotiation of payer-provider contracts, emphasizing the need for clear legal frameworks around audit liability. CMS aims to enhance enforcement against fraud, waste, and abuse in federal healthcare programs, asserting its responsibility to ensure accurate billing by MA plans. This strategic audit expansion represents a significant shift in regulatory compliance expectations and financial accountability throughout the Medicare Advantage ecosystem.