Senators Propose Bill to Tighten Medicare Advantage Risk Adjustment, Curb Overpayments

Senators Bill Cassidy and Jeff Merkley introduced the bipartisan No UPCODE Act aimed at improving risk assessment and reducing overpayment in Medicare Advantage (MA) programs. The bill proposes using two years of diagnostic data to determine patients' health risks, limiting the use of outdated or unrelated conditions, and aligning patient assessments more closely with traditional Medicare. The legislation aims to address financial losses due to "upcoding," where MA providers inflate diagnosis severity to receive higher reimbursements, which the Congressional Budget Office estimates could save Medicare $124 billion over a decade. The Centers for Medicare and Medicaid Services (CMS) has acknowledged significant delays in auditing Medicare Advantage plans for overpayments and is expanding its Risk Adjustment Data Validation (RADV) audits to recover uncollected funds. CMS plans to complete these audits for payment years 2018 through 2024 by early 2026, collaborating with the Department of Health and Human Services Office of Inspector General to enforce payment accuracy. More than half of Medicare beneficiaries enroll in MA plans, which have faced both bipartisan support and criticism over potential overbilling practices. Stakeholders highlight the need for balancing fraud prevention with timely payments to compliant insurers, emphasizing that appropriate risk adjustment is critical to ensuring access to preventive care and managing chronic diseases effectively. The legislative effort and regulatory crackdown represent measures to enhance the financial sustainability and integrity of Medicare Advantage while addressing concerns about abuse of the risk adjustment system.