CMS Announces Enhanced and Accelerated Medicare Advantage Risk Adjustment Audits

On May 21, 2025, CMS issued a major Medicare Advantage (MA) policy announcement by press release, rather than through the standard HPMS communications system routinely used to interface with MA plans. This notification, intended for a broader audience and drafted in general terms with little specific detail, declares CMS’s new—and self-proclaimed “aggressive”—enforcement strategy regarding risk adjustment data validation (RADV) audits.

In the announcement, CMS describes its new approach—which is to begin “immediately”—as “a significant expansion of its auditing efforts for Medicare Advantage (MA) plans” in the risk adjustment context. While no specific timeframe for the commencement of the RADV audits for payment year (PY) 2025 is specified, CMS intends to “audit all [550] eligible MA contracts for each payment year in all newly initiated audits” (as compared to the 60 or so plans typically audited annually) and “invest additional resources to expedite completion of audits for payment years 2018 through 2024.” Moreover, in certain instances, the number of records reviewed would be expanded with the goal of increasing reliability for extrapolation purposes.         

MA plans receive risk-adjusted payments based on the diagnoses they submit for enrollees, which translates into higher payments for enrollees with more serious or chronic conditions. CMS conducts RADV audits to confirm the accuracy and integrity of diagnoses submitted by MA plans for payment purposes, which diagnoses must be the result of a face-to-face visit, coded in accordance with relevant coding guidelines, and appropriately supported by medical records. If diagnoses submitted to CMS fail to meet these requirements, CMS may recover overpayments from the relevant MA plan. Importantly, the RADV regulations allow CMS to extrapolate RADV audit findings, resulting in significant potential overpayment amounts.¹

The decision to step up risk adjustment audits is not surprising. CMS characterizes the RADV program as its “primary way to address overpayments to [MA organizations],” and Dr. Mehmet Oz, the CMS Administrator, has previously signaled that the Trump Administration was looking at “ways to address systemic upcoding” in the MA program. Moreover, the RADV audit process has historically been relatively small scale and riddled with delays, which has slowed overpayment recovery.²  

What is surprising is the scope of the audit expansion—i.e., to include all MA plans, rather than prioritizing MA plans through strategic selection criteria or based on prior CMS or HHS-OIG audit findings. Reading between the lines, the announcement may provide hints as to a broader agency strategy. Specifically, the announcement provides that CMS will “deploy advanced systems to efficiently review medical records and flag unsupported diagnoses,” and “leverage[ ] technology” to complete RADV audits for PYs 2018 through 2024. The Trump Administration in general, and HHS leadership in particular, have been supportive of using AI and other technologies to promote agency efficiency. While unstated, it may be that the expanded RADV audit program will allow the agency to obtain large data sets for AI training purposes, which will aid in scaling the RADV review process and potentially promote greater precision in identifying suspect diagnoses for review. Use of AI in this context could, however, raise questions relating to extrapolation, depending on how and when such technology is used. In any event, CMS intends to increase its team of medical coders from 40 to approximately 2,000 by September 1, 2025 (an ambitious goal), with coders manually verifying flagged diagnoses to ensure accuracy. While it is unclear how quickly the ramped up RADV audits will unfold, it will be important for MA plans to understand their appeal rights should a negative decision be issued. To that end, MA plans may wish to review the Office of Hearings’ Medicare Advantage Risk Adjustment Data Validation Level II Appeals Procedures that CMS shared with MA plans earlier this month via HPMS.

1. 42 C.F.R. § 422.311(a). ↩︎
2. Recognizing that the agency is “years behind in completing [the RADV] audits,” CMS asserts in its press release that:
    
   “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.”
   
   Per its announcement, CMS intends to step up overpayment recovery efforts by collaborating with HHS-OIG to recover uncollected overpayments identified in past audits. ↩︎