Risk Adjustment Coding Update: CMS Ramping Up Audits of Medicare Advantage Plans Changes from the Centers for Medicare & Medicaid Services (CMS) have been plentiful in recent months—and now things are ramping up for risk adjustment coding. Revenue cycle leaders working with Medicare Advantage (MA) plans and risk adjustment management will benefit from staying on top of recent changes in medical coding in USA. To help you in this task, we’ve put together a summary of proposed CMS changes to risk adjustment data validation (RADV) audits and expansion plans from the agency.
CMS Accelerates Medicare Advantage Audits The recent expansion announcement means revenue cycle leaders will be navigating a stricter enforcement environment around risk-adjusted payments [1]. Historically, CMS has audited only a fraction of MA contracts each year – only about 60 out of 550 – leading to a significant backlog. To catch up, the agency plans to audit all eligible MA contracts annually while accelerating reviews for payment years (PY) 2018 through 2024. This shift is CMS taking action to minimize improper payments. Federal estimates suggest these could be as much as $17 billion annually – or even $43 billion, according to The Medicare Payment Advisory Commission. Risk adjustment coding is central to MA payment structures. Plans receive higher reimbursements for patients with more severe or chronic conditions. To verify the accuracy of these payments, CMS conducts RADV audits. These audits help ensure diagnoses submitted for payment align with medical records and medical coding. However, CMS has struggled to keep up with audits. The last major
recovery was in 2007. The agency has completed audits for PYs 2011–2013 and found 5% to 8% in overpayments, highlighting potential issues in HCC risk adjustment accuracy. To address the backlog, CMS has announced plans to apply “advanced technology” as a tool to streamline record reviews and flag unsupported diagnoses. Additionally, the agency has announced an intent to expand its workforce from 40 to 2,000 medical coders by September 2025. This expansion should enable manual verification of flagged cases. Revenue cycle leaders can also expect audit sample sizes to grow – from 35 to 200 records per plan, depending on size. This expansion is expected to ensure that findings are statistically reliable and that they can be extrapolated under the RADV final rule, all in support of risk adjustment management compliance. RADV Auditing Gets Special Attention One of the main points of focus is the RADV audit program. Over 33 million Americans are enrolled in Medicare Advantage, costing $462 billion. The agency is leveraging RADV audits in its efforts to reduce waste and reduce spending. A key policy shift is the extrapolation of audit findings, beginning with PY 2018. Previously, CMS recouped only identified overpayments within the audit sample. After these changes are implemented, findings will be able to be extrapolated across an entire plan population, magnifying financial risks for MA organizations. This change, in combination with CMS’s aggressive timeline to complete 2018–2024 audits by early 2026, means that revenue cycle leaders should be prepared for the impacts of rapid, large-scale reviews. For MA plans and their provider networks, these changes will likely introduce operational and financial challenges. Plans must ensure medical coding risk adjustment processes are highly efficient and accurate. An unsupported diagnosis could trigger substantial recoupments and audit scrutiny. Providers, particularly those in risk-sharing agreements, may face unwanted attention and payment issues if audits uncover discrepancies in their documentation. Practical Considerations for MA Plans and Providers With RADV audits expanding in scope and speed, MA organizations and their partners in medical coding in USA should take proactive steps to mitigate risk: ● Conduct internal audits to identify and correct unsupported diagnoses before CMS reviews. ● Strengthen compliance programs, ensuring documentation meets HCC risk adjustment guidelines. ● Streamline medical record retrieval to meet CMS deadlines (usually 25 weeks). ● Review contracts to clarify liability for audit-related recoupments, as plans may push financial risks downstream onto providers Providers should also adjust their strategy to reflect risk around False Claims Act (FCA) exposure. Increased RADV audits in the future could lead to more DOJ investigations. Ensuring accurate risk adjustment coding and maintaining defensible documentation will be critical in a heightened
enforcement environment. Additionally, expect that this could impact feelings of stress and burnout on your existing stuff. Providers who prioritize risk adjustment management and compliance will be better positioned to navigate an evolving and intensifying audit landscape. Navigating a Future of Intensifying Audit Scrutiny As government scrutiny of MA audits increases, revenue cycle leaders should respond with a proactive strategy, and one that includes specialized partnerships. Now is an excellent time to update your revenue cycle strategy and future-proof it against growing uncertainty. This starts with a refreshed look at how you use risk adjustment coding partners at your organization. 3Gen Consulting offers proven expertise in medical coding risk adjustment, from compliance-driven audits to scalable coding solutions tailored to today’s challenges. Whether you’re adapting your internal teams to get ahead of MA audits or seeking a partner to support your prospective risk adjustment efforts, we’re here to help. Contact us today to get started on a strategy built for today’s audit landscape.
References [1] CMS, “CMS Rolls Out Aggressive Strategy to Enhance and Accelerate Medicare Advantage Audits,” 21 May 2025. Available: https://www.cms.gov/newsroom/press-releases/cms-rolls-out-aggressive-strategy-enhance-and-acc elerate-medicare-advantage-audits. Original Source https://www.3genconsulting.com/risk-adjustment-coding-update-cms-ramping-up-audits-of-medi care-advantage-plans/
