On May 21, 2025, CMS announced that it plans to increase its auditing efforts for Medicare Advantage (MA) plans. Effective immediately, CMS will audit all eligible MA contracts for each payment year in all newly initiated audits, and it will increase resources to complete audits for payment years 2018 through 2024 given that CMS is several years behind in completing these audits.
MA plans receive risk-adjusted payments based on the diagnoses they submit for enrollees, which results in higher payments for patients with more serious or chronic conditions. CMS’s auditing process involves confirming that the diagnosis codes used by MA plans are actually supported by patient medical records. These audits are known as Risk Adjustment Data Validation (RADV).
Dr. Mehmet Oz, CMS Administrator, said that CMS has a duty to ensure that MA plans are “billing the government accurately for coverage they provide to Medicare patients.” The Medicare Payment Advisory Commission estimates that MA plans may overbill the government as much as $43 billion a year.
Although CMS is backlogged with RADV audits (and the last major one that occurred was for payment year 2007), the Trump Administration aims to complete the remaining ones by early 2026. To meet this goal, CMS will roll out enhanced technology that can flag unsupported diagnoses and increase the number of medical coders from 40 people to 2,000 people beginning in September 2025. CMS will also work with HHS Office of Inspector General to recoup overpayments identified in past audits.
A copy of the CMS Press Release can be found here.
