CMS Ramps Up Medicare Advantage Plan Audits Aimed at Taking Back Billions in Overpayment Dollars – Here’s What Providers Can Expect

By: Jenni Colagiovanni and Erin Liechty, Wachler & Associates, P.C.

June 2025

On May 21, 2025, CMS announced its plan to significantly expand audit efforts of Medicare Advantage (MA) plans. CMS’ expanded audit effort is two-fold: (1) audit all eligible MA contracts for all newly initiated audit payment years, and (2) expedite audits from payment years 2018 to 2024. The Trump administration is turning its attention to these plans because it is estimated that MA plans have overbilled the government between $17 billion and $43 billion annually and because despite the vast overpayment suspected there has been no concerted effort to audit these plans since 2007.   

CMS’ MA audit expansion plan is comprised of the use of enhanced technology, workforce expansion, and increased audit volume. CMS states it will use “advanced systems” to find unsupported diagnoses. It is reasonable to assume this may take the form of an AI-driven program to flag unsupported diagnoses presumably for closer review, though CMS has not yet provided the specifics of this enhanced technology. Furthermore, CMS reports that by September 1, 2025, the number of medical coders who manually verify the flagged diagnoses will increase from 40 to 2,000. With these changes, CMS aims to have the capacity to audit all of the approximately 550 MA plans annually in newly initiated audits; previously, audit capabilities were limited to about 60 MA plans per year. Additionally, CMS hopes to expand the number of records audited per plan in a given year from 35 to between 35 and 200 records per plan (based on the size of the health plan). CMS noted that this expansion in the number of records reviewed not only increases the reliability of the findings but also affords CMS the added benefit of extrapolating its findings as provided for under the 2023 Risk Adjustment Data Validation (RADV) final rule.

Not only will CMS be working on completing the audits, it will also team with the Department of Health and Human Services Office of Inspector General (HHS-OIG) to collect previously identified overpayments. 

The MA plan audits will focus on the risk-adjustment data validation (RADV) scores, the metric used to confirm that medical records support the documented diagnoses, to determine if MA plans are reporting the proper codes based the diagnoses that the medical records support.  In turn, the MA plans are expected to increase scrutiny on provider documentation, billing and recordkeeping practices. This is likely to take the form of increased audits of providers by the MA plans to both inspect provider documentation and identify improper payments (and presumably offset anticipated MA plan overpayments identified in the RADV audits). As the government anticipates identifying billions in overpayments from its audits of MA plans, these plans are even more incentivized than before to scrutinize payment to providers and provider documentation. In addition to auditing provider documentation and coding, this tightening of the fists may also come in the form of increased difficulty in obtaining prior authorizations, an already widely reported criticism of MA plans, as MA plans may seek to conserve their funds. These impacts may be ameliorated somewhat by the additional funding the government recently committed towards the MA plans earlier this spring, but providers should not count on this. 

While providers can hope that MA plans will act fairly in promptly covering necessary care that beneficiaries are entitled to even as RADV audit ramp up, providers should take steps to ensure they are ready for the potential impact of the increased MA plan audits. First, providers are well advised to evaluate documentation and coding practices to ensure documentation properly supports the diagnoses as well as the prescribed treatments. Second, medical practices should ensure they have staff who are well versed in Medicare coding to avoid unintentional upcoding that could lead to clawbacks of reimbursements down the line. Third, since the financial strain caused by the increased audits could lead MA plans to reduce options, supplemental benefits, and payments, providers should look out for these changes and plan accordingly. Finally, it will remain to be seen whether the increased RADV audit efforts lead to MA plans seeking to revise audit liability and recoupment language in future provider-MA plan contracts.

One can expect that there is more to come on the specifics of CMS’ recent MA plan audit announcement and healthcare providers are advised to keep watch over the downstream impacts and provider scrutiny to come.  

Short Bios: 

Jenni Colagiovanni is an attorney at Wachler & Associates, P.C. Ms. Colagiovanni practices in all areas of healthcare law and devotes a substantial portion of her practice to regulatory compliance, physician contracting, and reimbursement matters, including Medicare, Medicaid, and third-party payor audit defense.

Erin Liechty is an attorney at Wachler & Associates, P.C. Ms. Liechty practices various areas of healthcare law with a focus on Medicare audit appeals.

Sources:

• https://www.cms.gov/newsroom/press-releases/cms-rolls-out-aggressive-strategy-enhance-and-accelerate-medicare-advantage-audits
• https://www.federalregister.gov/documents/2023/02/01/2023-01942/medicare-and-medicaid-programs-policy-and-technical-changes-to-the-medicare-advantage-medicare
• https://oig.hhs.gov/reports/all/2022/some-medicare-advantage-organization-denials-of-prior-authorization-requests-raise-concerns-about-beneficiary-access-to-medically-necessary-care/
• https://www.cms.gov/newsroom/press-releases/cms-finalizes-2026-payment-policy-updates-medicare-advantage-and-part-d-programs#:~:text=Payments%20from%20the%20government%20to,in%20the%20effective%20growth%20rate.