The Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) recently announced two major policy efforts directed at Medicare Advantage (MA) plans. As MA plans have become a significant share of the healthcare insurance market, healthcare providers are left wondering what impacts these attempts at MA reform will have on providers.
First, CMS has announced a significant expansion of its auditing efforts for Medicare Advantage (MA) plans. Beginning in May 2025, CMS began to audit all eligible MA contracts for each payment year and invest additional resources to expedite the completion of audits for payment years 2018 through 2024. These audits primarily involve Risk Adjustment Data Validation (RADV) audits to confirm that diagnoses used for payment are supported by medical records. CMS reported that it is several years behind in completing these audits, but that recent estimates suggest that MA plans may have been overpaid by several billion dollars.
If CMS demands that MA plans return significant overpayments, the MA plans may seek to pass this cost along to providers. Namely, where an MA plan experiences an unexpected expense in the form of an overpayment demand, it will likely seek to decrease its costs elsewhere. This may lead to increased scrutiny of claims billed to MA plans, meaning more audits and overpayment demands aimed at healthcare providers.