Implications of CMS’s Expansion of RADV Audits Could be Far-Reaching
The Centers for Medicare and Medicaid Services (CMS) announced on May 21 a significant expansion of its auditing efforts for Medicare Advantage (MA) plans. With the last significant clawback effort dating back to 2007 and estimates of overpayments reaching $43 billion annually, the implications could be wide-reaching across the industry.
MA plans receive risk-adjusted payments based on the diagnoses they submit for enrollees, CMS explained in its news release. To verify the accuracy of these claims, CMS conducts Risk Adjustment Data Validation (RADV) audits to confirm that medical records support diagnoses used for payment. As CMS is several years behind in completing these audits, the Trump Administration has introduced a plan to complete all remaining RADV audits for 2018-2024 by early 2026.
Justin Liu, CEO of Charta Health, an AI-powered chart review platform, provided comments to Healthcare Innovation on the impact of the newly announced CMS audit strategy on providers.
“CMS’s expansion of RADV audits marks a new era of oversight in Medicare Advantage (MA). The agency is rolling out a more systematic and extrapolated audit strategy - its most expansive effort since 2007, targeting an estimated $17-43 billion in annual overpayments,” Liu said.
“This policy shift is especially consequential for providers operating under global capitation contracts. While most payers retain just 15-20% of MA premium dollars, the vast majority of financial risk has been transferred to provider networks, leaving them increasingly exposed to the consequences of CMS takebacks.”
“A key flashpoint will be how payers pursue these overpayments,” Liu explained. “Some provider contracts restrict the use of extrapolation, which could trigger disputes and a wave of contract renegotiations. Legal language around audit liability is likely to become a central issue in payer-provider agreements moving forward.”
Liu cautioned, “This is more than an enforcement effort; it’s a fundamental rebalancing of financial accountability within the MA ecosystem. Risk-bearing stakeholders must now adapt operationally, contractually, and strategically to navigate a more aggressive and exacting regulatory environment.”
CMS will start auditing all eligible MA contracts each payment year and add resources to expedite completion of 2018 to 2024 audits, the agency announced.
“We are committed to crushing fraud, waste and abuse across all federal healthcare programs,” said Dr. Mehmet Oz, CMS Administrator, in a statement, “While the Administration values the work that Medicare Advantage plans do, it is time CMS faithfully executes its duty to audit these plans and ensure they are billing the government accurately for the coverage they provide to Medicare patients.”
