Medicare Advantage plans come under fire from DOGE

Health insurers are on alert after the Centers for Medicare & Medicaid Services announced May 22 that it is immediately expanding audits of all Medicare Advantage (MA) contracts and adding resources to complete overdue 2018-2024 audits.

Many older Americans flock to Medicare Advantage programs because of cheaper premiums and, in some states, more over-the-counter (OTC) benefits like vision, dental, prescriptions and even food.

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However, repeated studies have shown that MA coverage costs the federal government more than traditional Medicare, despite significant concerns that private insurers may deny justifiable care.

Of the 67.3 million Americans enrolled in Medicare, approximately 35 million are in Medicare Advantage plans. Total federal Medicare spending is approximately $1 trillion annually but an estimated $84 billion goes to MA plans.

Because of the way Medicare Advantage payments are structured, payouts are often adjusted upwards, in part for the additional OTC benefits not found in traditional Medicare. 

Some MA plans may use more aggressive diagnosis findings than what the patient actually has, a practice known as upcoding that raises reimbursements.

CMS Medicare Advantage audits seek to uncover fraud

Medicare Advantage plans receive risk-adjusted payments based on the diagnoses they submit for enrollees, meaning higher payments for patients with more serious or chronic conditions. 

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.

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Currently, CMS is several years behind in completing these audits. 

The last significant recovery of MA overpayments occurred following the audit of payment year (PY) 2007, despite federal estimates suggesting MA plans may overbill the government by approximately $17 billion annually. 

The Medicare Payment Advisory Commission (MedPAC) estimates this figure could be as high as $43 billion per year. CMS’s completed audits for PYs 2011–2013 found between 5 and 8 percent in overpayments.

To address this backlog, the Trump Administration has introduced a plan to complete all remaining RADV audits by early 2026. Key elements of the plan include:

• Enhanced Technology: CMS will deploy advanced systems to efficiently review medical records and flag unsupported diagnoses.
• Workforce Expansion: CMS will increase its team of medical coders from 40 to approximately 2,000 by Sept. 1, 2025. These coders will manually verify flagged diagnoses to ensure accuracy.
• Increased Audit Volume: By leveraging technology, CMS will be able to increase its audits from ~60 MA plans a year to all eligible MA plans each year in all newly initiated audits (approximately 550 MA plans).
• CMS will also be able to increase from auditing 35 records per health plan per year to between 35 and 200 records per health plan per year in all newly initiated audits based on the size of the health plan. This will help ensure CMS’s audit findings are more reliable and can be appropriately extrapolated as allowed under the RADV final rule.

What Medicare Advantage insurers will be audited?

These and other financial issues are fueling the CMS audits of the four Medicare Advantage insurers, all ignited by President Trump and the Department of Government Efficiency, or DOGE, commitments to eliminate federal spending waste, fraud and overpayments.

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UnitedHealthGroup  (UNH) , rocked by months of personal and professional trauma, Elevance Health  (ELV) , CVS Health’s Aetna  (CVS)  and Humana  (HUM)  are the four healthcare insurers undergoing the CMS MA audits.

CMS will collaborate with the Department of Health and Human Services Office of Inspector General (HHS-OIG) to recover uncollected overpayments identified in past audits to ensure all MA plans comply with federal requirements and accurately report patient diagnoses

Dozens and dozens of MA plans are pulling coverage out of mostly rural, poor areas because their parent companies are losing money there. 

As a result, many hospitals and healthcare providers closed, leaving patients without nearby healthcare options. Also, the transition from an Medicare Advantage plan to a traditional Medicare plan is not easy in some states, especially for patients with serious existing medical conditions.

These and other financial issues are fueling the CMS audits of the four MA insurers, all ignited by President Trump and the DOGE commitments to eliminate federal spending waste, fraud and overpayments. 

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