CMS Bolsters Medicare Advantage Audits to Combat Overbilling and Ensure Accountability
The Stakes of Medicare Advantage Oversight
Medicare Advantage, a program that allows private insurers to administer Medicare benefits, has grown exponentially over the past two decades. As of 2025, nearly half of all Medicare beneficiaries—approximately 30 million people—are enrolled in MA plans. These plans receive risk-adjusted payments from the federal government, which increase based on the severity of diagnoses reported for enrollees. This payment model incentivizes plans to document chronic or serious conditions, as sicker patients translate to higher reimbursements. While this system aims to ensure adequate funding for complex care, it has also raised concerns about overbilling.
The Medicare Payment Advisory Commission (MedPAC) estimates that MA plans may overbill the government by as much as $43 billion annually, with more conservative estimates pegging the figure at $17 billion. These discrepancies arise when plans submit unsupported or inaccurate diagnoses, inflating payments without corresponding medical evidence. To address this, CMS conducts Risk Adjustment Data Validation (RADV) audits, which verify whether diagnoses used for payment are substantiated by medical records. Historically, however, CMS has struggled to keep pace with the volume of audits required, leaving billions in potential overpayments unrecovered.
A Backlog of Accountability
CMS’s auditing efforts have lagged significantly, with the last major recovery of MA overpayments tied to payment year (PY) 2007. Audits for PYs 2011–2013 revealed overpayment rates of 5% to 8%, underscoring the scale of the issue. Yet, the agency has been unable to complete audits for more recent years, creating a backlog that spans 2018 to 2024. This delay has drawn criticism from watchdog groups and lawmakers, who argue that the lack of timely oversight undermines the integrity of the Medicare program and diverts taxpayer funds from other critical needs.
Dr. Mehmet Oz, CMS Administrator, emphasized the urgency of addressing this gap. “We are committed to crushing fraud, waste, and abuse across all federal healthcare programs,” he stated. “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.” This renewed focus reflects a broader push by the Trump Administration to strengthen fiscal accountability in federal programs.
A Bold Plan to Overhaul Auditing
To tackle the audit backlog and enhance oversight, CMS has introduced a multifaceted plan designed to streamline processes and increase audit capacity. The initiative, set to be fully operational by early 2026, includes three key components:
1. Enhanced Technology for Efficient Auditing
CMS is investing in advanced systems to revolutionize the audit process. These technologies will enable faster and more accurate reviews of medical records, flagging unsupported diagnoses with greater precision. By automating parts of the audit workflow, CMS aims to reduce the time and resources required to identify discrepancies, allowing auditors to focus on high-priority cases. This technological leap is critical for scaling up audit volume without compromising accuracy.
2. Workforce Expansion
Recognizing that technology alone is insufficient, CMS plans to dramatically expand its auditing workforce. By September 1, 2025, the agency will increase its team of medical coders from 40 to approximately 2,000. These coders will manually verify flagged diagnoses, ensuring that audit findings are robust and defensible. This fiftyfold increase in staffing underscores CMS’s commitment to tackling the backlog and maintaining rigorous oversight moving forward.
3. Increased Audit Volume and Scope
Perhaps the most significant change is CMS’s decision to audit all eligible MA contracts—approximately 550 plans—each payment year for all newly initiated audits. Previously, CMS audited only about 60 plans annually, a fraction of the total. Additionally, the agency will expand the number of records reviewed per plan, from 35 to between 35 and 200, depending on the plan’s size. This expanded scope will enhance the reliability of audit findings and allow CMS to extrapolate overpayment estimates more accurately, as permitted under the RADV final rule.
Collaboration with Oversight Partners
To recover uncollected overpayments from past audits, CMS is partnering with the Department of Health and Human Services Office of Inspector General (HHS-OIG). This collaboration will strengthen efforts to hold MA plans accountable and ensure that taxpayer dollars are recouped where overbilling is identified. By combining CMS’s auditing expertise with HHS-OIG’s investigative capabilities, the agencies aim to create a formidable deterrent against fraudulent or inaccurate billing practices.
Why This Matters for Medicare Beneficiaries
The implications of CMS’s enhanced auditing efforts extend beyond fiscal accountability. Medicare Advantage plans play a critical role in providing healthcare to millions of seniors and individuals with disabilities. Ensuring that these plans operate transparently and bill accurately is essential to maintaining the program’s sustainability. Overpayments, if left unchecked, could strain Medicare’s trust fund, potentially leading to higher premiums or reduced benefits for enrollees.
Moreover, accurate risk adjustment ensures that MA plans are appropriately funded to care for patients with complex needs. When plans inflate diagnoses, they divert resources from those who genuinely require intensive care, undermining the program’s equity. By cracking down on overbilling, CMS aims to protect both taxpayers and beneficiaries, ensuring that Medicare Advantage delivers high-quality, cost-effective care.
Challenges and Criticisms
While CMS’s plan has been broadly welcomed, it is not without challenges. The rapid expansion of the auditing workforce, for instance, will require significant training to ensure consistency and accuracy in reviews. Additionally, MA plans may push back against the increased scrutiny, arguing that audits could disrupt operations or lead to disputes over findings. Some industry groups have historically contended that RADV audits are overly punitive, potentially discouraging plans from enrolling high-risk patients.
To address these concerns, CMS has emphasized that its goal is not to penalize plans but to ensure compliance with federal requirements. The agency has also committed to working collaboratively with MA plans to streamline the audit process and minimize disruptions. By leveraging technology and expanding resources, CMS aims to make audits more efficient and less burdensome for compliant plans.
A New Era of Accountability
CMS’s announcement marks a pivotal moment for Medicare Advantage oversight. By committing to audit all eligible contracts each payment year and clear the 2018–2024 backlog by early 2026, the agency is sending a clear message: fraud, waste, and abuse will not be tolerated. The integration of advanced technology, a bolstered workforce, and partnerships with oversight agencies positions CMS to transform its auditing capabilities and safeguard the integrity of the Medicare program.
For beneficiaries, this initiative offers hope for a more equitable and sustainable Medicare Advantage program. For taxpayers, it promises greater accountability and the potential recovery of billions in overpayments. As CMS embarks on this ambitious journey, the healthcare industry—and the millions who rely on Medicare Advantage—will be watching closely to see if this bold plan delivers on its promise of accountability and fairness.
