Medicare advantage audits under pressure

[UNITED STATES] In this article, you’ll learn why the U.S. government is dramatically expanding audits of Medicare Advantage (MA) plans — and what it means for insurers, taxpayers, and millions of older Americans. We’ll break down the complex system behind these audits, how they aim to tackle waste and fraud, and the ripple effects on healthcare access.

What Is Medicare Advantage and How Does It Work?

Medicare Advantage (MA) plans are a popular alternative to traditional Medicare. About half of all Medicare enrollees — roughly 35 million Americans — have opted into these private health plans, lured by lower premiums and added perks like dental, vision, and even grocery benefits.

But here’s the catch: MA plans are funded largely by federal dollars, with insurers paid more to cover sicker patients. This payment system, known as risk adjustment, is designed to ensure plans aren’t penalized for enrolling people with chronic or serious conditions.

For example, if a plan reports that a patient has diabetes, heart disease, and depression, the government pays more than it would for a healthier enrollee. Sounds fair, right? But this system can be gamed. Insurers may upcode, or exaggerate the severity of patient conditions, to trigger higher payments — even if the patient’s actual health status doesn’t justify it.

Why Is the Government Auditing Medicare Advantage Plans?

The Centers for Medicare & Medicaid Services (CMS) uses Risk Adjustment Data Validation (RADV) audits to ensure that the billions paid to MA plans match the care patients actually need and receive.

Think of these audits like a giant receipt check:

• Did the insurer bill for services the patient actually needed?
• Do the medical records back up the diagnoses submitted?

For years, CMS has lagged in completing these audits. In fact, the last major recovery of overpayments happened after an audit of payment year 2007! Meanwhile, federal watchdogs like the Medicare Payment Advisory Commission (MedPAC) estimate that Medicare Advantage overpayments may top $17 billion to $43 billion per year.

With nearly $1 trillion in total annual Medicare spending, this isn’t just a bookkeeping issue — it’s a major strain on taxpayer resources.

How Will the Expanded CMS Audits Work?

In May 2025, CMS announced a dramatic expansion of its auditing operations. The agency’s new plan includes:

Enhanced Technology: Advanced systems will scan medical records to spot red flags, such as unsupported diagnoses or suspicious billing patterns.

Massive Workforce Growth: CMS plans to scale up its team of medical coders from 40 to 2,000 by September 2025. These human reviewers will manually check flagged records for accuracy.

More Comprehensive Audits: Instead of auditing just ~60 MA plans per year, CMS will now audit all ~550 eligible MA plans annually, and review up to 200 records per plan, depending on size.

This is like upgrading from checking a few random grocery receipts to auditing every single one from every store — across the entire country.

The ultimate goal? To identify and recover past overpayments, ensure current billing practices are accurate, and hold insurers accountable under federal rules.

Which Insurers Are Being Audited — And Why?

Four major insurers are at the center of this intensified scrutiny:

• UnitedHealth Group (UNH)
• Elevance Health (ELV)
• CVS Health’s Aetna (CVS)
• Humana (HUM)

Together, these companies control a huge share of the Medicare Advantage market. With pressure from both the CMS and the Department of Health and Human Services Office of Inspector General (HHS-OIG), these insurers face a multi-front challenge:

• Correct past overbilling
• Prove compliance in future audits
• Adapt their internal processes to tighter oversight

Importantly, these audits aren’t just about clawing back dollars. They’re also about restoring trust in a system that many critics argue has prioritized profits over patient care.

What Could This Mean for Patients?

Here’s where things get tricky.

Some MA plans have already started withdrawing from rural or low-income regions where they claim they can’t turn a profit. This leaves patients with fewer healthcare options, especially in areas where hospitals and clinics are also closing due to financial stress.

Switching from a Medicare Advantage plan back to traditional Medicare isn’t always easy — especially for people with preexisting conditions. In some states, patients face limited enrollment windows or may lose access to supplemental Medigap coverage if they switch back.

In short: While the audits aim to protect taxpayer dollars and curb abuse, they could also trigger real-world disruptions for vulnerable patients, especially if insurers exit unprofitable markets.

FAQs and Common Myths

Q: Are all Medicare Advantage plans guilty of fraud?

No. While some insurers have engaged in upcoding or questionable billing, many MA plans operate within the rules. The audits are designed to target systemic issues, not to paint all plans with the same brush.

Q: Will these audits cut patient benefits?

Not directly. But if audits lead to major financial recoveries, some insurers may scale back on generous benefits or pull out of less profitable areas, indirectly affecting patients.

Q: Is traditional Medicare immune to billing problems?

Not at all. Fee-for-service Medicare has its own fraud and waste issues, but the scale and structure of MA plan payments make the upcoding issue particularly attractive for audits.

Q: Why now? Why the sudden push?

The Trump administration’s Department of Government Efficiency (DOGE) has prioritized eliminating waste, fraud, and abuse in federal programs. The RADV audit expansion is part of a broader effort to ensure federal dollars are used effectively.

Why This Matters

At Open Privilege, we believe that making government programs work better is about more than numbers on a balance sheet — it’s about people’s lives.

The Medicare Advantage audits are a crucial test of whether the federal government can rein in waste without hurting the very people these programs are meant to help. With $1 trillion in annual Medicare spending, even small improvements in oversight can translate into billions saved — or better yet, billions redirected to patient care, rural health services, and long-term sustainability.

For curious professionals, investors, and everyday readers, this is a space worth watching. The outcomes of these audits could reshape not only the insurance market but also how America cares for its aging population.