CMS’s RADV Strategy Will Reverberate Throughout Health Plan Operations

On May 21, 2025, the Centers for Medicare and Medicaid Services (CMS) announced their plan to accelerate and expand risk adjustment data validation (RADV) audits. CMS has stated that Medicare Advantage (MA) plans may overbill the government by approximately $17 billion annually. The most recently reported net MA Payment Error Rate from FY 2024 was $15.34 billion.

Eric Levine, M.P.H.

Today the payment year 2018 RADV audit is currently in progress and RADV audits for payment years 2019–2024 have not yet begun. In its announcement, CMS stated its plan to clear the backlog of RADV audits for prior payment years by early 2026. This plan included three key elements:

Increased Audit Volume: CMS plans to conduct RADV audits for all eligible MA plans annually. Currently, the agency conducts RADV audits on roughly 60 plans per year. CMS also plans to increase the number of audited records per plan per year from 35 to up to 200 records depending on plan enrollment.

Enhanced Technology: CMS plans to leverage advanced technology to increase the number of medical records it reviews for unsupported diagnoses.

Workforce Expansion: CMS plans to increase the size of its team of medical coders from 40 to roughly 2,000 before September 2025.

While MA plans will be responsible for repaying any payment errors found during the RADV audits, CMS’ new RADV strategy will have broad implications across the healthcare delivery system. To minimize the burden of RADV audits, MA plans must recognize the critical role that each of their internal functions and external partners plays in the risk adjustment and RADV processes.

“CMS intends to hit the gas pedal hard, accelerating the auditing for 2018 through 2024. At the same time, the Department of Health and Human Services’ Office of Inspector General (OIG) intends to continue their RADV program. Until they are caught up, it is likely plans at some point will be audited for more than one year and potentially by both CMS and OIG,” says Mark Newsom, Managing Director at Avalere Health.

RADV requires more than a single point-in-time effort. Successful plans conduct year-round activities, and the most successful integrate functions across departments to have the largest impact on RADV readiness and performance in a RADV.

Provider relations

Providers are critical partners in a plan’s risk adjustment program. Plans partner with providers to educate them on coding and documentation practices so they are capturing the most accurate and complete picture of the member’s health. Plans also rely on providers to share member medical records upon request to support retrospective reviews and RADV audits. During RADV audits, plans work with their providers to pull medical records. Many of these providers will be supporting RADV across multiple plans to provide medical records that are more than five years old. In some cases the provider may no longer have a contract with the plan under audit.

CMS’s RADV strategy may cause friction among providers. Physicians and hospitals have already been vocal with policymakers around the administrative burdens imposed by MA plans, including medical record retrieval and prior authorizations. Adding to that burden is a political risk as Congress continues to explore reforms of both risk adjustment and utilization management practices.

Nevertheless, plans should identify strategies to reduce provider burden and partner with providers to reach shared goals. They can develop data sharing partnerships and should also build RADV metrics into value-based contracts.

Quality and care management

Increased RADV audits mean more record collection from providers which, as mentioned above, places a burden on providers. Plans need to coordinate their medical record collection activities across all programs, including risk adjustment and quality for HEDIS, to reduce provider abrasion. Further, quality programs such as care gap closure activities can support plans in getting members to the care they need and thus generating medical records as supporting documentation in RADV audits.

Tom Martin, M.A., MBA

Care managers connect members with their providers to address healthcare needs. Care management teams should build in processes so that following a health risk assessment or in-home assessment, the care manager works with members and their providers to update care plans. Care management workflows should be coordinated with risk adjustment activities (particularly prospective programs); the two activities can inform and influence each other.

Understanding the administrative burdens providers face, quality and care management teams can review policies and processes to find ways to reduce that burden. Further, plans may find strategies to integrate data and information collected during quality initiatives and care management touchpoints into risk adjustment programs to further recognize efficiencies.

Member engagement

Member engagement initiatives are critical in risk adjustment programs. They connect members with resources needed to access the care they need. This in turn helps the plan collect the clinical information and documentation needed to support encounter data submissions. Ensuring members seek the care they need helps the plan confirm that it is submitting accurate risk adjustment data that can be supported by documentation from those visits.

Member engagement initiatives should be plugged into prospective risk programs as well as other plan activities, such as quality initiatives, so that the plan is coordinated in its efforts to reduce member abrasion and increase efficacy. Initiatives must also be coordinated across all engagement channels as part of a multichannel plan.

Payment integrity

Payment integrity teams are critical to RADV preparedness, as they identify and prevent overpayments that result from coding, documentation, or billing errors. Retrospective and prospective clinical and coding audits across inpatient (Medicare Severity Diagnosis-Related Group / All Patient Refined Diagnosis Related Groups), outpatient (Ambulatory Payment Classifications ), skilled nursing facility (Patient Driven Payment Model / Resource Utilization Groups), and physician claims uncover inaccuracies that, if unaddressed, could surface during RADV audits and lead to significant financial exposure. By integrating payment integrity with risk adjustment workflows—such as targeting high-risk claims, aligning audit findings with RADV vulnerabilities, and sharing insights across departments—plans can proactively strengthen compliance, improve documentation quality, and mitigate audit risk.

IT

Risk adjustment programs run on strong IT platforms. CMS is planning to adopt new technologies such as artificial intelligence (AI) to support its goals of conducting RADV audits for all MA plans. Health plans must ensure that their systems can interface with any new CMS systems. Plans can also evaluate similar technologies that can support risk adjustment programs. However, IT system transformation and implementation takes time, and given CMS’s aggressive timeframe to ramp up its auditing capabilities, plans need to be vigilant and validate CMS system outputs to avoid errors or breakdowns in processes.

Financial planning

Risk adjustment is a key component of financial planning for a MA plan. Given CMS’s RADV strategy, it is essential for plans to not only forecast risk adjustment revenue but also to understand and prepare for potential RADV-related financial exposure. Once CMS notifies a plan of their selection for a RADV audit, plans should estimate their potential repayment risk and begin including those estimates in their financial projections.

CMS’s new RADV audit approach makes strong financial planning even more critical. Plans can now face audits for multiple payment years at once, and both CMS and OIG can conduct audits in the same year. Adding to the complexity, starting with payment year 2018, CMS began using an extrapolation method, where findings from a small sample of enrollees are applied to the entire plan. The extrapolation method may introduce additional uncertainty in the estimate of potential RADV audit financial exposure.

“Plans that can proactively identify their potential exposure to RADV audit payment error penalties can develop a complete picture of the improvements that they need to proactively pursue have a best-in-class risk adjustment program and make future RADV audits less time consuming,” says Kirsten Stryker Blasch, Consultant II at Avalere Health.

Policy advocacy

In the coming months, CMS is expected to provide additional information about its RADV strategy. Plans’ internal government affairs teams and trade groups will play a critical role in helping to obtain timely answers to key operational questions about this roll out. Plans should also proactively engage with internal government affairs teams and trade groups throughout the RADV audit process to help identify improvements that could inform future RADV and risk adjustment policy making.

Compliance

Compliance teams should continue to be collaborative partners with risk adjustment teams to translate incoming regulatory changes into business processes. They can also support year-round activities to ensure RADV audit readiness at all times, such as regularly reviewing processes and conducting mock audits. During RADV audits, compliance teams will need to partner with risk adjustment teams as they interface with government auditors.

Risk adjustment

Risk adjustment teams will obviously feel the greatest impact, as they are responsible for running all risk adjustment program elements, including RADV audits. They need to balance reactionary activities in response to RADV audits for prior payment years to lead the organization successfully through these audits. However, successful plans will also be taking the time now to re-assess their full risk adjustment programs to identify areas of improvement, both to close potential compliance risks as well as implement industry best practices

Eric Levine, principal at Avalere Health notes, “Risk adjustment programs that integrate multiple areas of the business and that are informed by and feed into other workflow, can help plans before they even get into a RADV audit. Successful plans have programs that set the organization up for year-round readiness and compliance.”

Conclusion

To prepare for CMS’ new RADV strategy and build effective risk adjustment programs, Medicare Advantage plans must take a coordinated, organization-wide approach that engages providers, aligns quality and care management, enhances member engagement, integrates payment integrity initiatives, invests in IT infrastructure, incorporates proactive financial planning, collaborates with compliance and government affairs, and ensures that risk adjustment teams lead with strategic oversight and cross-functional integration.

Each of these components plays a critical role in creating sustainable, audit-ready systems that enable plan efforts to ensure their members have access to the benefits and services that support their healthcare goals. They should all flow into a comprehensive RADV readiness program that runs throughout the year to maintain preparedness and set the organization up for success.

Eric Levine, M.P.H., is an associate principal at Avalere Health. Tom Martin, M.A., MBA, is vice president, client relations at DRG Claims Management.