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Medicare Advantage: Questionable Use of Health Risk Assessments Continues To Drive Up Payments to Plans by Billions

Issued on  | Posted on  | Report number: OEI-03-23-00380

Why OIG Did This Review

  • Medicare Advantage (MA) companies receive higher risk-adjusted payments from the Centers for Medicare & Medicaid Services (CMS) for enrollees who are sicker, which helps to ensure that plans receive sufficient payment to cover more costly care and enrollees have continued access to MA plans. However, taxpayers fund billions of dollars in overpayments to MA companies each year based on unsupported diagnoses for MA enrollees. Unsupported diagnoses inflate risk-adjusted payments and drive improper payments in the MA program.
  • Using 2016 MA encounter data, prior OIG work identified two sources of enrollee diagnoses—health risk assessments (HRAs) and chart reviews—as vulnerable to misuse by MA companies. This evaluation updates that work and determines whether vulnerabilities persist regarding the appropriateness of resulting risk-adjusted payments and the quality of care for enrollees with diagnoses reported only on HRAs and on no other records of services (i.e., service records) in the 2022 MA encounter data. This evaluation also newly examines the extent to which MA companies use chart reviews of information gathered as part of HRAs to add diagnoses that increase their risk-adjusted payment (HRA-linked chart reviews).

What OIG Found

Diagnoses reported only on enrollees’ HRAs and HRA-linked chart reviews, and not on any other 2022 service records, resulted in an estimated $7.5 billion in MA risk-adjusted payments for 2023. The lack of any other followup visits, procedures, tests, or supplies for these diagnoses in the MA encounter data for 1.7 million MA enrollees raises concerns that either: (1) the diagnoses are inaccurate and thus the payments are improper or (2) enrollees did not receive needed care for serious conditions reported only on HRAs or HRA-linked chart reviews.

In-home HRAs and HRA-linked chart reviews generated almost two-thirds of the estimated $7.5 billion in risk-adjusted payments. In-home HRAs and HRA-linked chart reviews may be more vulnerable to misuse because these tools are often administered by MA companies or their third-party vendors and not enrollees’ own providers. Diagnoses reported only on these types of records heighten concerns about the validity of the diagnoses or the coordination of care for MA enrollees

Just 20 MA companies drove 80 percent of the estimated $7.5 billion in payments. Also, these MA companies generated a substantially greater share of payments resulting from HRAs or HRA-linked chart reviews for certain health conditions, including serious and chronic illnesses, such as diabetes and congestive heart failure.

What OIG Recommends

In addition to implementing prior OIG recommendations, CMS should:

  1. Impose additional restrictions on the use of diagnoses reported only on in-home HRAs or chart reviews that are linked to in-home HRAs for risk-adjusted payments.
  2. Conduct audits to validate diagnoses reported only on in-home HRAs and HRA-linked chart reviews.
  3. Determine whether select health conditions that drove payments from in-home HRAs and HRA-linked chart reviews may be more susceptible to misuse among MA companies.

CMS concurred with our third recommendation but not the other two.

To address the issues identified in this report and prepare for future emergencies, we issued the following recommendations:
25-E-03-003.01 to CMS-Open Unimplemented
Next Update Expected 04/20/2025
CMS should impose additional restrictions on the use of diagnoses reported only on in-home HRAs or chart reviews that are linked to in-home HRAs for risk-adjusted payments. While there are general requirements and oversight in place for the MA risk adjustment payment.

25-E-03-003.02 to CMS-Open Unimplemented
Next Update Expected 04/20/2025
CMS should conduct audits to validate diagnoses reported only on in-home HRAs and HRA-linked chart reviews.

25-E-03-003.03 to CMS-Open Unimplemented
Next Update Expected 04/20/2025
CMS should determine whether select HCCs that drove payments from in-home HRAs and HRA-linked chart reviews may be more susceptible to misuse among MA companies.

View in Recommendation Tracker

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