HCC Coding Fraud in Medicare Advantage: Higher-Paying Conditions the Record Does Not Support

HCC coding fraud in Medicare Advantage means knowingly using unsupported or inaccurate diagnoses to increase Medicare payments. For a coder, the contradiction may already be on the screen: a recorded BMI that conflicts with morbid obesity, a cancer history submitted as active disease, or a query asking a doctor to add a condition the visit never addressed. The code earns more while the clinical record tells a different story.

What an HCC Diagnosis Changes

Medicare Advantage diagnostic coding turns eligible ICD diagnosis codes into Hierarchical Condition Categories. Those categories contribute to a member’s risk score, which changes the monthly payment the plan receives from the Centers for Medicare & Medicaid Services. More severe conditions generally produce higher payments because the model expects those patients to need more care.

The financial effect reaches beyond the physician’s encounter charge. Medicare Advantage plans receive monthly capitation payments, and a health care provider group can share in those payments under its contract with the plan. That arrangement gives the provider a financial stake in the diagnoses it sends upstream. It is the payment chain behind risk adjustment fraud.

A study in Health Management Policy and Innovation tested how much the choice of risk measure mattered. Using Medicare Advantage and fee-for-service claims from 2010 through 2014, it compared HCC scores with adjusted diagnostic groups, another way of measuring patients’ health risks. The alternative measure was not used to set Medicare Advantage payments.

The study found similar results from the two measures in fee-for-service Medicare, but the alternative substantially reduced the apparent risk in Medicare Advantage, bringing it approximately into line with fee-for-service. Its conclusion points to the incentive: plans may be using more intensive coding to push risk scores, and with them payment rates, higher.

Its finding makes the condition-level question sharper: what in this patient’s record supports the diagnosis that increased the payment?

Spinal Conditions and the Report That Came Later

Spinal-condition coding cases put both the diagnosis and the instructions behind it in view. HealthCare Partners, acquired by DaVita, allegedly distributed guidance directing physicians to use an improper code for a spinal condition because it increased reimbursement. The Justice Department’s account of the DaVita settlement describes a provider organization that collected diagnoses, sent them to Medicare Advantage plans and received a share of those plans’ payments.

The same settlement addressed allegations of one-way chart reviews: additional diagnoses went to plans, while inaccurate codes that should have reduced payments stayed in place. Add what pays. Keep what pays.

Seoul Medical Group’s case adds another step. In its March 2025 settlement announcement, the government alleged that the group submitted spinal enthesopathy and sacroiliitis diagnoses for patients who did not have those conditions. When a Medicare Advantage plan questioned the spinal enthesopathy coding, Seoul allegedly enlisted Renaissance Imaging Medical Associates to create radiology reports that appeared to support it.

In that account, the plan challenged the diagnosis, and only then did the supporting reports appear. We examine the original encounter, the coding guidance and the radiology response together to see how the disputed diagnosis acquired its support.

Morbid Obesity and the BMI in the Chart

Morbid obesity coding allegations repeatedly put the submitted diagnosis beside the patient’s recorded body mass index.

In the Cigna settlement announced in September 2023, the government alleged that Cigna submitted or failed to delete morbid obesity diagnoses for people lacking a BMI of 35 or above.

Aetna’s March 2026 settlement announcement described a similar contradiction in different terms. Aetna allegedly submitted or retained morbid obesity codes for people whose recorded BMI was inconsistent with the diagnosis. The announcement tied those codes to increased Medicare payments.

The provider side appears in Complete Physician Services, a Philadelphia primary care practice. In its May 2023 announcement, the government alleged unsupported morbid obesity coding where patients’ BMI was under 35. It also alleged chronic obstructive pulmonary disease diagnoses without medical support or appropriate documentation.

For a coding auditor, the question is what happened after the mismatch was found: did the diagnosis stay in the submission?

Active Cancer or a History of Cancer?

Active cancer coding allegations concern what the record supports for the year submitted. The distinction between active disease and a cancer history becomes consequential when the active diagnosis increases a risk score.

A whistleblower at Martin’s Point alleged that a patient underwent a radical prostatectomy in 2014 and that the record indicated no evidence of recurrent prostate cancer. Martin’s Point nevertheless allegedly submitted active prostate cancer for the 2016 payment year.

A Sutter whistleblower likewise identified active prostate cancer submissions after prostate removal and disputed them based on the documented history and absence of treatment directed to cancer. These allegations direct attention to the whole clinical account: the current assessment, recurrence evidence, treatment or management, and the diagnosis actually submitted.

The workflow shows how a disputed diagnosis traveled: which review found the diagnosis, which record it relied on, and whether contrary information reached the people submitting it. That is where a coder’s knowledge of the system adds something a diagnosis list alone cannot show.

Behavioral and Substance-Use Diagnoses Added After Review

Behavioral and substance-use coding cases show how a retrospective review can push a condition into the record. Complete Health’s August 2026 settlement addressed allegations involving HCC 55, drug and alcohol dependence, and HCC 59, major depressive, bipolar and paranoid disorders, during 2020 through 2023.

The government alleged that Complete Health distributed incorrect coding guidance, had coders identify additional chronic-condition diagnoses, and prompted doctors to add them even when they lacked support or clinical justification. Complete Health’s contracts paid it a percentage of the plans’ Medicare payments. Under the alleged scheme, the added diagnosis increased the plan’s payment and the provider organization’s share.

An older government complaint involving Independent Health, Group Health Cooperative and the chart-review vendor DxID shows what that contradiction can look like inside a chart:

The government’s allegation was specific: the review picked up the old diagnosis while the chart also recorded its resolution. A coder who sees both entries can explain how the program selected one and passed over the other.

Chronic Conditions Generated by Home Assessments

Home-assessment diagnoses put the information available during the visit at the center of the inquiry. In the Cigna home-visit case, the government alleged unsupported diagnoses including chronic kidney disease and congestive heart failure. Its account tied those diagnoses to missing testing or imaging, insufficient information on the assessment forms and the absence of the same diagnoses from other providers that year.

Cigna admitted that, in many instances, it submitted diagnoses from forms lacking corroborating clinical information. It also admitted that the forms did not reflect the testing necessary to make those diagnoses for the first time. Its coding teams translated conditions checked on vendor forms into codes submitted to Medicare, and the company tracked the effect on payments. The route from the home visit to the revenue was built into the program.

Monogram Health’s August 2026 settlement addressed another in-home provider. The government alleged that, during 2021 through 2023, it knowingly submitted diagnoses that were clinically inaccurate, unsupported by documentation, or did not require or affect care, treatment or management.

The named categories included protein-calorie malnutrition under HCC 21, substance use disorder, coagulation defects and other specified hematological disorders, and angina pectoris.

The announcement says diagnoses must be supported by a face-to-face visit record and, for outpatient visits, must have required or affected care, treatment or management at that visit.

The government’s DxID complaint gives visit relevance its own example. It alleged that DxID coded uncontrolled diabetes from a problem list during a dermatology appointment for a skin lesion and a bump behind the patient’s ear. Group Health Cooperative submitted the code, although the complaint said the record did not document diabetes as a factor in that encounter. Here the question reaches beyond whether the patient had diabetes. It asks what the provider’s encounter supported, and why that encounter became the basis for the submitted condition.

In a 2024 report on health risk assessments, the Department of Health and Human Services’ Office of Inspector General estimated $7.5 billion in payments for 2023 from diagnoses appearing only on assessments or assessment-linked chart reviews, with no other 2022 service records reporting them. The Inspector General raised two concerns: inaccurate diagnoses generating improper payments, or patients missing needed care for the serious conditions reported.

Taxpayers lose when a false diagnosis raises the payment. Patients lose when a serious diagnosis brings a higher payment but no needed care.

The Record Trail in HCC Coding Fraud Cases

HCC coding fraud cases connect the clinical contradiction to the submitted code and the people who knew about it. An original encounter note, the later query and the resulting diagnosis show how the code entered the system. A review finding and the submission history show whether it stayed after someone challenged it. The contract and payment records show who benefited.

The location of a correction matters too. In the Sutter whistleblower complaint, an audit team allegedly received instructions to change the billing side of the electronic record while only physicians could correct the clinical encounter. The whistleblower alleged that management had been told a billing-file correction would leave the inaccurate data used by Medicare unchanged.

An internal list marked corrected can therefore answer a different question from the one Medicare needs answered. We trace the disputed diagnosis from its source through the actual submission, including any deletion, and connect the findings to management’s response to the coding concerns. The record of what happened after the objection can be as revealing as the original code. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The HCC Number Belongs to the Payment Year

The Centers for Medicare & Medicaid Services completed the phase-in of the 2024 CMS-HCC model for non-PACE organizations in 2026. That model is commonly called v28.

To trace how an older diagnosis changed the payment, we use the model for that payment year.

When You Know Why the Code Stayed

If you work in healthcare coding, clinical care or risk adjustment and know how an unsupported diagnosis reached Medicare, speak with our whistleblower experts about the code and the decisions behind it. We build the case with you from the clinical contradiction through the payment, bringing in Medicare Advantage whistleblower lawyers who understand diagnosis coding. You bring knowledge of how the system actually worked, and we stay beside you as your partners through the case.