Medicare Advantage Risk Adjustment Fraud: When the Chart Says No and the Code Still Pays

Medicare risk adjustment fraud happens when a plan or provider knowingly uses unsupported diagnoses to increase Medicare Advantage payments, or keeps overpayments it knows are wrong. This form of Medicare Advantage fraud makes taxpayers pay for illnesses the medical record does not support. For a coder, clinician or finance employee inside the process, the telling moment may come after someone finds the problem. The company has the chart, the contradictory finding and the money. What does it do next?

Medicare pays private plans a monthly amount for each enrollee and, as the HHS Office of Inspector General explains, multiplies the plan’s base payment rate by a risk score that eligible diagnoses help set. A diagnosis can therefore raise revenue without a separate bill for another visit, which is how a diagnosis becomes revenue.

That money can travel further. A provider group paid a percentage of the plan’s capitation receives more when risk-adjusted payments rise. The provider supplies the diagnosis, the plan submits it, and both can benefit from the resulting payment. The Department of Justice describes exactly that arrangement in its account of The Villages Health System.

For outpatient diagnoses, the connection to the visit matters. The government’s enforcement accounts require support in the medical record of a face-to-face encounter and a condition that required or affected care, treatment or management at that visit. A condition selected from an old problem list can look convincing in a submission file while saying very little about what happened in the examination room.

What Is an Example of Upcoding in Medicare?

Reporting a historical cancer as an active condition is an example of Medicare Advantage upcoding alleged in the Martin’s Point complaint. The whistleblower described past cancers, strokes and heart attacks that had already been treated, with no current treatment, reaching Medicare as active conditions. The difference between a history and a current illness can become a difference in payment.

A chart review of existing records can find a diagnosis omitted from a submission or a submitted diagnosis the chart does not support, findings that pull revenue in opposite directions.

One-way chart review fraud at Martin’s Point allegedly continued after a 2017 internal audit found almost a 60% error rate in its sample of submitted diagnosis codes. The whistleblower’s complaint says the company did not expand the review. The whistleblower also believed it did not notify CMS or return the overpayments.

Meanwhile, according to the complaint, Martin’s Point calculated an 8:1 return on retrospective chart reviews. Management allegedly dismissed a proposed system for both adding codes and deleting known errors as a waste of resources that would distract from the revenue goal. The review had money for finding diagnoses. Correcting them competed with the budget.

An outside contractor could share the same incentive. The complaint alleges that DxID collected a percentage of additional Medicare revenue. A vendor paid for additional revenue has a financial reason to deliver additions. The contract, the findings it delivers and the plan’s response belong in the same account of how the codes reached Medicare.

The government’s complaint against Anthem alleges an instruction to that effect: Anthem directed its vendor, Medi-Connect, to aim its review and coding work at new codes that would generate revenue.

The government also alleged that Anthem required a second review for newly identified codes that could generate revenue, while declining to investigate flagged records when they concerned codes already submitted. The same chart-review operation could be painstaking about additions and incurious about money it might owe back.

The evidence connects the encounter, the diagnosis code, the submission and the payment to what the company knew, and an internal compliance finding can show that management knew a diagnosis was unsupported. In risk adjustment, those pieces may sit in different departments or different companies, which shapes how to report Medicare Advantage fraud.

A Correction Has to Reach the Payment Input

An internal correction can be accurate and still leave the federal payment unchanged. In the Sutter whistleblower’s original complaint, a risk-adjustment manager alleged that auditors were told to change only the billing side of the electronic record. The inaccurate diagnoses remained in the patient’s medical record, which supplied the risk-adjustment data sent onward to the plan and CMS.

The complaint alleges that the manager explained the consequence and that management knew changing the billing file would not fix the payment data. The distinction matters to anyone whose work ends with a closed correction ticket. The account has to follow the diagnosis all the way into the data Medicare uses.

The original submission and the later retention of money raise different questions. Under CMS’s overpayment-return rule, plans must report and return identified overpayments. An audit, the decision about correction and the continued payment can therefore tell one connected story.

The Signature Has Information Behind It

CMS’s payment-certification requirements put the accuracy, completeness and truthfulness of submitted data before the plan’s chief executive, chief financial officer or someone authorized to sign who reports directly to either officer. They certify the data based on what they know and believe. Contractors and subcontractors that generate the data must similarly certify it.

What did validation find? Which findings reached the signer? What happened to the unresolved codes? The signature belongs beside the audit and correction history, where an insider can explain what the organization knew when it requested payment.

When a Query Changes the Visit

Kaiser Permanente agreed to a $556 million settlement announced in January 2026 over alleged invalid diagnosis submissions. Former employees brought the whistleblower cases, and the government pursued the diagnosis allegations. The Justice Department’s account describes a scheme in which physicians faced pressure to add diagnoses after visits, sometimes more than a year later, for conditions they had not considered or addressed at those visits.

The government alleged that Kaiser used risk-score production targets in its scheme from 2009 to 2018, singling out physicians and facilities falling short and tying bonuses to diagnosis goals. It also alleged that physician objections and compliance audits had flagged the practices. The targets supplied the pressure. The query and the resulting amendment showed what happened to the patient’s record.

The Villages allegations show another weakness in the same chain. The government described unsupported diagnoses or amendments that the treating provider had not initiated and that were untimely or lacked that provider’s approval. The provider group supplied codes to insurers, and the resulting higher payments flowed back to the group. Authorship, approval and visit relevance mattered because the altered record was going to earn money.

Home Visits That Feed the Payment

Health risk assessments collect information about an enrollee’s health, risks and daily activities. A home assessment can also supply diagnoses for risk adjustment, directly or through a later chart review. The form completed in the patient’s home can become the source of an insurer’s increased payment.

The HHS Office of Inspector General’s October 2024 evaluation found that diagnoses appearing only on health risk assessments or linked chart reviews, with no other service record in 2022, generated an estimated $7.5 billion in risk-adjusted payments for 2023. The missing follow-up records involved 1.7 million enrollees. In-home assessments and their linked reviews generated almost two-thirds of the estimated payments.

The inspector general raised two concerns: inaccurate diagnoses could be producing improper payments, or people with serious conditions could be missing needed care. The question for an insider is what the assessment actually documented and what care followed the diagnosis.

Cigna’s local home-visit settlement shows how that question becomes a case. The company agreed to pay $37 million in September 2023. A former part-owner of a home-visit vendor brought the case, and the government joined. The government alleged that vendors completed check-the-box forms, Cigna’s coding teams translated the checked conditions into codes, and those codes went to CMS. It also alleged that Cigna targeted members likely to produce the largest risk-score increases.

Cigna admitted that vendor clinicians in many cases could not provide treatment or prescriptions, that the company tracked the diagnoses and their effect on payments, and that in many instances it submitted diagnoses whose forms lacked corroborating clinical information. The company also admitted that in many cases it did not require vendors to have the equipment needed for diagnostic testing. The government’s allegations included diabetes with renal complications reported without the necessary testing. There was a system for measuring the revenue from the visit. The admissions describe what was missing from the medical side of it.

A 2019 study in Health Management Policy and Innovation found evidence that plans may be using more intensive coding to raise risk scores and payment rates, the problem behind Medicare Advantage’s coding intensity adjustment. Who enrolls is a separate question from how they are coded: the disproportionate enrollment of people whose care costs less than their risk scores predict is favorable risk selection.

Inside a plan, coding validation and compliance audits may find the problem before the HHS Office of Inspector General or the government’s risk adjustment data validation audits reach it. Because final 2027 payments use 2026 dates of service, records being created now already fall under the exclusion of most diagnoses from unlinked chart review records.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers, and risk-adjustment managers, physicians, coders and vendor insiders have brought these cases. The Kaiser settlement allocated $95 million of its recovery to the whistleblowers, one measure of what Medicare whistleblowers get paid.

You Know Where the Code Came From

If your work shows how unsupported diagnoses reached Medicare, or why a known error kept producing revenue, speak with our whistleblower experts. We connect the clinical evidence, coding decisions and payment trail to build your strongest Medicare Advantage whistleblower case and bring in Medicare fraud whistleblower lawyers who understand risk adjustment. We stay beside you through the case, with the judgment and expertise that an insider taking on this system needs.