What to do about CMS's RADV Audits

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By now, you’ve probably heard the buzz about CMS’s big announcement on May 21, 2025. If not, here’s the headline: they’re launching full-scale RADV (Risk Adjustment Data Validation) audits on every single Medicare Advantage (MA) plan. Yes. Every single one.

They’re hiring 2,000 coders (up from a mere 40) and rolling out “advanced systems” to search medical records, find unsupported HCC diagnoses, and recoup overpayments. If you’re not sure what HCCs are, check out my previous newsletter for a quick refresher.

Why Now?

Because they’re waaaaay behind. The last big clawback happened after they audited payment year 2007. But CMS estimates that MA plans may be overbilling the government by $17 billion a year. MedPAC thinks it might be worse at $43 billion.

And with the current administration making a big push against waste, fraud, and abuse, they’re coming for that money.

But Wait… They’re Targeting MA Plans, Not Health Systems… Right?

Yes. And while MA plans are responsible for the accuracy of the codes that they submit to CMS (because that impacts how much CMS pays them), MA plans rely on provider documentation to justify the HCC codes they submit. So if CMS tightens the squeeze on MA plans, I suspect those MA plans could tighten the squeeze on us.

So this is an opportunity. We can audit ourselves, find our weak spots, and develop solutions to “protect our payer partners.” Ya know, extend the olive branch and all that.

So What Are They Focusing On?

Glad you asked, Robert. The latest OIG report targeting Coventry Health is a great roadmap. They grouped “high-risk diagnoses” into these categories:

• Acute stroke

• Acute myocardial infarction (AMI)

• Acute Embolism

• Sepsis

• Pressure ulcers

• Cancers: lung, breast, colon, prostate, and ovarian

Their approach to identifying unsupported diagnoses is fairly straightforward (and helpful for building your own audit strategy). For example:

• Sepsis: If it only shows up on one outpatient claim, but not on an inpatient claim, that’s a red flag. Sepsis almost always lands a patient in the hospital.

• Acute MI or stroke: Same logic. If it's coded in an outpatient note without an associated hospitalization, it’s suspect.

• Embolism: If it’s coded without prescribed anticoagulation, that suggests an inappropriate claim.

• Pressure ulcers: If the code only shows up once in the entire year, CMS sees that as unlikely for a significant chronic issue like this.

• Cancers: If they appear on a single claim during the year and don’t have associated chemotherapy drug treatment or surgical therapy in a 6 month period before or after the claim - again, high risk for being inappropriate.

Building Our Own Audit

We ran our own review, modeled after the OIG’s methods, with some differences because of some lack of complexity in our reports.

We focused our audit on this year’s data. CMS is looking back to 2018–2024, but we want to protect ourselves moving forward. Note that if you perform retrospective audits of previous years and find unsupported HCCs for a patient in a capitated payment model, you’ll have to reconcile that and possibly return money.

One challenge we ran into quickly: figuring out which patients are actually attributed to our ACO (Accountable Care Organization) or MSSP (Medicare Shared Savings Plan). That turned out to be harder than expected. So we shifted gears and focused on our Traditional Medicare population. Why? Because it mirrors MA patients, and this audit wasn’t about finger-pointing, but rather identifying system-level issues and designing fixes.

By the way, these chart audits were time consuming and human capital intensive, and not something we’d done before. A great partner, like today’s sponsor Norwood, can help you get it done right and make you look like the hero of your hospital.

What We Found

Honestly, it wasn’t as bad as I feared (kudos to our providers and coding team). For sepsis, every case we flagged came from hospital follow-ups. While those codes shouldn’t have been used in outpatient visits, they didn’t impact HCC scoring since the inpatient claim already captured it for that year. Still, the new code Z51.A, “Encounter for Sepsis Aftercare,” may have been more appropriate in some of those cases.

For acute MIs, strokes, and PEs, we saw a mix of hospital follow-ups and diagnoses that were copy-forwarded from previous hospitalizations outside of the current calendar year. In a few cases, we saw December hospitalizations with January hospital follow ups that could improperly impact HCC risk-adjustment.

What we’re doing about it

Here’s what we’re doing to clean it up:

• Coding software edits: We’re flagging these acute diagnoses that appear in non-inpatient settings. It’s not impossible they’re appropriate, but it’s rare. As Dr. Erica Remer says, “If you’re typing ‘acute stroke’ with one hand in clinic, you better be calling 911 with the other.”

• Discharge documentation update: Most hospitalists were letting acute conditions default to “active” status at discharge (many didn’t even realize they were supposed to review them). We’re changing that. Moving forward, hospitalists will click the “resolved” button for acute conditions at discharge. This simple step prevents those diagnoses from being automatically pulled into outpatient follow-up visits.

• Coder education: We’re reinforcing that acute conditions must have clear, supported documentation in outpatient settings. Otherwise, they shouldn’t be coded.

• Provider education: We’re helping outpatient clinicians understand the difference between acute codes versus “personal history of” codes and why it matters for risk adjustment.

• Ongoing monitoring: We’ll keep an eye on the OIG work plan and run regular audits to stay ahead.

Remember: CDI isn’t about maximizing revenue, it’s about revenue integrity, and even more importantly, documentation integrity. When you document accurately, the rest takes care of itself.

Now go forth and audit. And don’t say I didn’t warn you.

 👇️ BTW, come GEEK OUT with us 👇️ with loads of forum topics, >12 hours of webinars, and my hot-off-the-press CDI Tip card found exclusively in the village!

That’s all for now. Don’t hesitate to ask questions as they help inspire future issues!

Cheers,

Robert

When you’re ready, there are 3 ways I can help you:

1. Join our CDI and Coding Village online community! It’s impossible to know it all, it takes a village! What you’ll get:

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