Proactive CMS RADV Compliance: Identify Potentially Over-Coded Conditions Early On

CMS risk adjustment data validation (RADV) audits are getting faster, broader, and more expensive for Medicare Advantage (MA) plans. In a January 2026 memo, the Centers for Medicare & Medicaid Services (CMS) announced plans to conduct RADV audits every quarter, and recoveries from plan years as far back as 2011 are coming due. Gone are the days of guessing if your plan will be audited. It’s whether you’ll be ready.

These RADV audits carry real financial stakes for MA plans because accurate condition reporting affects risk adjustment payments. Depending on the MA plan’s validation rates, its risk adjustment factor (RAF) score can be negatively impacted. On top of that, CMS uses audits as an essential tool to recover overpayments from MA plans. The rules around CMS RADV audits have changed in recent years, creating confusion and uncertainty.

This blog sheds light on how health plans can work to remain compliant in their coding by identifying potentially over-coded conditions early on.

What we’ll cover:

• What a RADV audit is and why CMS uses risk adjustment data validation to identify unsupported diagnoses
• Medicare Advantage risk adjustment 101, including how HCCs and RAF scores connect coding accuracy to reimbursement
• Key updates since the 2023 RADV Final Rule, plus what the January 2026 CMS memo signals for audit scope, timing, and recoveries
• What quarterly RADV audits mean operationally and financially for MA plans
• A proactive compliance approach to identify potentially over-coded conditions early
• Practical steps to strengthen risk adjustment compliance, using internal audits and clinically informed analytics

Understanding CMS RADV Audits

CMS and the Department of Health and Human Services’ Office of the Inspector General (OIG) have identified “High-Risk Groups of Diagnoses” to focus on when auditing MA plans.

RADV audits are CMS’s primary way to address improper overpayments made to MA plans. During a RADV audit, documentation is reviewed to confirm that any diagnosis submitted by an MA plan for risk adjustment is supported by the patient’s medical record.

As the healthcare environment shifts towards value-based payment models, Hierarchical Condition Categories (HCC), the set of medical codes linked to specific clinical diagnoses, become even more pertinent.

HCCs directly link patient conditions to payment, making accurate coding critical to RAF score integrity.

Medicare Advantage Risk Adjustment 101

Medicare Advantage (MA) risk adjustment is the mechanism the Centers for Medicare & Medicaid Services (CMS) uses to align plan payments with the expected healthcare needs of enrolled members. In simple terms, plans receive higher payments for members with more complex conditions, but only when those conditions are accurately documented and coded.

HCCs: How diagnoses translate to payment

CMS uses diagnosis codes to assign HCCs, which group conditions that predict future cost. Not every diagnosis maps to an HCC, and CMS applies hierarchies so the most clinically significant related condition is counted.

RAF score: The number that drives reimbursement

A member’s Risk Adjustment Factor (RAF) score is calculated using a combination of demographic information and assigned HCCs. This score directly determines how much a Medicare Advantage plan is reimbursed. When coding is incomplete or inaccurate, RAF scores can be understated, reducing revenue, or overstated, increasing exposure during audits

Why it matters for RADV and compliance

In a RADV audit, CMS checks whether submitted diagnoses are supported by the medical record. That’s why MA plans benefit from proactive reviews that confirm documentation and flag potentially over-coded conditions early.

Rule Updates Since the 2023 RADV Final Rule

CMS published a RADV final rule in February 2023.¹ The purpose of the final rule was to outline the audit methodology, recovery process, and related policies that CMS employs in its RADV audits. The main components of the final rule outlined CMS’s plan to extrapolate RADV audit findings across the audited MA contracts, starting with plan year (PY) 2018.

Since 2023, CMS and MA plans have been in legal disputes over how these audits are to be conducted. In a memo published in January 2026, CMS acknowledged the U.S. District Court of the Northern District of Texas vacated portions of the 2023 RADV Final Rule. CMS and the U.S. Department of Health and Human Services (HHS) plan to “fully comply” with the district court order while they appeal the decision.

In the meantime, the 2026 memo also clarified and reinforced some of the rule changes since 2023, including:

• Recovery for PY 2011-2013
  The memo states that CMS RADV audits from PY 2011-2013 found overpayment rates between 5% to 8%, and “recoveries on these amounts will begin soon.”
• Accelerated timelines
  CMS reinforced the expedited audits for PY 2018-2024 and confirmed that audits are being expanded to all RADV-eligible contracts.
• A phased rollout
  Future audits will be conducted every three months, with PY 2020 beginning in February 2026.
• Longer submission windows
  CMS will give plans a five-month window to submit up to two supporting medical records per audit.

What impact will this have on Medicare Advantage plans?

The January 2026 memo made it clear that MA plans must align with CMS’s direction. This includes being prepared for the recovery pressures from the PY 2011-2013 overpayments, which will lead to an immediate financial impact and an increased administrative burden due to the regular quarterly audit cadence.

Get Ahead of RADV Audits with a Proactive, Data-Driven Approach

While legal and regulatory uncertainty remains, MA plans need to be ready for the quarterly audit cadence. While certain aspects of a CMS RADV audit are beyond the control of MA plans, there are steps the plan can take to assist it in reaching its compliance goals.

CMS and OIG continually adjust their audit focus based on modeling of the highest-risk HCCs, which can make it difficult for MA plans to manage. However, MA plans can run their own internal audits against the same high-risk HCC categories that CMS and OIG target, flagging potentially over-coded conditions before the quarterly audit clock starts.

Waiting for CMS to identify over-coded conditions is not ideal for MA plans, given the challenges of payment recoupment and the increased scrutiny that poor RADV audit performance can attract. Therefore, it is beneficial for MA plans to adopt a proactive approach to RADV audits, leveraging clinically informed expert analytics.

Don’t wait for CMS to flag over-coded conditions. Manage them first, with Inovalon’s regulatory expertise. Invest in effective risk-adjustment software and adopt a proactive approach to improving risk score accuracy.

See how Inovalon’s Converged Risk™ helps MA plans catch over-coded conditions before CMS does. Talk to our team today.

Frequently Asked Questions on RADV Audit Compliance

What is a RADV audit?

A RADV audit (risk adjustment data validation) is a CMS program that reviews a Medicare Advantage plan’s submitted diagnoses to confirm each one is supported by the patient’s medical record. If diagnoses can’t be validated, CMS may adjust the plan’s risk scores and pursue overpayment recoveries.

What is risk adjustment in healthcare?

Risk adjustment in healthcare is a payment method that accounts for how sick or complex a patient population is. In Medicare Advantage, plans receive payments tied to documented conditions (often mapped through HCCs), so accurate, compliant coding helps ensure payments reflect true clinical burden.

How can Medicare Advantage plans prepare for RADV audits and improve risk adjustment compliance?

Plans can strengthen risk adjustment compliance by running internal, RADV-style reviews focused on high-risk HCCs, verifying documentation supports each submitted diagnosis, and flagging potentially over-coded conditions early. A proactive process, paired with clinically informed analytics, helps reduce avoidable findings before quarterly audit timelines begin.

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¹ “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020-2021,” Final Rule, The Centers for Medicare & Medicaid Services, February 1, 2023, https://www.govinfo.gov/content/pkg/FR-2023-02-01/pdf/2023-01942.pdf

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