The Centers for Medicare & Medicaid Services (CMS) recently announced a proposed rule that would restrict a widespread billing practice used by Medicare Advantage plans to inflate payments from the federal government. The proposal signals that the government is committed to combating risk adjustment fraud, an area with substantial and growing False Claims Act exposure.
What CMS Proposed
On January 26, 2026, CMS released its 2027 Advance Notice, which included a proposal to exclude patient diagnoses identified through “chart reviews” from Medicare Advantage risk score calculations, unless those diagnoses are linked to actual medical treatment. CMS actuaries estimate the change would save Medicare more than $7 billion in 2027 alone.
In Medicare Advantage, the federal government pays private insurers higher rates to cover sicker patients. Insurers determine how sick their members are through a process called risk adjustment. Over the past decade, many plans have hired medical coding consultants to comb through patient records (often without any associated care) to identify additional diagnoses that increase their risk scores and, in turn, the plan’s payments from the government. This practice of adding diagnoses unlinked to actual medical treatment and unsupported by the medical record is commonly referred to in the industry as “upcoding.”
Medicare rules require that health plans both document and treat all medical conditions they bill. Yet federal audits have consistently found that many plans’ billing practices do not meet that standard. The proposed rule would eliminate the financial incentive to conduct chart reviews that are untethered from actual patient care.
Why This Matters
Risk adjustment fraud has been a priority area for False Claims Act enforcement for years, and the CMS proposal reinforces that trajectory. Several whistleblower lawsuits and government investigations have already alleged False Claims Act violations based on Medicare Advantage plans exaggerating how sick their members are to collect additional risk adjustment payments they do not deserve. The government can recover up to three times the amount improperly billed when a plan knowingly submits these types of false claims.
The insurance industry has pushed back on the proposal, arguing that chart reviews help plans obtain a complete picture of their members’ health. Industry groups have also warned of benefit cuts if the rate changes proceed. However, as health policy experts have noted, these warnings are common and do not often translate into material changes for beneficiaries.
Whether CMS finalizes the rule as proposed remains to be seen. The agency has, at times, softened similar proposals in response to industry pressure. Regardless of the outcome, the announcement reflects sustained government attention to risk adjustment fraud and a clear signal that scrutiny of Medicare Advantage billing practices will continue.
Whistleblowers Can Play an Important Role
Much of the government’s enforcement in this area is driven by whistleblowers with inside knowledge of how their employers code and bill for patient diagnoses. If you work for a Medicare Advantage plan or a company that provides coding, analytics, or consulting services to one, and you have witnessed practices that inflate risk scores without supporting medical documentation, you may have grounds to file a False Claims Act claim on behalf of the government.
Whistleblowers who come forward in successful cases are entitled to a portion of whatever the government recovers. Federal law also protects whistleblowers from retaliation.
Speak With a Whistleblower Attorney
If you are aware of improper billing or risk adjustment fraud in a Medicare Advantage plan or related organization, contact the whistleblower attorneys at Keller Grover. We can evaluate your situation, help you understand your rights and advise you on the most effective path forward. Contact our office today.