Payers today face mounting pressures from a changing health care landscape. Medicare Advantage (MA) continues to grow, covering 54 percent of eligible beneficiaries for 2025. It drives significant federal spending—and increased scrutiny in the form of the Centers for Medicare & Medicaid Services’ (CMS) expanded Risk Adjustment Data Validation (RADV) audit strategy. Changes to regulatory requirements and evolving quality standards up the stakes for accuracy and compliance.
Manual, retrospective approaches to coding, risk capture, and quality management are no longer sufficient. To remain competitive and compliant, payers need to adopt proactive strategies to enhance coding accuracy, quality performance, and patient outcomes amidst shifting policies and regulations.
The changing HCC model
CMS finalized Version 28 (V28) of the Hierarchical Condition Category (HCC) model in March 2023, phasing it in over the next three years for full implementation in 2026. This update brings numerous changes. Unlike previous versions, V28 is built on ICD-10 codes. The update also significantly changes methodologies for calculating risk adjustment scores, adding and renumbering HCCs, adjusting condition groups, and eliminating categories that failed to accurately predict costs and categories that lacked clear diagnostic criteria.
HCC coding is used to determine each patient’s Risk Adjustment Factor (RAF) score. This number reflects the complexity of the patient’s condition and is used to assign their reimbursement level. As a result, coding accuracy is crucial for timely reimbursement. Inaccurate coding contributes to revenue leakage and potential penalties for non-compliance. According to a study by AAPC Services, 24 percent of claims are denied due to coding errors.
Equipping your physicians with real-time auditing tools can help ensure accurate coding and identify compliance gaps.
Undocumented diagnoses
Incomplete documentation of patient diagnoses is a major source of risk. The Office of Inspector General estimates $7.5 billion of 2023 MA payments were tied to diagnoses recorded only in chart reviews or Health Reimbursement Arrangements without actual service documentation. Routine, prospective internal reviews and audits are essential not only to identify potential coding errors, but also to identify under-coded conditions and missed opportunities for complete risk capture.
Increasing audit pressure
In 2023, CMS released the MA RADV Final Rule. This finalized the details of the RADV program, CMS’ primary tool for recovering improper risk adjustment payments to MA plans. The Final Rule eliminated the Fee-for-Service Adjuster and enabled extrapolation of audit results beginning with Payment Year (PY) 2018. In May 2025, CMS announced a “significant expansion of its auditing efforts” for MA plans. Beginning immediately, with PY 2025, they intend to audit 100 percent of plans.
A federal district court vacated the RADV Final Rule on September 25, 2025, making the 2023 RADV framework technically unenforceable. As of November 1, CMS had not yet issued its response; however, the agency is likely to maintain its commitment to correcting MA overpayments. In other words, organizations must still assume that an audit is on the horizon and prepare accordingly, prioritizing efforts to ensure every diagnosis code is thoroughly supported in patient medical records.
Quality ratings
CMS publishes Star Ratings annually to evaluate MA and Part D performance. These ratings, based primarily on Healthcare Effectiveness Data and Information Set (HEDIS®)) measures, influence both consumer choice and MA quality bonus payments. Improving HEDIS scores—and, therefore, Star Ratings—depends on closing gaps in patient care. Unaddressed care gaps translate to missed screenings and follow-up, leading to poor patient outcomes and lost revenue.
Integrated tools to identify care gaps and improve documentation enhance HEDIS performance, drive higher Star Ratings, and strengthen population health management.
The case for integrated tools
With mounting regulatory and financial pressures, proactive strategies and tools for risk adjustment and quality management are essential. However, integrating these tools with existing clinical workflows is equally important. Many providers juggle six to 20 clinical support tools in addition to their electronic health records; but disjointed tools and the manual processes they require lead to incomplete documentation and “orphaned” care gaps.
Integrating coding review and claims submissions with clinical workflows can help ensure smoother workflows, plus:
- Increase accuracy in risk capture
- Improve quality performance
- Reduce risk of audit exposure
- Reduce revenue leakage
Make the shift to proactive strategies
In a health care environment with increased focus on CMS’ RADV audits coupled with uncertain, changing regulatory guidelines, proactive strategies for risk adjustment and quality management are nonnegotiable.
Veradigm CORE leverages patented risk adjustment and quality analytics processes to proactively identify care gaps, rank them by predicted impact, and support providers with in-workflow prospective care reminders. Bi-directional EHR integration enables real-time audits to ensure coding accuracy and effective documentation. Contact Veradigm today to see how Veradigm CORE can help you make the transition to prospective risk adjustment and quality management.