Medicare Advantage Fraud: Risk Adjustment and Unsupported Diagnoses

How the payment model creates the incentive

Medicare Advantage plans are paid a capitated amount per beneficiary, adjusted by a risk score built from diagnosis codes. A sicker enrollee generates a higher payment.

That structure rewards finding diagnoses. Finding real ones is the point of the program. Recording ones that are not supported by the record, or that no longer apply, transfers money without any corresponding care, and that is where liability begins.

The recurring schemes

Enforcement has concentrated on a handful of mechanisms that appear across plans and provider groups.

• In-home assessments performed to capture diagnosis codes with no resulting treatment
• Retrospective chart review that adds codes but never deletes unsupported ones, known as one-way review
• Provider incentive programs that pay for coding intensity rather than care
• Coding software or vendors that prompt for high-value diagnoses regardless of clinical support
• Failure to delete codes known to be unsupported, which is a reverse false claim
• Diagnoses carried forward year over year without current clinical documentation

The one-way review problem

Chart review is legitimate. A plan may look back at records to find diagnoses that were treated but not coded. The problem is doing that in only one direction.

When a review program adds codes that raise payment but has no process to remove codes it discovers are unsupported, the plan has knowledge of overpayment and is retaining it. Retaining a known overpayment is an obligation avoided, which is a reverse false claim under the statute.

Who reports these cases

Coders and coding auditors, clinicians who conducted in-home assessments, risk adjustment analysts, compliance staff, and vendor employees who ran chart review programs. These relators typically have data rather than anecdote, which makes their cases strong.