U.S. Department of Health and Human Services 
Office of Inspector General 
 
 
 
Billions in Estimated 
Medicare Advantage 
Payments From Chart 
Reviews Raise Concerns  
 
OEI-03-17-00470 
December 2019  Joanne M. Chiedi 
  Acting Inspector General 
oig.hhs.gov  Report in Brief  U.S. Department of Health and Human Services 
December 2019 
Office  of Inspector General 
OEI-03-17-00470 
 
 
   
Billions in Estimated Medicare Advantage Payments  Why OIG Did This Review 
We undertook this study 
From Chart Reviews Raise Concerns 
because of concerns that MAOs 
  may use chart reviews to 
The risk adjustment program is an important Medicare Advantage (MA) payment  increase risk-adjusted payments 
mechanism.  It levels the playing field for MA organizations (MAOs) that enroll sicker  inappropriately.  Unsupported 
beneficiaries who need a more costly level of care.  This helps to ensure that sicker  risk-adjusted payments are a 
beneficiaries have continued access to MA plans.  Chart reviews can be a tool to  major driver of improper 
improve the accuracy of risk-adjusted  payments in the MA program, 
Key Takeaway  payments by allowing MAOs to add and  which provided coverage to  
Billions of estimated risk-adjusted  delete diagnoses in the encounter data  21 million beneficiaries in 2018 
payments supported solely through  based on reviews of patients records.   at a cost of $210 billion.   
chart reviews raise potential  However, chart reviewsparticularly those 
CMS risk-adjusts payments by 
concerns about the completeness of  not linked to service recordsmay provide 
using beneficiaries diagnoses to 
payment data submitted to CMS, the  MAOs opportunities to circumvent the 
pay higher capitated payments 
validity of diagnoses on chart  Centers for Medicare & Medicaid Services 
to MAOs for sicker 
reviews, and the quality of care  (CMS) face-to-face requirement and inflate  
beneficiarieswhich may create 
provided to beneficiaries.  risk-adjusted payments inappropriately.   
financial incentives for MAOs to 
  make beneficiaries appear as 
 
sick as possible.  MAOs report 
What OIG Found 
these diagnoses via CMSs MA 
Our findings highlight potential issues about the extent to which chart reviews are 
encounter data system and 
leveraged by MAOs and overseen by CMS.  Based on our analysis of MA encounter 
RAPS based on services and 
data, we found that:  
chart reviews (i.e., MAOs 
  MAOs almost always used chart reviews as a tool to add, rather than to delete, 
reviews of a beneficiarys 
diagnosesover 99 percent of chart reviews in our review added diagnoses.   
medical record to identify 
  Diagnoses that MAOs reported only on chart reviewsand not on any service 
diagnoses that a provider did 
recordsresulted in an estimated $6.7 billion in risk-adjusted payments for 2017.1   
not submit or submitted in 
  CMS based an estimated $2.7 billion in risk-adjusted payments on chart review 
error).   
diagnoses that MAOs did not link to a specific service provided to the 
beneficiarymuch less a face-to-face visit.    To be eligible for risk 
  Although limited to a small number of beneficiaries, almost half of MAOs  adjustment, a diagnosis must be 
reviewed had payments from unlinked chart reviews where there was not a single  documented in a medical record 
record of a service being provided to the beneficiary in all of 2016.  as a result of a face-to-face visit.  
Although CMS requires MAOs 
These findings raise three types of potential concerns.  First, there may be a data 
to identify chart reviews in the 
integrity concern that MAOs are not submitting all service records as required.  Second, 
encounter data, CMS does not 
there may be a payment integrity concern if diagnoses are inaccurate or unsupported
require MAOs to link these chart 
making the associated risk-adjusted payments inappropriate.  Third, there may be a 
reviews to a specific service 
quality-of-care concern that beneficiaries are not receiving needed services for 
associated with the diagnoses.  
potentially serious diagnoses listed on chart reviews, but with no service records. 
This may provide MAOs 
 
opportunities to circumvent 
1 CMSs  actual risk-adjusted payments to MAOs incorporate diagnoses from both Risk Adjustment  CMSs face-to-face requirement 
Process ing System (RAPS) data and encounter data; however, there is no method to identify which  and inflate risk-adjusted 
diagnoses in the RAPS data are from chart reviews.  Risk-adjustment-eligible diagnoses in the encounter 
  payments inappropriately.   
data should be in the RAPS data.  If MAOs submitted any eligible diagnoses from chart reviews only in the 
 RAPS or only in the encounter data system, our payment estimates could underestimate or overestimate the 
 
actual risk-adjusted payments resulting solely from diagnoses on chart reviews.   
  Report in Brief  U.S. Department of Health and Human Services 
December 2019 
Office  of Inspector General 
OEI-03-17-00470 
 
 
Despite the potential for MAOs to misuse chart reviews, CMS has not reviewed the  How OIG Did This Review 
financial impact of chart reviews in the encounter data on risk-adjusted payments.  CMS  We analyzed 2016 MA 
has not assessed variation across MAOs in their chart review submissions.  In addition,  encounter data to determine 
CMS has not analyzed the quality of care provided to beneficiaries who may have serious  the 2017 financial impact of 
health conditions and may not be receiving needed services.  Finally, CMS has not yet  diagnoses reported only on 
performed audits that validate diagnoses reported on chart reviews in the encounter  chart reviews and not on any 
data against beneficiaries medical records.  CMS reported that it plans to begin audits  service record in the encounter 
that would include such chart reviews later this year.   data that year.  We also 
  analyzed CMSs responses to a 
What OIG Recommends   structured questionnaire to 
We recommend that CMS (1) provide targeted oversight of MAOs that had risk-adjusted  identify actions taken by CMS 
payments resulting from unlinked chart reviews for beneficiaries who had no service  to review the impact of chart 
records in the 2016 encounter data, (2) conduct audits that validate diagnoses reported  reviews on MA payments. 
on chart reviews in the MA encounter data, and (3) reassess the risks and benefits of 
 
allowing chart reviews that are not linked to service records to be used as sources of 
diagnoses for risk adjustment.  CMS concurred with these recommendations.
Key Terms 
Encounter Data  
Chart reviews and service 
records submitted by MAOs 
to CMSs encounter data 
system. 
Chart Reviews  
Records based on MAOs 
retrospective reviews of 
beneficiaries medical record 
documentation to (1) add 
diagnoses not previously 
submitted or (2) delete 
diagnoses submitted in 
error. 
Service Records  
Records based on 
information that providers 
submit to MAOs after 
providing services or medical 
items to beneficiaries 
(non-chart reviews). 
 
 
Full report can be found at oig.hhs.gov/oei/reports/oei-03-17-00470.asp   
TABLE OF CONTENTS 
BACKGROUND  1 
Methodology  6 
   
FINDINGS   
Less than 1 percent of chart reviews deleted risk-adjustment-eligible diagnoses from the MA  10 
encounter data for payment year 2017 
Diagnoses that MAOs reported only on chart reviewsand not on any service  11 
recordsresulted in an estimated $6.7 billion in risk-adjusted payments for 2017 
CMS based an estimated $2.7 billion in risk-adjusted payments on chart review diagnoses that  13 
MAOs did not link to any service provided to the beneficiary  
Although limited to a small number of beneficiaries, almost half of MAOs reviewed had  16 
payments from unlinked chart reviews where there was not a single record of a service being 
provided to the beneficiary in all of 2016  
CMS has not validated diagnoses or reviewed the financial impact of diagnoses reported on  17 
chart reviews in the encounter data 
   
CONCLUSION AND RECOMMENDATIONS   
Provide targeted oversight of MAOs that had risk-adjusted payments resulting from unlinked  19 
chart reviews for beneficiaries who had no service records in the 2016 encounter data 
Conduct audits that validate diagnoses reported on chart reviews in the MA encounter data   19 
Reassess the risks and benefits of allowing chart reviews that are not linked to service records  19 
to be used as sources of diagnoses for risk adjustment 
 
AGENCY COMMENTS AND OIG RESPONSE  21 
   
APPENDICES   
A. Detailed Methodology  23 
B. Estimated Payments Resulting From Diagnoses Reported Only on Chart Reviews, by HCC   29 
C. Estimated Payments Resulting From Chart Reviews for HCCs at High Risk for Improper  34 
Payments  
D. Agency Comments  35 
   
ACKNOWLEDGMENTS  39 
 
   
BACKGROUND 
 
Objectives 
 
1.  To determine the extent to which diagnoses reported only on chart 
  reviews conducted by Medicare Advantage organizations increased 
Medicare Advantage (MA) risk-adjusted payments. 
 
2. To identify actions that the Centers for Medicare & Medicaid Services 
 
(CMS) has taken to review the impact of chart reviews on MA 
  risk-adjusted payments. 
Ensuring that MA organizations (MAOs) receive accurate payments to provide 
appropriate care to Medicare beneficiaries is critically important.  Toward this 
end, CMS makes risk-adjusted payments by using beneficiaries diagnoses to 
pay higher capitated rates to MAOs for sicker beneficiaries with higher risk 
scores.  However, this may create financial incentives for MAOs to make 
beneficiaries appear as sick as possible to obtain higher payments.  CMS 
estimates that from 2013 through 2016, Medicare paid $40 billion in 
overpayments that resulted from plan-submitted diagnoses that were not 
supported by beneficiaries medical records.  The Government Accountability 
Office (GAO) and the Department of Justice (DOJ) have also identified 
vulnerabilities related to MAOs inflating their beneficiaries risk scores.  This OIG 
evaluation analyzed data and trends related to chart review encounter records 
(hereafter chart reviews), an allowable source of diagnoses that may provide 
MAOs with opportunities to inflate risk scores inappropriately. 
The Medicare Advantage Program 
Under MA, also known as Medicare Part C, CMS contracts with private insurance 
companies, known as MAOs, to provide coverage of Parts A and B services 
through private health plan options.1  In 2018, a third of Medicare 
beneficiaries21 millionelected to enroll with approximately 700 MAOs 
rather than receive services through the Medicare fee-for-service program.2  
MA program costs were $210 billion of the total $711 billion in Medicare 
program costs in fiscal year 2018.3   
 
 
1 Each MAO may offer multiple plans.  Medicare Parts A and B include hospital care, skilled 
nursing facility care, hospice care, home health care, physician services, and durable medical 
equipment, prosthetics, orthotics, and supplies.  Many MA plans also offer prescription drug 
coverage under Medicare Part D. 
2 We use the term MAO to refer to a unique MA contract. 
3 CMS, CMS Financial Report Fiscal Year 2018, November 2018, p.71.  Accessed at 
https://www.cms.gov on November 15, 2018. 
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MA Risk-Adjusted Payments  
For each beneficiary enrolled, MAOs receive a monthly capitated payment that 
reflects CMSs predicted cost of providing care to an MA beneficiary.  CMS 
risk-adjusts payments to pay MAOs more for beneficiaries with higher expected 
healthcare costs.  CMS bases risk adjustments on MA beneficiaries 
demographic information and diagnoses from the prior year.  As outlined in 
Exhibit 1, CMSs risk-adjustment process relies on diagnoses reported by MAOs.  
MAOs Report Diagnoses to CMS.  The risk-adjustment process begins when 
the beneficiary receives a service or medical item from a provider.  The provider 
submits claims information, including diagnoses, to the MAO based on the 
service or medical item provided.  The MAO submits a record of the service 
(hereafter service record) to CMSs MA encounter data system that contains this 
claims information, including the diagnoses.4  CMS began collecting encounter 
data from MAOs in 2012 as part of an effort to improve MA payment accuracy 
and better perform MA quality reviews.   
Exhibit 1: MA risk-adjustment process 
 
 
 
 
The beneficiary  The provider submits  The MAO submits a 
 
receives a  service information  service record to 
service  to the MAO  CMSs encounter 
 
data system 
 
 
 
 
 
 
CMS performs data  CMS identifies risk- CMS risk-adjusts 
 
integrity checks on the  adjustment-eligible  payments and 
service record  diagnoses from the  pays the MAO 
 
submitted by the MAO  submitted service record   
 
 
 
 
4  MAOs also submit data on beneficiaries diagnoses to CMS through the Risk Adjustment 
Processing System (RAPS).  Ultimately, CMS plans to rely exclusively on encounter data to identify 
diagnoses for risk-adjusted payments. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  2 
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CMS Performs Activities To Safeguard the Integrity of Reported Diagnoses.  
CMS requires MAOs to certify the accuracy, completeness, and truthfulness of 
their encounter data submissions.5  In addition, CMS performs activities to 
safeguard the integrity of the encounter data.  During the data submission 
process, CMS performs automated checks, or edits, that reject service records 
containing incorrect information (e.g., service records with improperly formatted 
data or missing fields) that CMS deems key to MA program payment and data 
integrity.  After records pass these edits, CMS conducts analyses to review the 
stored data.  If these analyses identify data errors, CMS may perform outreach 
to MAOs or introduce new edits to prevent incorrect data from being included 
in the encounter data.6       
CMS Identifies Eligible Diagnoses for Risk Adjustment.  For CMS to permit a 
diagnosis to be eligible for risk adjustment, it must be:  
(1) documented in a medical record from a hospital inpatient stay, hospital 
outpatient visit, or a visit with a physician or other eligible healthcare 
professional during the prior year; and  
(2) documented as a result of a face-to-face visit between the beneficiary and 
the provider.7   
To identify which diagnoses meet these eligibility criteria, CMS extracts, or 
filters, diagnoses in the encounter data based on whether the service record 
contains an acceptable procedure code and/or type of bill code8, 9  
CMS Risk-Adjusts Payments.  To risk-adjust payments to MAOs based on 
eligible diagnoses, CMS employs a health-based risk adjustment model known 
as the CMS hierarchical condition category (CMS-HCC) model.  The model 
groups certain medical conditions into HCCs, which are categories of clinically 
related diagnoses.10  The model also ranks related groups of  
risk-adjustment-eligible diagnoses on the basis of disease severity and costs 
associated with treatment.  Each HCC has relative numerical values (i.e., relative 
factors) that represent CMSs predicted costs associated with treating the 
 
5 42 CFR  422.504(l). 
6 CMS plans to implement additional compliance activities, such as issuing notices of 
noncompliance, warning letters, and corrective action plans, for MAOs that fail to satisfy certain 
performance thresholds related to the integrity of the encounter data. 
7 CMS, Medicare Managed Care Manual, Pub. No. 100-16 (Rev. 118, September 19, 2014), ch. 7,  40.  
Accessed at https://www.cms.gov on December 17, 2018. 
8 For institutional outpatient services, CMS uses type of bill and procedure codes to identify which 
diagnoses are eligible for risk-adjusted payment.  For hospital inpatient services, CMS uses type of 
bill codes.  For professional services, CMS uses procedure codes to identify which diagnoses are 
eligible for risk-adjusted payment.  For CMSs filtering logic, the type of bill code is a value 
signifying the type of claim information submitted on a record.  For example, type of bill code 11X 
indicates a hospital inpatient record. 
9 CMS, Final Encounter Data Diagnosis Filtering Logic, December 2015.  Accessed at 
https://www.csscoperations.com on December 2, 2019. 
10 42 CFR  422.2. 
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medical conditions in the category.  A beneficiary may have multiple HCCs.  A 
beneficiarys risk score equals the sum of the relative factors that correspond  
with his or her HCCs and demographic characteristics.11  The total risk-adjusted 
payment to an MAO for an enrolled beneficiary equals the risk score multiplied 
by the MA plans base payment rate.12 
In addition to diagnoses reported by MAOs in the RAPS data, CMS began 
incorporating diagnoses from the encounter data into risk scores in 2015.  To 
determine risk-adjusted payments for 2017, CMS calculated a blended risk score 
for each beneficiary by combining 25 percent of the risk score calculated from 
diagnoses in the encounter data and 75 percent of the risk score calculated 
from diagnoses in the RAPS data.  CMS requires MAOs to submit records to the 
encounter data system for all services provided to beneficiaries.  Therefore, 
MAOs should report the same risk-adjustment-eligible diagnoses in both the 
RAPS and encounter data.  
CMS Conducts Audits To Validate Diagnoses Used in Risk Adjustment.  After 
making risk-adjusted payments to MAOs, CMS determines whether a sample of 
diagnoses reported by MAOs can be validated by supporting medical record 
documentation using contract-level and national risk-adjustment data validation 
(RADV) audits.13  CMS has conducted these audits of diagnoses submitted to 
CMS through RAPS since payment year 2007.  When contract-level RADV audits 
cannot validate a diagnosis, CMS uses this information to recover overpayments 
from MAOs and calculate a payment error rate.  As part of the RADV audit 
process, CMS identifies the HCCs that had the highest rates of errors for that 
payment year.   
Chart Reviews 
In addition to reporting diagnoses to CMS on service records, MAOs may also 
perform retrospective reviews of beneficiaries medical record documentation to 
identify diagnoses that (1) providers did not originally submit to the MAO or 
(2) providers submitted to the MAO in error.  To perform these reviews, MAOs 
may employ third-party vendors to examine beneficiaries medical records by 
using staff with clinical or coding experience or by using artificial intelligence 
software.  MAOs may report diagnoses identified by these reviews to the 
encounter data as chart review records (hereafter chart reviews).14  CMS allows 
 
11 The CMS-HCC model also includes relative factors for certain combinations of coexisting 
diagnoses (i.e., disease interactions) and interactions between certain diseases and a beneficiarys 
disabled status (i.e., disabled interactions), which are added to a beneficiarys risk score.  For the 
purposes of this evaluation, we use the term HCCs to refer to all HCCs, disease interactions, and 
disabled interactions. 
12 An MA plans base payment rate is the plans standardized bid adjusted by the county Intra 
Service Area Rate factor for the beneficiarys county of residence. 
13 CMS, Contract-Level Risk Adjustment Data Validation Medical Record Reviewer Guidance, 
September 2017, p.5.  Accessed at https://www.cms.gov on November 23, 2017. 
14 Although MAOs may also report diagnoses identified by chart reviews to the RAPS data, CMS 
does not have a method to identify which RAPS records contain diagnoses resulting from chart 
reviews. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  4 
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diagnoses reported on chart reviews that are eligible for risk adjustment (i.e., 
contain an acceptable type of bill code and/or procedure code) to support  
risk-adjusted payments.   
MAOs may submit an unlimited number of chart reviews to the encounter data 
system.  However, CMS instructs MAOs that a chart review should not be the 
only record in the encounter data system that contains information about an 
item or service provided to a beneficiary.15  Furthermore, diagnoses reported on 
chart reviews should be associated with an item or service provided to the 
beneficiary.16       
As with service records, CMS performs edits on chart reviews during the data 
submission process.  However, to reduce administrative burden for MAOs and 
streamline processing of these records, CMS recently discontinued a number of 
edits performed on chart reviews, including edits that would have rejected chart 
reviews with institutional type of bill codes that contained unacceptable 
diagnosis codes and missing dates of service on service lines.17    
Linked Chart Reviews.  Linking a chart review to a previously accepted service 
record allows CMS and other oversight entities to identify the specific item or 
service that is associated with a risk-adjustment-eligible diagnosis.  MAOs link 
chart reviews by identifying the previously accepted service record to which 
they are adding or deleting chart review diagnoses.18  In April 2019, CMS issued 
guidance to MAOs that CMS will reject linked chart reviews that do not match 
certain data fields on the linked service record.19   
Unlinked Chart Reviews.  CMS permits MAOs to submit unlinked chart reviews 
that add diagnoses to the encounter data without identifying the specific item 
or service associated with the diagnoses.20  CMS instructs MAOs that all 
diagnoses submitted on unlinked chart reviews must be supported by medical 
record documentation from a face-to-face visit with the beneficiary.  However, 
when the MAO does not know the actual procedure code associated with a 
diagnosis submitted on an unlinked chart review, CMS allows MAOs to submit 
any procedure code of their choosingand refers to the code as a default 
procedure code.  However, CMS requires MAOs to include a variable that 
indicates that they used a default procedure code on the chart review.  CMS 
reminds MAOs that, diagnoses that are not risk-adjustment-eligible should not 
 
15 CMS, Encounter Data Submission and Processing Guide, Medicare Advantage Program, 
March 2019, ch. 2, p.3.  Accessed at https://www.csscoperations.com on June 3, 2019. 
16 Ibid. 
17 CMS, Encounter Data Software Release-Chart Review Record Edits, October 2018.  
18 On a linked chart review, MAOs identify the previously accepted service record by reporting 
that service records unique internal control number. 
19 CMS, June 2019 Encounter Data Software Release Updates, May 2019.  
20 MAOs cannot use unlinked chart reviews to delete previously accepted diagnoses. 
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be submitted with default [procedure] codes that would cause the diagnoses to 
be allowed [for risk adjustment].21 
Concerns Reported About Chart Reviews.  Federal entities have questioned 
MAOs use of chart reviews to add diagnoses for risk adjustment.  Risk 
adjustment may provide opportunities for MAOs to inappropriately inflate 
Medicare Advantage payments through the submission of unsupported 
diagnoses.  Chart reviews appear particularly vulnerable to such misuse by 
MAOs.  By allowing MAOs to add or delete diagnoses, chart reviews can be a 
tool to improve the accuracy of risk-adjustment-eligible data submitted to CMS.  
However, MAOs may use chart reviews to mainly increase their risk-adjusted 
payments.  In 2017, the United States joined a whistleblower lawsuit filed under 
the False Claims Act alleging that an MAO used the results of chart reviews to 
report diagnoses that the treating physician did not originally report but did not 
use the chart review results to delete diagnoses found to be invalid by these 
chart reviews.22  In 2016, GAO stated concern that diagnoses collected from 
MAOs retrospective chart reviews may be less likely to be supported by 
medical records compared to diagnoses submitted to MAOs by providers.23  
 
Methodology  We reviewed chart reviews from the 2016 MA encounter data stored in CMSs 
Integrated Data Repository (IDR) to determine the amount of 2017 MA  
risk-adjusted payments that would have resulted from diagnoses reported only 
on chart reviews.  We did not incorporate diagnoses stored in CMSs RAPS data 
into our payment calculations, as there is no way to identify which diagnoses in 
the RAPS data are from chart reviews.  
We determined there were 52.6 million chart reviews submitted by 80 percent 
of MAOs (553 of 690) that added or deleted diagnoses in the MA encounter 
data, as outlined in Exhibit 2.24   
 
 
 
 
21 CMS, Encounter Data Submission and Processing Guide, Medicare Advantage Program, 
March 2019, ch. 2, p.3.  Accessed at https://www.csscoperations.com on June 3, 2019. 
22 Department of Justice, U.S. intervenes in Second Whistleblower Lawsuit Alleging UnitedHealth 
Mischarged the Medicare Advantage and Prescription Drug Programs, May 16, 2017.  Accessed at 
https://www.justice.gov on December 17, 2018; United States ex rel. Poehling v. UnitedHealth 
Group, Inc. et al., No.11-cv-8697-MWF (SSX), (C.D. Cal. filed May 16, 2017). 
23 GAO, Fundamental Improvements Needed in CMSs Effort to Recover Substantial Amounts of 
Improper Payments, GAO-16-76, April 2016, p.13.  Accessed at https://www.gao.gov on 
December 15, 2018. 
24 We use the term MAO to represent each unique MA contract number.  As of January 2016, CMS 
contracted with 690 MAOs to provide Parts A and B services to MA beneficiaries.  CMS, Medicare 
Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report-Monthly Summary Report 
(Data as of January 2016), January 2016.  Accessed at https://www.cms.gov on March 28, 2019. 
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Exhibit 2: The number of MAOs included in our review  
690 MAOs  553 MAOs  426 MAOs 
Enrolled all MA  Submitted chart reviews  Reported                     
  
beneficiaries as of  to the MA encounter    risk-adjustment-eligible 
January 2016  data for 2016  diagnoses on chart 
reviews included in our 
   
review 
 
Source: OIG analysis of 2016 MA encounter data from CMSs IDR and CMSs Medicare Advantage, Cost, 
PACE, Demo, Prescription Drug Plan Contract ReportMonthly Summary Report (Data as of January 2016).   
 
 
We included chart reviews only for beneficiaries enrolled in the same MA plan 
for all 12 months of 2016 in our evaluation.25  In addition, we excluded cost 
plans, demonstration plans, program of all-inclusive care for the elderly (PACE) 
organizations, and Medicare medical savings account plans.  We analyzed  
risk-adjustment-eligible diagnoses reported on 17 million chart reviews 
submitted by 426 MAOs (hereafter referred to as the MAOs reviewed) to 
calculate the impact on risk-adjusted payments for 2017.26  Appendix A contains 
a detailed description of our methodology.  
Financial Impact of Chart Reviews 
To determine the financial impact of diagnoses reported only on chart reviews 
in the encounter data, we calculated the net difference between the amount of 
increased payments from chart reviews that added diagnoses and the amount 
of decreased payments from chart reviews that deleted diagnoses.     
Increased Payments From Chart Reviews.  To estimate the amount of increased 
payments from chart reviews, we identified beneficiaries who had  
risk-adjustment-eligible diagnoses reported on chart reviews that were not 
reported on any service records in 2016.27, 28  We used the 2017 CMS-HCC 
model to identify the HCCs that would not have been generated if MAOs had 
not added these diagnoses.  For each HCC, we calculated the increased  
 
25 We use the term MA plan to represent each unique combination of an MA contract number 
and plan number. 
26 Out of the 40.6 million chart reviews that added risk-adjustment-eligible diagnoses for 
beneficiaries included in our review, 16.8 million chart reviews contained diagnoses found only on 
chart reviews and not on any service records.  An additional 273,118 chart reviews deleted 
diagnoses from service records, resulting in a total of 17 million chart reviews analyzed for  
risk-adjusted payment. 
27 MAOs may submit a chart review to the encounter data when a provider documents more 
diagnoses than the maximum number of diagnoses allowable on a service record.  Our evaluation 
excluded chart reviews that MAOs linked to accepted service records that contained the 
maximum number of diagnoses allowable on a service record. 
28 For beneficiaries with diagnoses reported on chart reviews with dates of service in the last 
quarter of 2016 (October through December), we ensured that the diagnoses were not reported 
on any service records with service dates in the first quarter of 2017 (January through March). 
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risk-adjusted payment by multiplying the MA plans base payment rate by the 
HCCs relative factor.  Our calculations are reasonable payment estimates if the 
MAOs submitted the same risk-adjustment-eligible diagnoses reported on chart 
reviews to the RAPS as they submitted to the MA encounter data system.  We 
cannot confirm this because there is no mechanism to identify which diagnoses 
came from chart reviews in RAPS.  However, MAOs are required to submit 
complete and accurate data to each system.  Furthermore, it is in an MAOs 
financial interest to submit all eligible diagnoses to both systems to maximize its 
resulting risk-adjusted payment. 
We summarized the number and type of HCCs that increased payments and 
compared our list of HCCs to the high-risk HCCs that CMS identified for 2014.29  
We also checked for variation across MAOs and their parent organizations to 
see if certain MAOs and parent organizations had higher or lower amounts of 
risk-adjusted payments due to diagnoses reported only on chart reviews.30  We 
performed these same analyses separately for the subset of diagnoses reported 
only on unlinked chart reviews. 
Decreased Payments From Chart Reviews.  To estimate the amount of 
decreased payments from chart reviews, we identified beneficiaries who had 
risk-adjustment-eligible diagnoses deleted by chart reviews.  We removed these 
diagnoses from the previously accepted service records identified by the MAOs 
and determined the HCCs that would have been generated if the MAOs had 
not deleted these diagnoses.  We calculated the amount of decreased 
payments associated with these HCCs and reviewed MAO variation by using the 
same methods as outlined above for our analysis of increased payments. 
CMS Oversight of the Financial Impact of Chart Reviews  
To identify the actions taken by CMS to review the impact of chart reviews on 
MA risk-adjusted payments, we analyzed CMSs responses to a structured 
questionnaire and reviewed documentation related to:  
  instructions, procedures, and policies CMS has in place to review the 
financial impact of chart reviews using MA encounter data, RADV audits, 
and/or any other data sources; 
  the use of encounter data, RADV audits, or any other data sources to 
track and analyze the care provided to MA beneficiaries for diagnoses 
added by chart reviews; 
  the kinds of issues, if any, identified by CMS related to the financial 
impact of chart reviews; and 
  descriptions of whether and how concerns regarding the financial 
impact of chart reviews were addressed by CMS. 
 
29 We used HCCs that CMS identified as at high risk for payment errors for 2014, the most recent 
year for which CMS identified high-risk HCCs.  CMS, High-Risk Hierarchal Condition Categories, 
November 2017. 
30 A parent organization is an entity that owns or has controlling interest in one or more MAOs.   
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Limitations 
We did not review CMSs final payment data to MAOs for 2017.  In addition, we 
estimated risk-adjusted payments that resulted from chart reviews based solely 
on diagnoses contained in the MA encounter data.  We did this because there is 
no method to identify which diagnoses in the RAPS data are from chart reviews.  
CMSs actual risk-adjusted payments to MAOs incorporate diagnoses from both 
RAPS and encounter data.  For 2017, CMS calculated a blended risk score for 
each beneficiary by combining 25 percent of the risk score calculated from 
diagnoses in the encounter data and 75 percent of the risk score calculated 
from diagnoses in the RAPS data.  Because CMS requires MAOs to submit 
records of all services provided for beneficiaries to the encounter data system, 
MAOs should submit the same risk-adjustment-eligible diagnoses in both the 
RAPS and encounter data.  However, if MAOs submitted any  
risk-adjustment-eligible diagnoses from chart reviews only to the RAPS or only 
to the encounter data system, our payment estimates could underestimate or 
overestimate the actual risk-adjusted payments resulting solely from diagnoses 
on chart reviews. 
CMS bases risk-adjusted payments for a given year on diagnoses from specified  
face-to-face visits provided to the beneficiary in the previous year.  Thus, we 
estimated the potential impact of chart reviews on the MA program for 2017 by 
using the encounter data submitted by MAOs for 2016.  CMSs actual monthly 
payments to MAOs may change each month if there are changes in certain 
beneficiary characteristics, such as long-term institutional status, dual-eligibility 
status, and county of residence.  For analytic efficiency, our analysis calculated 
payment estimates for the entire year using encounter data and beneficiaries 
characteristics as of January 2016.  We believe that selecting a point in time 
resulted in reasonable payment estimates because changes to these 
characteristics during the year can cause both payment increases, and payment 
decreases, which could balance out across the population.  We also assumed 
that 2016 MA beneficiaries remained enrolled in MA in 2017.   
We also did not determine whether diagnoses reported only on chart reviews 
were supported by documentation in beneficiaries medical records.  Finally, we 
did not determine whether each MAO had submitted all required encounter 
records. 
 
Standards  We conducted this study in accordance with the Quality Standards for Inspection 
and Evaluation issued by the Council of the Inspectors General on Integrity and 
Efficiency.   
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  9 
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FINDINGS 
Less than 1 percent  Although chart reviews can be a tool that MAOs can use to strengthen payment 
accuracy by adding and deleting beneficiaries diagnoses, MAOs almost 
of chart reviews 
exclusively added diagnoses as a result of their chart reviews.  Thus, chart 
deleted risk-
reviews rarely resulted in decreased payments to the MAOs.  As Exhibit 3 shows, 
adjustment-eligible  0.7 percent of the chart reviews reviewed deleted incorrect diagnoses from 
diagnoses from the  previously accepted service records compared to the 99.3 percent that added 
diagnoses.  For 2017, only 218 MAOs submitted chart reviews that deleted 
MA encounter data 
diagnoses.  The deleted diagnoses decreased MA payments by an estimated 
for payment year 
$196.5 million. 
2017 
  Exhibit 3: MAOs almost always used chart reviews as a tool to add, 
rather than to delete, diagnoses for risk adjustment, resulting in 
  increased payments to MAOs 
 
Deleted Diagnoses Added Diagnoses
 
 
 
0% 25% Percent of5 C0h%art Reviews 75% 100%
 
Source: OIG analysis of 2016 MA encounter data from CMSs IDR. 
 
 
Overall, 48 percent of the MAOs that had increased risk-adjusted payments 
from chart reviews did not use a single chart review to delete an incorrect  
risk-adjustment-eligible diagnosis.  The highest amount of increased payments 
solely from chart reviews for a single MAO was an estimated $507.3 million.  
This MAO had only an estimated $779,508 in decreased payments from chart 
reviews, a ratio of $651 to $1.  Payments to 201 MAOs that exclusively used chart 
reviews to increase payments (and never to decrease payments) totaled an 
estimated $1.6 billion. 
 
 
 
 
 
 
 
 
 
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Diagnoses that MAOs reported only on chart reviews in the encounter data 
Diagnoses that 
totaled an estimated $6.7 billion in risk-adjusted payments for 2017.31 Chart 
MAOs reported only 
reviews that added diagnoses increased risk-adjusted payments by an 
on chart reviews, 
estimated $6.9 billion, as shown in Exhibit 4.  Chart reviews that deleted 
and not on any  diagnoses decreased risk-adjusted payment by $196.5 million, resulting in net 
payments of $6.7 billion.   
service records, 
 resulted in an  Exhibit 4: For 2017, increased risk-adjusted payments from chart  
 estimated   reviews that added diagnoses far exceeded decreased payments from 
 $6.7 billion in   chart reviews that deleted diagnoses 
risk-adjusted  Increased Payments Decreased Payments
payments for 2017 
$6.9 Billion
-$196.5 Million
Payments from Chart Reviews
 
Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data from CMSs IDR.
For the beneficiaries reviewed, MAOs submitted 40.6 million chart reviews to 
add risk-adjustment-eligible diagnoses.  For 16.8 million, or 41 percent, of these 
chart reviews, there were no service records of visits, procedures, tests, or 
supplies that contained the diagnosis reported on the chart review.  This means 
that, for the entire year, these beneficiaries may not have received any other 
services for the medical conditions indicated by the diagnoses.  However, we 
estimated that Medicare paid MAOs billions in MA risk-adjusted payments to 
provide care for these beneficiaries. 
Overall, 426 MAOs used chart reviews to add and/or delete  
risk-adjustment-eligible diagnoses in the encounter data.  Almost all of these 
MAOs (410 of 426) had a payment resulting solely from chart reviews, as shown 
in Exhibit 5.32  For these 410 MAOs, risk-adjusted payments due solely to 
diagnoses reported on chart reviews varied significantly, ranging from a high of 
$506.6 million to a low of $195 across MAOs.  Ten MAOs drove almost a third of 
these risk-adjusted payments, totaling an estimated $2.2 billion.  Of the 
137 parent organizations reviewed, 10 parent organizations drove 79 percent of 
 
31 Risk-adjustment-eligible diagnoses reported by MAOs in the encounter data should be 
reported in the RAPS data.  However, if MAOs submitted any risk-adjustment-eligible diagnoses 
from chart reviews only in the RAPS or only in the encounter data system, our payment estimates 
could underestimate or overestimate the actual risk-adjusted payments resulting solely from 
diagnoses on chart reviews.  If all the diagnoses included in our analysis were submitted only in 
the encounter data and not in the RAPS data, actual risk-adjusted payments resulting solely from 
chart reviews would total an estimated $1.7 billion. 
32 Eight MAOs had net decreases in risk-adjusted payments from diagnoses reported on chart 
reviews.  An additional 8 of the 426 MAOs reported risk-adjustment-eligible diagnoses on chart 
reviews that did not impact their payments.   
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the risk-adjusted payments from chart reviews.  These 10 parent organizations 
enrolled 70 percent of MA beneficiaries. 
 Exhibit 5: Almost all MAOs reviewed had estimated payments  
 resulting solely from chart reviews 
-  , 
 
Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data from CMSs IDR. 
 
 
 
We estimated that MAOs received risk-adjusted payments for  
1.7 million beneficiaries based solely on chart review diagnoses.  For these 
In an extreme case, a 
beneficiaries, there was no record in the encounter data demonstrating that 
beneficiary had 
they received any other medical care for diagnoses on chart reviews.  In an 
diagnoses reported 
extreme case, a beneficiary had diagnoses reported only on chart reviews that 
only on chart reviews 
that resulted in an  resulted in an estimated $229,050 in risk-adjusted payments to the MAO for 
estimated $229,050 in  2017.  However, these diagnoses did not appear on a single service record for 
risk-adjusted payments 
this beneficiary in 2016.   
to the MAO for 2017.  
The HCCs generated by diagnoses reported only on chart reviews included 
serious illnesses, such as cancer, diabetes, and heart disease.  Appendix B 
provides the amount of risk-adjusted payments for each HCC that resulted from 
diagnoses reported only on chart reviews.  The 10 HCCs that CMS identified as 
having the highest payment error rates for 2014 (the most recent year for which 
CMS identified high-risk HCCs) accounted for $216 million of the estimated net 
increase in risk-adjusted payments from chart reviews for 2017.  Appendix C lists 
the impact on risk-adjusted payments from chart reviews for these HCCs. 
 
 
 
 
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CMS based an  Diagnoses that MAOs reported only on unlinked chart reviews (i.e., those that 
add diagnoses to the encounter data without identifying the specific item or 
estimated  
service associated with the diagnoses) generated an estimated $2.7 billion in 
$2.7 billion in  
risk-adjusted payments for 2017.33  This amount represents 41 percent of the 
risk-adjusted  estimated $6.7 billion in net risk-adjusted payments from diagnoses only on 
payments on chart  chart reviews.  Estimated payments to MAOs for diagnoses reported only on 
unlinked chart reviews ranged from a high of $146.4 million to a low of $2,346.  
review diagnoses 
Seven MAOs drove almost a quarter of these payments, totaling an estimated 
that MAOs did not 
$650.9 million.  Among parent organizations, 10 parent organizations drove 
link to any service  two-thirds of all payments resulting from unlinked chart reviews, totaling an 
estimated $1.8 billion. 
provided to the 
beneficiary  For a diagnosis to be eligible for risk adjustment, it must be (1) documented in a 
medical record from a hospital inpatient stay, hospital outpatient visit, or a visit 
with an eligible healthcare professional during the prior year; and 
(2) documented as a result of a face-to-face visit between the beneficiary and 
the provider.34  However, as a result of our encounter data analysis, we estimate 
that CMS based billions in risk-adjusted payments on diagnoses that MAOs did 
not link to a specific face-to-face visit provided to the beneficiary.  Although 
CMS allows unlinked chart reviews, the extent to which MAOs used them to 
drive higher risk-adjusted payments raises concerns about why so many chart 
reviews were not linked back to the service from which the MAO used the 
medical record to support the chart review diagnoses.   
Although CMS uses procedure codes to identify which diagnoses in the 
encounter data are eligible for inclusion in risk adjustment, CMS allows MAOs to 
enter any procedure code of their choosing as a default procedure code on 
unlinked chart reviews.  MAOs are allowed to do this when they are unable to 
determine the actual procedure code documented by the provider for services 
with the diagnoses.  MAOs are not allowed to use default procedure codes on 
other service records that are used for risk adjustment.  For the unlinked chart 
reviews where procedure codes are used to identify diagnoses for risk 
adjustment, we found that 67 percent (5.3 million of 7.9 million) contained 
default procedure codessuggesting that MAOs were unable to determine the 
actual procedure code associated with the chart review, for the majority of 
services with these diagnoses.   
 
33 If all the diagnoses included in our analysis were submitted only in the encounter data and not 
in the RAPS data, the actual risk-adjusted payments resulting solely from unlinked chart reviews 
would total an estimated $676.8 million. 
34 CMS, Medicare Managed Care Manual, Pub. No. 100-16 (Rev. 118, September 19, 2014),  
ch. 7,  40.  Accessed at https://www.cms.gov on December 17, 2018. 
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Allowing MAOs to submit default procedure codes on chart reviews creates an 
opportunity for MAOs to circumvent the face-to-face visit requirement for risk 
Allowing MAOs to 
adjustment.  CMS instructs MAOs not to use default procedure codes that 
submit default 
procedure codes on  would trigger an adjustment when diagnoses are not from 
chart reviews creates  risk-adjustment-eligible services.  However, CMS does not have safeguards in 
an opportunity for 
place to ensure that MAOs comply with this requirement.  The decision as to 
MAOs to circumvent 
which default procedure code to submit is left entirely up to the MAO.  As such, 
the face-to-face visit 
requirement for risk  nothing prevents an MAO from receiving payment for a diagnosis that is not 
adjustment.  risk-adjustment-eligible when it chooses to submit a default procedure code 
that is risk-adjustment-eligible.   
The diagnoses that MAOs reported only on unlinked chart reviews 
corresponded to some serious and chronic health conditions 
Unlinked chart reviews that resulted in risk-adjusted payments provided the 
only source of diagnoses associated with some serious and chronic medical 
conditions for beneficiaries.  There were no service records in the encounter 
data of visits, procedures, tests, or supplies that contained the diagnoses 
reported on these unlinked chart reviews.  This means that these beneficiaries 
may not have received services throughout 2016 for the medical conditions 
indicated by the diagnoses.  For 105,607 beneficiaries, diagnoses that MAOs 
reported only on unlinked chart reviews corresponded to having vascular 
disease.  However, their MAOs did not identify which service record was 
associated with these diagnoses and there were no service records directly 
demonstrating that they received treatment for these serious health diagnoses.  
Fifty-six percent of risk-adjusted payments ($1.5 billion of $2.7 billion) from 
diagnoses reported only on unlinked chart reviews were concentrated among 
10 of 101 possible HCCs, as shown in Exhibit 6.  
Exhibit 6: Half of the estimated MA risk-adjusted payments from unlinked chart 
reviews corresponded to 10 HCCs 
Number of  Estimated  Percentage 
HCCs Added  Payments   of 
by Unlinked  From Unlinked  Unlinked 
HCC  HCC Description  Chart Reviews  Chart Reviews  Payments 
HCC108  Vascular Disease  105,607  $269,536,256  10% 
HCC18  Diabetes With Chronic Complications  74,221  $208,226,576  8% 
HCC111  Chronic Obstructive Pulmonary Disease  67,703  $189,101,725  7% 
HCC85  Congestive Heart Failure  63,568  $178,715,593  7% 
Major Depressive, Bipolar, and  $173,294,795 
HCC58  Paranoid Disorders  58,059  6% 
HCC22  Morbid Obesity  71,924  $169,677,377  6% 
Rheumatoid Arthritis and Inflammatory  $119,265,820 
HCC40  Connective Tissue Disease  35,260  4% 
HCC55  Drug/Alcohol Dependence  24,629  $75,094,794  3% 
HCC8  Metastatic Cancer and Acute Leukemia  3,237  $71,051,426  3% 
HCC96  Specified Heart Arrhythmias  28,674  $67,609,601  2% 
Total  532,882  $1,521,573,963  56% 
Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data from CMSs IDR. 
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Almost a third of MAOs reviewed had estimated risk-adjusted 
payments driven by only unlinked chart reviews, totaling nearly 
$1 billion 
For 125 of 426 MAOs, diagnoses reported only on unlinked chart reviews drove 
all of their risk-adjusted payments from chart reviews.  Risk-adjusted payments 
The highest  
for these 125 MAOs totaled an estimated $986.5 million of the $2.7 billion in 
risk-adjusted payment 
risk-adjusted payments from unlinked chart reviews.  The highest risk-adjusted 
for a single MAO 
payment for a single MAO based solely on unlinked chart reviews totaled an 
based solely on 
unlinked chart reviews  estimated $146.4 million.  For 33 MAOs, all risk-adjusted payments resulted 
totaled an estimated  from linked chart reviews.  For 258 MAOs, risk-adjusted payments resulted from 
$146.4 million.   
a combination of linked and unlinked chart reviews.  The remaining 10 MAOs 
did not increase their risk-adjusted payments from diagnoses reported only on 
chart reviews.  
CMS does not require MAOs to link chart reviews to service records 
due to concerns of burden on MAOs  
According to CMSs responses to our questionnaire, it would be extraordinarily 
burdensome for some MAOs to link information collected from annual or 
periodic chart reviews with the claims information the MAOs continuously 
collect from providers in their electronic databases.  CMS reported that the 
process of linking findings from chart reviews to claims information is difficult to 
automate and thus can be labor-intensive.  The burden may differ among plans, 
requiring some to overhaul data collection systems or billing systems.  In 
addition, CMS noted that in some cases, beneficiaries medical record 
documentation may not contain sufficient information to identify the previously 
accepted service record associated with the diagnosis.  CMS stated concern that 
requiring MAOs to submit linked chart reviews to the service record may limit 
the completeness of the submitted data.   
Despite CMSs concerns about the burden of linking chart reviews, more than a 
third of MAOs (156 of 426) reviewed linked all or most of their chart reviews to 
service records.  We found that 32 of these MAOs were able to link all of their 
chart reviews to service records.  An additional 124 MAOs linked at least 
75 percent of their chart reviews to service records, as shown in Exhibit 7.   
 
 
 
 
 
 
 
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Exhibit 7: Despite CMSs concerns about the burden of linking chart 
reviews, more than a third of MAOs linked all or most of their chart 
reviews to service records1 
 
MAOs that linked all chart 
  8%
reviews 
 
25% MAOs that linked at least 75%, 
  29% but not all chart reviews 
  MAOs that linked some, but 
less than 75% of chart reviews 
 
38%
  MAOs that did not link any 
chart reviews 
 
  Source: OIG analysis of 2016 MA encounter data from CMSs IDR.1  This analysis is based on the 17 million 
chart reviews submitted by MAOs (i.e., contract numbers) included in this review.  
 
 
 
 
Although limited to  Almost half of MAOs (196 of 426) received risk-adjusted payments based on 
diagnoses from unlinked chart reviews where not a single item or service was 
a small number of 
provided to the beneficiary by the MAO in 2016.  These MAOs submitted only 
beneficiaries, almost 
unlinked chart reviews and no service records for 4,616 beneficiaries.  CMS 
half of MAOs had  states that a chart review must be based on a review of the medical record for a 
payments from  service or item provided to the beneficiary during a face-to-face encounter.  For 
the 4,616 beneficiaries with no service records for the year, the source of the 
unlinked chart 
chart reviews is unclear.  These chart reviews resulted in an estimated 
reviews where there 
$21.9 million in risk-adjusted payments for 2017.  Most of these payments 
was not a single  ($18.4 million) were concentrated among 35 MAOs and the top 6 MAOs 
record of a service  accounted for half ($11.8 million) of these payments.  One MAO submitted only 
unlinked chart reviews and no service records for 4 percent of its beneficiaries, 
being provided to 
resulting in $3.9 million in risk-adjusted payments. 
the beneficiary in all 
Although CMS has instructed all MAOs that a chart review should not be the 
of 2016 
only record in the MA encounter data that contains information about an item 
or service provided to a beneficiary, CMS does not verify MAOs compliance 
with this instruction.  The total lack of any record aside from an unlinked chart 
review that triggered a risk-adjusted payment raises concerns that these MAOs:  
  may not have ensured that the MA encounter data contains all records 
of items and services provided to beneficiaries,  
  may not have provided appropriate treatments and services to  
MA beneficiaries who have serious and chronic health problems, or  
  may have submitted diagnoses on the chart review that were not 
documented in the beneficiarys medical recordand, therefore, may 
have received inappropriate payments from CMS.   
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At the time of this review, CMS had not performed audits that validate the 
CMS has not 
diagnoses reported on chart reviews in the encounter data against beneficiaries 
validated diagnoses 
medical record documentation to identify the extent to which overpayments 
or reviewed the 
resulted from these diagnoses.  CMS had not yet conducted audits of  
financial impact of  2015 risk-adjusted payments, which is the first payment year that CMS 
incorporated diagnoses from encounter data along with RAPS data.  However, 
diagnoses reported 
CMS reported that it plans to begin audits of 2015 risk-adjusted payments later 
on chart reviews in 
this year.  
the encounter data 
Although CMS has the ability to identify which diagnoses in the encounter data 
were added or deleted by MAOs as the result of chart reviews, CMS has not 
usedand has no plans to usethe encounter data to review the financial 
impact of chart reviews on risk-adjusted payments to MAOs.  For example, CMS 
has not determined the increase or decrease in MA payments due to chart 
reviews.  Also, CMS has not assessed variation across MAOs in their chart review 
submissions.  According to CMS, there is no reason to conduct such reviews 
because linked and unlinked chart reviews are acceptable methods to submit 
risk-adjustment-eligible diagnoses.  CMS also has not tracked or analyzed the 
care provided to beneficiaries who had diagnoses added only through chart 
reviews.   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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CONCLUSION AND RECOMMENDATIONS 
The risk adjustment program is an important mechanism for accurately 
reimbursing MAOs based on the differences in health status across 
beneficiaries.  It levels the playing field for MA organizations (MAOs) that enroll 
sicker beneficiaries who need a more costly level of care.  This helps to ensure 
that sicker beneficiaries have continued access to MA plans.  Chart reviews can 
be a tool to improve the accuracy of risk-adjusted payments by allowing MAOs 
to add and delete diagnoses in the encounter data based on reviews of 
patients records.  We found that MAOs chart reviews almost always resulted in 
added diagnoses (over 99 percent of chart reviews), and almost never deleted 
diagnoses (less than 1 percent).   
CMS uses the diagnoses from chart reviews to determine risk-adjusted 
paymentsas long as the diagnoses are based on a face-to-face visit between 
beneficiaries and their providers.  Diagnoses that MAOs reported only on chart 
reviewsand not on any service recordsresulted in an estimated $6.7 billion 
in risk-adjusted payments for 2017.   
Of the $6.7 billion in risk-adjusted payments, CMS based an estimated 
$2.7 billion on diagnoses that MAOs did not link to any service provided to the 
beneficiary in 2016.  Allowing unlinked chart reviews provides opportunities for 
MAOs to circumvent CMS face-to-face requirement and inflate risk-adjusted 
payments inappropriately.  Although limited to a small number of beneficiaries, 
almost half of MAOs reviewed had risk-adjusted payments from unlinked chart 
review for beneficiaries where there was not a single record of any service being 
provided to them in all of 2016.  For beneficiaries with unlinked chart reviews, 
and no records of services in all of 2016, it is not at all clear what services were 
used to generate diagnoses added on these chart reviews.     
These findings raise three types of potential concerns.  First, there may be a 
data integrity concern that MAOs are not submitting all service records as 
required.  Second, there may be a payment integrity concern if diagnoses are 
inaccurate or unsupportedmaking the associated risk-adjusted payments 
inappropriate.  Third, there may be a quality of care concern that beneficiaries 
are not receiving needed services for potentially serious diagnoses listed on 
chart reviews but no service records.  Despite the potential for MAOs to misuse 
chart reviews, CMS has not yet validated the diagnoses reported on chart 
reviews and has not reviewed the financial impact of chart reviews on  
risk-adjusted payments. 
We understand that MAOs need a mechanism to add diagnoses to the 
encounter data that providers have neglected to include in the service 
information submitted to the MAO.  However, in the absence of monitoring and 
oversight by CMS, our findings raise questions about the vulnerabilities 
associated with using chart reviews, particularly unlinked chart reviews, as this 
mechanism. 
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OEI-03-17-00470   
Based on these findings we recommend that CMS: 
Provide targeted oversight of MAOs that had risk-adjusted 
payments resulting from unlinked chart reviews for beneficiaries 
who had no service records in the 2016 encounter data 
CMS should take actions to perform targeted oversight of MAOs that had  
risk-adjusted payments from unlinked chart reviews for beneficiaries who had 
no service records whatsoever in the 2016 encounter data.  To do this, OIG will 
provide CMS with a list of the 4,616 beneficiaries who had unlinked chart 
reviews and no records to show that any services were provided in all of 2016.  
CMS should use this information to perform targeted reviews of the MAOs who 
had payments resulting from these beneficiaries unlinked chart reviews.  These 
reviews could include outreach to the MAOs to determine whether they 
submitted records for all services, as required.  If CMS identifies problems with 
the completeness of these MAOs encounter data submissions, or if CMS 
identifies that an MAO submitted a chart review without a service to support 
the creation of that chart review, CMS should take action to remedy these 
problems.  
Conduct audits that validate diagnoses reported on chart reviews 
in the MA encounter data 
Risk-adjusted payments for diagnoses reported only on chart reviews raise 
concerns regarding payment integrity.  Risk-adjustment data validation audits 
provide an important opportunity for CMS to determine whether diagnoses 
reported in the MA encounter data that resulted in risk-adjusted payments were 
supported by medical record documentation.  CMS began collecting the 
encounter data in 2012 and began using diagnoses from the encounter data for 
calculating 2015 risk-adjusted payments.  CMS has not yet conducted RADV 
audits of 2015 payments.  CMS should incorporate risk-adjustment-eligible 
diagnoses from the MA encounter data, including chart reviews, into 
contract-level RADV audits of 2015 payments.  In addition, CMS should ensure 
that audits include a representative sample of diagnoses reported on chart 
reviews.  After conducting these contract-level RADV audits and any other 
assessments of chart reviews, CMS should take steps to mitigate any 
vulnerabilities identified in its audits and oversight of chart reviews.  For 
example, CMS might flag certain diagnoses or MAOs for enhanced review. 
Reassess the risks and benefits of allowing chart reviews that are 
not linked to service records to be used as sources of diagnoses for 
risk adjustment  
Identifying the service associated with diagnoses reported on chart reviews is 
critical to safeguard the integrity of MA payments and ensure that MA 
beneficiaries receive needed care.  CMS should use data gathered during  
risk-adjustment data validation audits and targeted MA reviews to determine 
the impact of unlinked chart reviews on MA data integrity and overpayments.  If 
contract-level RADV audits do not include a sufficient number of beneficiaries 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  19 
OEI-03-17-00470   
with diagnoses reported only on unlinked chart reviews, CMS should conduct a 
separate review of unlinked chart reviews.  These audits and/or reviews should 
identify the risks and benefits associated with unlinked chart reviews by 
(1) determining the validity of diagnoses reported only on unlinked chart 
reviews, (2) analyzing the care provided to beneficiaries for diagnoses 
documented only on unlinked chart reviews, (3) assessing the completeness of 
encounter data service records submitted by MAOs for beneficiaries with 
unlinked chart reviews, and (4) measuring the potential burden to MAOs of 
linking all chart reviews.   
After assessing the risks and benefits, CMS should reconsider allowing MAOs to 
submit unlinked chart reviews.  If CMS ultimately demonstrates that the benefits 
of allowing unlinked chart reviews outweigh the risks, CMS should conduct an 
additional assessment to determine the risks and benefits of eliminating the use 
of default procedure codes on chart reviews.     
 
 
 
 
   
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AGENCY COMMENTS AND OIG RESPONSE 
CMS concurred with all three of our recommendations.  However, in reference 
to our finding that diagnoses reported only on chart reviews resulted in an 
estimated $6.7 billion in risk-adjusted payments for 2017,35 CMS stated that this 
payment estimate seems inaccurate because we only used encounter data and 
did not apply CMSs blended calculation using the RAPS data.  As noted in the 
report, there is no method to identify which diagnoses in the RAPS data are 
from chart reviews.  We believe our calculations resulted in reasonable payment 
estimates because CMS requires MAOs to submit the same 
risk-adjustment-eligible diagnoses in both RAPS and encounter data.  If MAOs 
submitted any risk-adjustment-eligible diagnoses from chart reviews only in the 
RAPS or only in the encounter data system, our payment estimates could 
underestimate or overestimate the actual risk-adjusted payments resulting 
solely from diagnoses on chart reviews, as we noted in our findings and 
methodology.  In a scenario in which all of the diagnoses included in our 
analysis were submitted only in the encounter data and not in the RAPS data, 
the actual risk-adjusted payments resulting solely from chart reviews would 
total an estimated $1.7 billion.  However, such a discrepancy between the RAPS 
and the encounter data would raise serious concerns regarding the integrity of 
MA risk adjustment data. 
In response to our first recommendation, CMS stated that it will review the 
beneficiaries we identified as having unlinked chart reviews and no service 
records in the 2016 encounter data.  CMS will provide targeted outreach to the 
MAOs where these beneficiaries were enrolled, if appropriate.  CMS noted that 
it will also provide targeted outreach to MAOs that submitted unlinked chart 
reviews but no service records for beneficiaries that CMS identified in the 
2018 encounter data.  
In response to our second recommendation, CMS agreed to include diagnoses 
submitted on chart reviews in the MA encounter data in their RADV audits 
beginning with payment year 2015.  CMS stated that it anticipates launching 
payment year 2015 RADV audits in late 2019. 
Finally, in response to our third recommendation, CMS noted that it will 
conduct a review of unlinked chart reviews to determine whether they should 
be used as sources of diagnoses for risk adjustment.  CMS will use RADV audits 
to determine whether beneficiaries have the diagnoses that were reported on 
unlinked chart reviews.  In addition, CMS will analyze the extent to which the 
2018 encounter data include the service records associated with unlinked chart 
 
35 CMSs comments reference $6.6 billion in risk-adjustment payments for diagnoses resulting 
only from chart reviews, as that was our preliminary calculation in the draft report that CMS 
reviewed.  In our final calculations, that estimate is $6.7 billion. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  21 
OEI-03-17-00470   
reviews.  Finally, CMS will assess the burden to MAOs of linking chart reviews to 
service records. 
 
For the full text of CMSs comments, see Appendix D.   
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OEI-03-17-00470   
APPENDIX A: Detailed Methodology 
This appendix provides a more detailed description of the methodology that we 
used to determine the amount of 2017 MA risk-adjusted payments that resulted 
from diagnoses reported only on chart reviews with 2016 service dates.  We did 
not review CMSs final 2017 risk-adjusted payments to MAOs.  In addition, we 
estimated risk-adjusted payments that resulted from chart reviews based solely 
on diagnoses contained in MA encounter data.36  We did this because there is 
no method to identify which diagnoses in the RAPS data are from chart reviews.  
CMSs actual risk-adjusted payments to MAOs incorporate diagnoses from both 
RAPS and encounter data.  Because CMS bases risk-adjusted payments for a 
given year on diagnoses from services provided to the beneficiary in the 
previous year, we estimated the potential impact of chart reviews on 
2017 payments based on encounter data that MAOs submitted for 2016.   
Analyses of All Chart Reviews 
We determined the chart reviews that added and deleted diagnoses in the  
2016 MA encounter data, as shown in Exhibit A-1 and described below.37  In 
October 2018, after the September deadline for MAOs to submit data for 
payment year 2017, we identified chart reviews in the 2016 MA encounter data 
in CMSs IDR as records containing:  
  a claim type code between 4000 and 4800, indicating that the record is 
MA encounter data;  
  a claim through date between January 1, 2016, and December 31, 2016;  
  a submission date between January 1, 2016, and September 14, 2018; 
  a chart review switch value of Y, indicating that the record is a chart 
review; and  
  a chart review effective switch of Y, indicating that the record is the 
most recently accepted version of the chart review. 
For chart reviews that added diagnoses, we identified diagnoses reported only 
on chart reviews and not on any service record in the 2016 MA encounter data.  
For beneficiaries with diagnoses reported on chart reviews with dates of service 
in the last quarter of 2016 (October through December), we also ensured that 
the diagnoses were not reported on any service records with dates of service in 
the first quarter of 2017 (January through March).  
 
36 If MAOs reported any risk-adjustment-eligible diagnoses from chart reviews only in the RAPS or 
only in the encounter data system, our payment estimates could underestimate or overestimate 
the actual risk-adjusted payments resulting solely from diagnoses on chart reviews. 
37 MAOs may submit a chart review to the encounter data when a provider documents more 
diagnoses than the maximum number of diagnoses allowable on a service record.  Therefore, we 
did not include 1.3 million chart reviews that added diagnoses and were linked to accepted 
service records that contained the maximum number of diagnoses allowed on a service record. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  23 
OEI-03-17-00470   
Exhibit A-1: Identifying chart reviews in the encounter data that resulted in added and   
deleted diagnoses 
 
Chart Reviews That Added Diagnoses 
 
Number of records remaining  Number of beneficiaries 
 
Steps 
after each step remaining after each step
 
  (1) Identify chart reviews that      
52,244,574 8,138,472
added diagnoses
 
 
(2) Identify risk-adjustment-
49,476,152 8,009,369
eligible diagnoses
 
 
(3) Exclude certain beneficiaries  
40,601,359 6,456,571
  and types of MAOs
 
(4) Remove diagnoses deleted by 
  another chart review 40,572,204 6,454,438
 
(5) Identify diagnoses reported 
  16,766,659 4,474,340
only on chart reviews
 
  Chart Reviews That Deleted Diagnoses 
Number of records remaining  Number of beneficiaries 
Steps 
after each step remaining after each step
(1) Extract chart reviews that 
335,531 202,009
deleted diagnoses
(2) Identify risk-adjustment-
317,031 199,309
eligible diagnoses
(3) Exclude certain beneficiaries 
273,121 170,648
and types of MAOs
(4) Exclude chart reviews that 
deleted diagnoses that were not  273,118 170,645
linked to a service record1
Source: OIG analysis of 2016 MA encounter data from CMSs IDR. 
1 To delete a diagnosis from a service record, a chart review must be linked to a previously accepted service record containing that 
diagnosis.  After excluding certain beneficiaries, we also excluded chart reviews that deleted diagnoses that were not linked to a 
previously accepted service record (i.e., had a four-part effective key that did not match the four-part effective key of a 
2016 service record). 
 
 
 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  24 
OEI-03-17-00470   
Identification of Risk-Adjustment-Eligible Diagnoses.  We then identified which 
diagnoses reported on chart reviews in the MA encounter data met CMSs 
eligibility criteria for risk adjustment by using the same methods used by CMS.38  
For each chart review, we identified whether it contained a  
risk-adjustment-eligible claim type code (which corresponds to the type of bill 
code on institutional inpatient and outpatient encounter data) and/or a 
procedure code listed on CMSs filtering list for 2016.39  Because MAOs may 
submit chart reviews to delete diagnoses from a previously accepted chart 
review, we also removed diagnoses added by chart reviews and subsequently 
deleted by chart reviews.   
Exclusion of Beneficiaries With Certain Characteristics.  We excluded 
beneficiaries who had end-stage renal disease, were receiving hospice care, or 
did not reside in a U.S. State based on information contained in the IDRs MA 
prescription drug (MARx) data, because CMS uses different methods to 
calculate these payments.  We included only beneficiaries enrolled with the 
same MA plan for all 12 months of 2016.40  We excluded beneficiaries with 
inconsistencies between their MA encounter data, Medicare beneficiary data, 
and MARx data contained in the IDR to ensure data accuracy.  For example, we 
did not include beneficiaries whose MAO contract number was not the same 
across all three IDR data sources.   
Identification of Diagnoses Reported Only on Chart Reviews.  For each 
beneficiary with a diagnosis added by chart reviews, we identified all of their 
service records contained in the IDRs 2016 MA encounter data.  For 
beneficiaries with diagnoses reported on chart reviews with a claim through 
date between October 1, 2016, and December 31, 2016, we also identified all 
service records that had claim through dates between January 1, 2017, and 
March 31, 2017.  We then compared the diagnoses reported on the chart 
reviews to the diagnoses reported on the service records.  We kept the 
diagnoses reported on chart reviews that were not reported on any service 
record in 2016 and, if applicable, the first quarter of 2017.  
Identification of Linked and Unlinked Chart Reviews.  We separated chart 
reviews that added diagnoses into groups of linked versus unlinked chart 
reviews.  We identified linked chart reviews as chart reviews that contained an 
original control number and had a four-part effective key that matched the 
 
38 CMS requires risk-adjustment-eligible diagnoses to be based on a face-to-face visit between 
the beneficiary and certain types of providers.  CMS identifies risk-adjustment-eligible diagnoses 
in the encounter data based on whether the service record contains an acceptable procedure 
code and/or type of bill code.  CMS, Final Encounter Data Diagnosis Filtering Logic, December 
2015.  Accessed at https://www.csscoperations.com on December 2, 2019. 
39 CMS, 2016 Medicare Risk-Adjustment-Eligible CPT/HCPCS Codes.  Accessed at 
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors.html 
on May 2, 2018. 
40 We use the term MAO to represent each unique MA contract number.  We excluded from our 
review all cost plans, demonstration plans, PACE organizations, and Medicare medical savings 
account plans. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  25 
OEI-03-17-00470   
four-part effective key of an accepted service record with a date of service in 
2016.41  We considered all other chart reviews unlinked.  Of the 16.8 million chart 
reviews that added a risk-adjustment-eligible diagnoses code reported only on 
chart reviews, 8.2 million were unlinked chart reviews.  Of these, 7.9 million were 
non-inpatient unlinked chart reviews (i.e., did not have a hospital inpatient type 
of bill code).  We determined the number of non-inpatient unlinked chart 
reviews that contained default data reason code 056, indicating that the chart 
review contained default procedure codes.42 
Identification of HCCs Generated by Diagnoses Reported on Chart 
Reviews 
HCCs Added by Chart Reviews.  For beneficiaries who had  
risk-adjustment-eligible diagnoses reported only on chart reviews, we used the  
2017 CMS-HCC model and CMSs CMS-HCC mapping software to identify the 
HCCs generated by the diagnoses reported only on chart reviews.43  To identify 
these HCCs, we first mapped all of a beneficiarys risk-adjustment-eligible 
diagnoses (i.e., diagnoses reported on both service records and chart reviews) 
to HCCs.  Then, we mapped just the risk-adjustment-eligible diagnoses 
reported on service records to HCCs.  Finally, we compared the two sets of 
HCCs to determine the HCCs generated from mapping the diagnoses reported 
only on chart reviews.  
HCCs Deleted by Chart Reviews.  For beneficiaries who had a chart review that 
deleted a risk-adjustment-eligible diagnosis, we identified the HCCs that would 
have been generated if the MAOs had not deleted these diagnoses.  To 
determine these HCCs, we first mapped all of a beneficiarys  
risk-adjustment-eligible diagnoses without removing the diagnoses deleted by 
chart reviews.  Then, we removed the diagnoses that the chart reviews deleted 
from the previously accepted service records identified by the MAOs and 
mapped only the risk-adjustment-eligible diagnoses that remained for the 
beneficiary.  We compared the two sets of HCCs to determine the HCCs 
generated from mapping the diagnoses deleted by chart reviews.  
Assignment of Relative Factors to HCCs.  We assigned relative factors to each 
HCC based on the segment of the 2017 CMS-HCC model that applied to each 
 
41 As instructed by CMS, we used a four-part effective key to link chart reviews to previously 
accepted service records.  The four-part effective key includes the claim type effective code, the 
claim date signature effective key, the claim number effective key, and the geographic beneficiary 
effective key. 
42 For chart reviews with a hospital inpatient type of bill code, CMS does not use the procedure 
codes to determine risk adjustment eligibility.  Therefore, we excluded inpatient unlinked chart 
reviews from this analysis. 
43 CMS, Announcement of Calendar Year (CY) 2017 Medicare Advantage Capitation Rates and 
Medicare Advantage and Part D Payment Policies and Final Call Letter, Table VI-1. 2017 CMS-HCC 
Model Relative Factors for Community and Institutional Beneficiaries, April 2016,  
p.78-84.  Accessed at https://www.cms.gov on December 19, 2018; and CMS, 2017 Model 
Software/ICD-10 Mappings, V2217.79.O1.  Accessed at https://www.cms.gov/Medicare/Health 
-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors.html on May 9, 2018. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  26 
OEI-03-17-00470   
beneficiary based on their characteristics as of January 2016.  These 
characteristics included the beneficiaries long-term institutional status, age, 
original reason for Medicare entitlement, and dual-eligibility status.  We used 
Medicare beneficiary data from the IDR to identify beneficiaries age, original 
reason for Medicare entitlement, and dual-eligibility status.  We used MARx 
data from the IDR to identify beneficiaries long-term institutional status.  We 
adjusted each HCCs relative factor by CMSs normalization and coding 
adjustment factors for 2017 prior to calculating payment estimates.44 
Calculation of Payment Estimates  
We calculated estimates of the amount of increased and decreased annual  
risk-adjusted payments associated with each added and deleted HCC, 
respectively, by multiplying the MA plans monthly base payment rate by the 
HCCs relative factor.  We then multiplied monthly amounts of increased or 
decreased payments by 12 to determine annual payment estimates.   
We determined the base payment rate for each beneficiarys plan by using 
information gathered from several data sources.  For MA plans that submit bids 
to CMS, we identified base payment rates for December 2017 in the Approved 
Bid Pricing Tool Extract from CMSs Health Plan Management System.  For 
Employer-Group Waiver Plans (EGWPs), which do not submit bids to CMS, we 
identified base payment rates using CMSs EGWP county-level rate books for 
regional and local EGWPs and information on each EGWPs star rating.45, 46  We 
then determined base payment rates for each beneficiarys plan based on each 
beneficiarys plan contract number, plan number, plan segment number, Part A 
and B entitlement status, and county of residence as of January 2016 in the 
MARx data.  
For a small percentage of beneficiaries, we used an alternative method to 
determine their plans base payment rates.  For 11 percent of beneficiaries 
included in our analysis, we calculated payment estimates based on a median 
base payment rate for all non-EGWPs, instead of each plans actual base 
payment rate.  For 10.9 percent of these beneficiaries, the MA plan enrollment 
information (i.e., the contract number, plan number, segment number, or 
county of residence) contained in the IDR for January 2016 did not match the 
 
44 CMS adjusts the risk score by a normalization factor and a coding-adjustment factor.  The 
normalization factor reduces risk scores to ensure that the average beneficiary risk score in any 
given year remains 1.0, despite annual increases in risk scores.  The coding adjustment factor 
reduces risk scores to account for differences in coding patterns between MA and Medicare  
fee-for-service. 
45 CMS, 2017 Medicare Advantage Ratebook and Prescription Drug Rate Information, 2017.    
Accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/ 
Ratebooks-and-Supporting-Data.html on January 5, 2018. 
46 We identified EGWPs 2017 star ratings using the Approved Bid Pricing Tool Extract and the MA 
Quality Bonus Payment Rating files from CMSs Health Plan Management System. 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  27 
OEI-03-17-00470   
2017 MA plan information used in our analysis.47  In addition, 0.1 percent of 
beneficiaries were enrolled in an EGWP and were covered only by either 
Medicare Part A or Medicare Part B (and not covered by both Medicare Parts A 
and B).  For these beneficiaries, we determined the median Part A and/or Part B 
base payment rate for December 2017 for all plans in the Approved Bid Pricing 
Tool Extract.  
We conducted summary analysis of estimated payment amounts and HCCs 
from linked and unlinked chart reviews.  We calculated the net difference 
between the amount of increased and decreased payments from chart reviews.  
We summarized the number and type of HCCs that increased and decreased 
payments and compared our list of HCCs to the high-risk HCCs that CMS 
identified as having the highest rates of errors for 2014.48  We also checked for 
variation across MAOs (i.e., contract numbers) and their parent organizations to 
see if certain organizations had higher or lower payments due to diagnoses 
reported on chart reviews.     
 
47 The 2017 MA plan information used in our analysis included information from the Approved Bid 
Pricing Tool Extract and the Plan Benefit Package Extract in CMSs Health Plan Management 
System, as well as CMSs EGWP county-level rate books. 
48 We used HCCs that CMS identified as at high risk for payment errors for 2014, the most recent year 
of payment error data.  CMS, High-Risk Hierarchal Condition Categories, November 2017.  
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  28 
OEI-03-17-00470   
APPENDIX B: Estimated Payments Resulting 
From Diagnoses Reported Only on Chart 
Reviews, by HCC 
For beneficiaries who had diagnoses reported only on chart reviews in the 
2016 MA encounter data, we identified the HCCs generated by these added 
diagnoses.  As shown in Exhibit B-1, the estimated 2017 risk-adjusted payments  
for each HCC added by chart reviews ranged from $2,379 to $624.0 million.  
Decreased payments for each HCC deleted by chart reviews ranged from  
$2,572 to $13.0 million. 
Exhibit B-1: Estimated 2017 payments resulting from diagnoses reported on chart reviews, by HCC  
2017   2017  2017  
Increased   Decreased   Net  
Risk-Adjusted  Risk-Adjusted  Risk-Adjusted 
HCC  HCC Description  Payments   Payments   Payments 
HCC108  Vascular Disease  $624,015,682  -$12,747,660  $611,268,022 
HCC22  Morbid Obesity  $559,183,801  -$6,077,936  $553,105,865 
HCC111  Chronic Obstructive Pulmonary Disease  $558,092,852  -$5,631,330  $552,461,522 
HCC18  Diabetes with Chronic Complications  $555,902,426  -$9,217,688  $546,684,738 
HCC85  Congestive Heart Failure  $497,625,400  -$6,020,620  $491,604,780 
HCC58  Major Depressive, Bipolar, and Paranoid Disorders  $406,925,420  -$9,061,133  $397,864,287 
HCC40  Rheumatoid Arthritis and Inflammatory Connective  $350,613,311  -$7,132,613  $343,480,698 
Tissue Disease 
HCC8  Metastatic Cancer and Acute Leukemia  $184,261,584  -$9,395,942  $174,865,642 
HCC55  Drug/Alcohol Dependence  $166,550,059  -$3,872,066  $162,677,993 
HCC96  Specified Heart Arrhythmias  $165,271,612  -$3,984,647  $161,286,965 
HCC48  Coagulation Defects and Other Specified  $135,884,401  -$3,168,256  $132,716,145 
Hematological Disorders 
HCC161  Chronic Ulcer of Skin, Except Pressure  $117,461,633  -$1,773,973  $115,687,660 
HCC189  Amputation Status, Lower Limb/Amputation  $115,626,317  -$522,914  $115,103,403 
Complications 
HCC103  Hemiplegia/Hemiparesis  $110,157,913  -$2,544,705  $107,613,208 
HCC21  Protein-Calorie Malnutrition  $108,737,169  -$2,996,674  $105,740,495 
HCC23  Other Significant Endocrine and Metabolic  $107,860,427  -$3,262,498  $104,597,929 
Disorders 
HCC75  Myasthenia Gravis/Myoneural Disorders and  $92,693,353  -$5,797,873  $86,895,480 
Guillain-Barre Syndrome/Inflammatory and Toxic 
Neuropathy 
HCC47  Disorders of Immunity  $83,767,480  -$3,308,864  $80,458,616 
HCC82  Respirator Dependence/Tracheostomy Status  $76,498,580  -$247,917  $76,250,663 
 
Continued on next page 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  29 
OEI-03-17-00470   
Exhibit B-1: Estimated 2017 payments resulting from diagnoses reported on chart reviews, by HCC 
(continued) 
2017   2017  2017  
Increased   Decreased   Net  
Risk-Adjusted  Risk-Adjusted  Risk-Adjusted 
HCC  HCC Description  Payments   Payments   Payments 
HCC88  Angina Pectoris  $78,566,216  -$2,940,818  $75,625,398 
HCC10  Lymphoma and Other Cancers  $75,884,098  -$3,227,194  $72,656,904 
HCC79  Seizure Disorders and Convulsions  $71,524,374  -$1,002,701  $70,521,673 
HCC19  Diabetes without Complication  $69,256,511  -$1,379,037  $67,877,474 
HCC188  Artificial Openings for Feeding or Elimination  $67,633,105  -$552,126  $67,080,979 
HCC46  Severe Hematological Disorders  $59,967,818  -$1,406,728  $58,561,090 
HCC78  Parkinson's and Huntington's Diseases  $57,755,804  -$955,947  $56,799,857 
HCC135  Acute Renal Failure  $51,846,788  -$4,392,214  $47,454,574 
HCC84  Cardio-Respiratory Failure and Shock  $42,027,142  -$2,670,446  $39,356,696 
HCC27  End-Stage Liver Disease  $36,059,563  -$667,199  $35,392,364 
HCC106  Atherosclerosis of the Extremities With Ulceration or  $39,197,346  -$4,030,133  $35,167,213 
Gangrene 
HCC35  Inflammatory Bowel Disease  $34,397,104  -$559,974  $33,837,130 
HCC107  Vascular Disease With Complications  $37,873,851  -$6,254,858  $31,618,993 
HCC57  Schizophrenia  $31,610,792  -$220,284  $31,390,508 
HCC112  Fibrosis of Lung and Other Chronic Lung Disorders  $29,077,393  -$443,450  $28,633,943 
HCC28  Cirrhosis of Liver  $28,669,099  -$571,934  $28,097,165 
HCC72  Spinal Cord Disorders/Injuries  $29,090,320  -$1,470,668  $27,619,652 
HCC186  Major Organ Transplant or Replacement Status  $25,562,992  -$355,549  $25,207,443 
HCC9  Lung and Other Severe Cancers  $30,632,704  -$6,436,584  $24,196,120 
HCC158  Pressure Ulcer of Skin With Full Thickness Skin Loss  $23,009,366  -$902,403  $22,106,963 
HCC2  Septicemia, Sepsis, Systemic Inflammatory Response  $22,377,064  -$1,032,119  $21,344,945 
Syndrome/Shock 
HCC77  Multiple Sclerosis  $18,536,609  -$164,752  $18,371,857 
HCC39  Bone/Joint/Muscle Infections/Necrosis  $19,173,836  -$889,730  $18,284,106 
HCC71  Paraplegia  $17,651,393  -$225,207  $17,426,186 
HCC124  Exudative Macular Degeneration  $17,428,482  -$445,905  $16,982,577 
HCC176  Complications of Specified Implanted Device or  $18,264,506  -$2,513,591  $15,750,915 
Graft 
HCC134  Dialysis Status  $15,883,440  -$166,930  $15,716,510 
HCC137  Chronic Kidney Disease, Severe (Stage 4)  $15,059,826  -$608,940  $14,450,886 
HCC169  Vertebral Fractures Without Spinal Cord Injury  $17,340,191  -$2,990,413  $14,349,778 
HCC87  Unstable Angina and Other Acute Ischemic Heart  $16,245,743  -$2,171,216  $14,074,527 
Disease 
HCC70  Quadriplegia  $13,793,142  -$469,489  $13,323,653 
HCC34  Chronic Pancreatitis  $12,203,694  -$403,020  $11,800,674 
HCC29  Chronic Hepatitis  $12,013,143  -$388,234  $11,624,909 
 
Continued on next page 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  30 
OEI-03-17-00470   
Exhibit B-1: Estimated 2017 payments resulting from diagnoses reported on chart reviews, by HCC 
(continued) 
2017   2017   2017  
Increased   Decreased   Net  
Risk-Adjusted  Risk-Adjusted  Risk-Adjusted 
HCC  HCC Description  Payments   Payments   Payments 
HCC122  Proliferative Diabetic Retinopathy and Vitreous  $11,954,165  -$331,571  $11,622,594 
Hemorrhage 
HCC104  Monoplegia, Other Paralytic Syndromes  $12,037,509  -$460,910  $11,576,599 
HCC12  Breast, Prostate, and Other Cancers and Tumors  $12,733,378  -$2,289,158  $10,444,220 
HCC33  Intestinal Obstruction/Perforation  $11,279,410  -$1,122,810  $10,156,600 
HCC114  Aspiration and Specified Bacterial Pneumonias  $11,385,876  -$1,439,746  $9,946,130 
HCC136  Chronic Kidney Disease, Stage 5  $8,370,840  -$849,894  $7,520,946 
HCC6  Opportunistic Infections  $7,393,274  -$585,605  $6,807,669 
HCC157  Pressure Ulcer of Skin With Necrosis Through to  $5,738,216  -$315,268  $5,422,948 
Muscle, Tendon, or Bone 
HCC115  Pneumococcal Pneumonia, Empyema, Lung  $5,701,524  -$358,048  $5,343,476 
Abscess 
HCC80  Coma, Brain Compression/Anoxic Damage  $5,615,122  -$644,290  $4,970,832 
HCC11  Colorectal, Bladder, and Other Cancers  $11,246,919  -$6,281,339  $4,965,580 
HCC1  HIV/AIDS  $4,438,303  -$60,778  $4,377,525 
HCC86  Acute Myocardial Infarction  $7,770,769  -$3,498,486  $4,272,283 
HCC54  Drug/Alcohol Psychosis  $4,081,699  -$90,415  $3,991,284 
HCC17  Diabetes with Acute Complications  $4,269,503  -$608,995  $3,660,508 
HCC170  Hip Fracture/Dislocation  $4,176,285  -$869,601  $3,306,684 
HCC76  Muscular Dystrophy  $2,880,618  -$43,896  $2,836,722 
HCC110  Cystic Fibrosis  $2,818,485  -$74,680  $2,743,805 
HCC73  Amyotrophic Lateral Sclerosis and Other Motor  $2,646,642  -$67,279  $2,579,363 
Neuron Disease 
HCC167  Major Head Injury  $2,669,608  -$326,694  $2,342,914 
HCC74  Cerebral Palsy  $2,264,214  -$25,335  $2,238,879 
HCC99  Cerebral Hemorrhage  $3,632,171  -$1,455,800  $2,176,371 
HCC173  Traumatic Amputations and Complications  $2,137,805  -$462,633  $1,675,172 
HCC162  Severe Skin Burn or Condition  $487,287  -$40,779  $446,508 
HCC166  Severe Head Injury  $103,238  -$19,067  $84,171 
HCC83  Respiratory Arrest  $1,286,777  -$1,400,586  -$113,809 
HCC100  Ischemic or Unspecified Stroke  $9,252,840  -$13,007,907  -$3,755,067 
 
Continued on next page 
 
 
 
 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  31 
OEI-03-17-00470   
Exhibit B-1: Estimated 2017 payments resulting from diagnoses reported on chart reviews, by HCC 
(continued) 
2017   2017   2017  
Increased   Decreased   Net  
Risk-Adjusted  Risk-Adjusted  Risk-Adjusted 
HCC  HCC Description  Payments   Payments   Payments 
Disease Interactions 
HCC85_gCopdCF  Congestive Heart Failure*Chronic  $153,167,321  -$1,583,709  $151,583,612 
Obstructive Pulmonary Disease Group 
HCC85_gDiabetes Congestive Heart Failure*Diabetes Group  $128,721,969  -$1,655,531  $127,066,438 
Mellit 
HCC85_HCC96  Congestive Heart Failure*Specified Heart  $82,167,702  -$1,129,385  $81,038,317 
Arrhythmias 
HCC85_gRenal  Congestive Heart Failure*Renal Group  $63,949,989  -$1,803,179  $62,146,810 
gRespDepandArre Cardiorespiratory Failure Group*Chronic  $51,995,057  -$2,217,217  $49,777,840 
_gCopdCF  Obstructive Pulmonary Disease Group 
HCC47_gCancer  Immune Disorders*Cancer Group  $47,451,848  -$1,305,906  $46,145,942 
gSubstanceAbuse Substance Abuse Group*Psychiatric Group  $19,928,643  -$355,855  $19,572,788 
_gPsychiatric 
SEPSIS_ARTIF_  Sepsis*Artificial Openings for Feeding or  $488,349  $0  $488,349 
OPENINGS  Elimination 
SCHIZOPHRENIA_ Schizophrenia*Chronic Obstructive  $371,680  -$3,321  $368,359 
gCopdCF  Pulmonary Disease 
SCHIZOPHRENIA_ Schizophrenia*Seizure Disorders and  $261,654  $0  $261,654 
SEIZURES  Convulsions 
gCopdCF_ASP_SP Chronic Obstructive Pulmonary  $264,046  -$2,572  $261,474 
EC_BACT_PNEUM  Disease*Aspiration and Specified Bacterial 
Pneumonias 
SEPSIS_ASP_SPEC Sepsis*Aspiration and Specified Bacterial  $248,487  $0  $248,487 
_BACT_PNEUM  Pneumonias 
ART_OPENINGS_  Artificial Openings for Feeding or  $206,807  -$2,798  $204,009 
PRESSURE_ULCER  Elimination*Pressure Ulcer 
SCHIZOPHRENIA_ Schizophrenia*Congestive Heart Failure  $171,321  $0  $171,321 
CHF 
SEPSIS_PRESSURE Sepsis*Pressure Ulcer  $135,185  $0  $135,185 
_ULCER 
ASP_SPEC_BACT_ Aspiration and Specified Bacterial  $117,653  -$3,655  $113,998 
PNEUM_PRES_  Pneumonias*Pressure Ulcer 
ULC 
 
Continued on next page 
 
 
 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  32 
OEI-03-17-00470   
Exhibit B-1: Estimated 2017 payments resulting from diagnoses reported on chart reviews, by HCC 
(continued) 
2017   2017   2017  
Increased   Decreased   Net  
Risk-Adjusted  Risk-Adjusted  Risk-Adjusted 
HCC  HCC Description  Payments   Payments   Payments 
Disabled/Disease Interactions 
DISABLED_ 
Disabled, Congestive Heart Failure  $134,778  $0  $134,778 
HCC85 
DISABLED_  Disabled, Chronic Ulcer of the Skin, Except 
$92,421  -$2,624  $89,797 
HCC161  Pressure Ulcer 
DISABLED_ 
PRESSURE_  Disabled, Pressure Ulcer  $77,628  $0  $77,628 
ULCER 
DISABLED_ 
Disabled, Multiple Sclerosis  $40,271  $0  $40,271 
HCC77 
DISABLED_  Disabled, Bone/Joint Muscle 
$25,246  $0  $25,246 
HCC39  Infections/Necrosis 
DISABLED_ 
Disabled, Opportunistic Infections  $2,379  $0  $2,379 
HCC6 
TOTAL  $6,861,135,786  -$196,472,424  $6,664,663,362 
 
Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data from CMSs IDR. 
 
 
 
 
 
 
 
 
 
   
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  33 
OEI-03-17-00470   
APPENDIX C: Estimated Payments From Chart 
Reviews for HCCs at High Risk for Improper 
Payments 
When conducting audits of a sample of risk adjustment data submitted by MAOs, 
CMS determines whether the diagnoses that resulted in risk-adjusted payments can 
be validated by medical record documentation.  When audits cannot validate 
diagnoses, CMS uses this information to recover overpayments from MAOs and 
calculate a payment error rate.  The 2014 payment year is the most recent payment 
year that CMS identified HCCs at a high risk for payment errors (including both 
overpayments and underpayments).49  The 10 HCCs that CMS identified as having 
the highest payment error rates for 2014 accounted for $216 million of the 
estimated net payments solely from chart reviews for 2017.50  Exhibit C-1 outlines 
the estimated amount of 2017 risk-adjusted payments attributed to each of these 
high-risk HCCs. 
Exhibit C-1: Estimated payments from chart reviews for HCCs that CMS previously identified as at a 
high risk for improper payments totaled $216 million for 2017 
HCC  2017   2017  2017  
Identified  Increased   Decreased   Net  
by CMS as  Risk-Adjusted  Risk-Adjusted  Risk-Adjusted 
High-risk  HCC Description  Payments   Payments   Payments 
HCC75  Myasthenia Gravis/Myoneural Disorders and  $92,693,353  -$5,797,873  $86,895,480 
Guillain-Barre Syndrome/Inflammatory and Toxic 
Neuropathy 
HCC27  End-Stage Liver Disease  $36,059,563  -$667,199  $35,392,364 
HCC106  Atherosclerosis of the Extremities with Ulceration or  $39,197,346  -$4,030,133  $35,167,213 
Gangrene 
HCC9  Lung and Other Severe Cancers  $30,632,704  -$6,436,584  $24,196,120 
HCC87  Unstable Angina and Other Acute Ischemic Heart  $16,245,743  -$2,171,216  $14,074,527 
Disease 
HCC114  Aspiration and Specified Bacterial Pneumonias  $11,385,876  -$1,439,746  $9,946,130 
HCC136  Chronic Kidney Disease (Stage 5)  $8,370,840  -$849,894  $7,520,946 
HCC54  Drug/Alcohol Psychosis  $4,081,699  -$90,415  $3,991,284 
HCC99  Cerebral Hemorrhage  $3,632,171  -$1,455,800  $2,176,371 
HCC100  Ischemic or Unspecified Stroke  $9,252,840  -$13,007,907  -$3,755,067 
TOTAL  $251,552,135  -$35,946,767  $215,605,368 
Source: OIG estimation of 2017 payment amounts using 2016 MA encounter data from CMSs IDR and CMSs list of HCCs at a high risk for payment errors for 
201 4. 
  49 CMS, High-Risk Hierarchal Condition Categories, November 2017. 
50 We compared our list of HCCs from the 2017 CMS-HCC model that were added by chart reviews to the HCCs that CMS identified as 
at high risk for payment errors from the 2014 CMS-HCC model.  Across the 2014 and 2017 models, there may be differences in the 
relative factor assigned to each HCC. 
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APPENDIX D:  Agency Comments 
 
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ACKNOWLEDGMENTS 
Jacqualine Reid served as the team leader for this study.  Office of Evaluation 
and Inspections staff who provided support include Tara Bernabe, San Le, and 
Conswelia McCourt. 
We would also like to acknowledge the contributions of other Office of 
Inspector General staff, including Julie Brown, Rodney Brown, Berivan Demir 
Neubert, and Jessica Swanstrom. 
This report was prepared under the direction of Linda Ragone, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia regional 
office, and Joanna Bisgaier, Deputy Regional Inspector General.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
To obtain additional information concerning this report or to obtain copies, 
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov.  
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns  39 
OEI-03-17-00470   
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