Risk-adjustment fraud occurs when Medicare Advantage plans report to CMS that their members are sicker than they truly are, causing CMS to overpay the Medicare Advantage plans for the members. The Medicare Advantage plan – or a physician, contractor, or consultant hired by the plan – knows that the diagnosis submitted to CMS is unsupported.
It could be that a Medicare Advantage plan may not know that a diagnosis is unsupported when it submits the information to CMS, but the plan discovers that fact later on. This often happens when plans conduct retrospective “chart reviews” or “chart audits.”
However, once the Medicare Advantage plan discovers a diagnosis code is unsupported, it must “delete” that code. Failure to do so is a violation of the False Claims Act.