09/01/2026
DOJ steps up crackdown on Medicare Advantage upcoding.
By: Alan Condon
The Justice Department’s scrutiny of Medicare Advantage risk adjustment is intensifying, with two recent settlements totaling nearly $1.1 billion highlighting federal concerns about diagnosis coding practices that can increase payments to health plans.
The latest came Aug. 27, when The Villages (Fla.) Health System agreed to pay $541.5 million to resolve allegations that it violated the False Claims Act by submitting improper diagnosis codes to Medicare Advantage insurers. The settlement follows Oakland, Calif.-based Kaiser Permanente’s January agreement to pay $556 million over allegations that it submitted unsupported diagnoses to increase risk-adjusted Medicare Advantage payments.
The cases share a central theme. Federal prosecutors alleged diagnoses were added to patient records after visits — in some cases months or more than a year later — despite concerns that the conditions were not supported by the encounter.
Medicare Advantage plans receive fixed monthly payments from CMS for each enrollee, with payments adjusted based on beneficiaries’ health status. Plans generally receive more for members with more serious documented conditions, making accurate diagnosis coding key to the program’s payment structure.
In the Kaiser case, the Justice Department alleged that several affiliates used data-mining tools to identify diagnoses in patients’ medical histories that had not previously been submitted to CMS. Physicians were then sent queries encouraging them to add diagnoses to medical records through addenda after visits had occurred, according to prosecutors. In some instances, the diagnoses allegedly had no connection to the original visit.
The government also alleged Kaiser established diagnosis-submission targets, identified physicians and facilities that fell short and tied certain financial incentives to risk-adjustment performance.
Kaiser said it settled to avoid the cost, uncertainty and delay of prolonged litigation, adding that the dispute involved interpretation of Medicare risk-adjustment documentation requirements rather than the quality of care its members received.
The Villages Health case involved similar retrospective coding allegations. Prosecutors said the provider used internal processes called “retrospective amendments” and “sprints” to add diagnosis codes to medical records after visits, sometimes months or more than a year later. Proposed additions were sent to physicians for approval and, in some cases when the treating physician had left the practice, were reviewed by another clinician.
The Justice Department alleged that from January 2020 through December 2024, The Villages Health submitted improper diagnosis codes to Medicare Advantage insurers including UnitedHealthcare, Humana and GuideWell, resulting in inflated payments from CMS.
The organization self-disclosed the conduct to the HHS Office of Inspector General in December 2024. A sample review cited in the settlement found that the percentage of unsupported diagnosis codes among those reviewed increased from 28.6% in 2020 to 50.7% in 2024.
The Villages Health sought Chapter 11 bankruptcy protection in July 2025 and was subsequently acquired by Humana’s CenterWell. A Humana and CenterWell spokesperson said the allegations predated the acquisition and that the settlement is being funded by The Villages Health estate rather than Humana or CenterWell.
The two cases are part of broader federal enforcement activity involving Medicare Advantage coding and payments. Becker’s has tracked several recent Medicare Advantage fraud settlements involving insurers, providers and coding vendors. Recent cases include settlements involving Monogram Health, Aetna, Seoul Medical Group and Renaissance Imaging Medical Associates, Independent Health and DxID, and Oak Street Health.
