Risk Adjustment Explained: A Practical Guide to HCC, RAS, and Manual Risk Scoring (V28)

Introduction

Risk adjustment determines how Medicare Advantage plans are paid by estimating each enrollee’s expected healthcare costs using demographics and diagnoses. The current CMS model version, CMS-HCC Model V28, introduces important mapping and coefficient changes that materially affect RAFs (Risk Adjustment Factors) and plan revenue. This guide explains the concepts and systems (RAS) and gives a V28-aware manual scoring workflow you can use for auditing and training.

What is Risk Adjustment?

Risk adjustment is CMS’s statistical method to align payments with beneficiary risk. It is prospective: diagnoses collected during a data-collection year are used to predict costs in a subsequent payment year. Inputs include demographics (age/sex/dual status) and diagnoses mapped to HCCs; the result is a numeric risk score (RAF), where >1.0 = expected cost above average and <1.0 = below average.

Brief history & why V28 matters

CMS periodically updates the HCC model. V28 (the 2024/2025 model release commonly called V28) reconfigures HCCs to reflect ICD-10-CM and newer utilization patterns, expands the number of payment HCCs, and applies constraining (related HCCs sharing coefficients). Because of these changes, many prior examples and coefficients no longer apply — always use the official V28 mapping and coefficient files from CMS.

Key V28 points:

• V28 expanded payment HCCs (V24 → V28: ~86 → 115 HCCs) and reorganized mappings.

• V28 applies constraining in several HCC families (many related HCCs now share coefficients). This reduces volatility but changes RAF impacts per condition.

• CMS implemented V28 via a phase/blend schedule for payments (check the Rate/Advance Announcement for the model blend and normalization instructions for your payment year).

Where diagnoses come from (RAPS, EDPS, FFS)

CMS ingests diagnoses from:

• RAPS — legacy feed (now limited; used mainly for PACE in many contexts).

• EDPS — encounter-level data, broadly adopted since 2014; provides richer encounter detail.

• Fee-for-Service / IDR — FFS claims stored in CMS’s Integrated Data Repository; used because beneficiaries move between MA and FFS.

Understand which flows apply to your members — mappings and eligibility rules differ by source and affect what maps into V28 payment HCCs.

How the V28 HCC model works — core mechanics

V28 follows the same high-level mechanics as prior HCC models, but with revised mappings and coefficients:

1. Map ICD-10 → V28 payment HCCs using CMS V28 ICD→HCC mapping files.

2. Apply V28 hierarchy rules — in a disease family, only the retained payment HCC counts (V28 preserves hierarchy logic; constraining may cause related HCCs to share coefficients).

3. Sum relative factors — demographic cell + retained HCC factors + interaction terms + payment-HCC count factors = raw risk score (V28 coefficients must be used).

4. Apply final adjustments — divide the raw score by the normalization factor for the model/denominator year, then multiply by (1 − MA coding pattern adjustment) per the Rate Announcement for your payment year / model blend. (Normalization & coding adjustments are published in CMS Advance/Rate Announcement materials.)

Important: because V28 changes mappings and coefficients, numeric examples built under earlier models will likely produce different RAFs under V28.

Manual scoring — step-by-step (V28 edition)

Use this workflow to audit automated scoring under V28. Wherever you publish numbers on your site, insert the exact V28 table rows (ICD→HCC mapping row, coefficient table row, hierarchy reference) — I can extract those for you.

High level steps

1. Map ICD-10 codes → V28 payment HCCs (use the V28 mapping ZIP from CMS).

2. Apply V28 hierarchy rules and drop dominated HCCs (note V28 constraining).

3. Retrieve V28 relative factors from the coefficient tables (demographic cell, HCC(s), interaction(s), HCC count factor) and sum them → raw score.

4. Normalize & apply MA coding pattern adjustment (use normalization & MA coding adjustment values published for the payment year / blend you are calculating under).

Example (V28) — structure and how we will compute it

Example beneficiary (same demographics to be computed under V28):

• Female, 76 years old

• Community resident (not institutionalized)

• Non-dual (not Medicaid eligible)

• Not disabled

Steps to compute the V28 RAF for this beneficiary:

1. Identify the ICD-10 codes submitted.

2. Use the CMS V28 ICD→HCC mapping file to map each code to a V28 payment HCC (or determine if it no longer maps to a payment HCC).

3. Apply V28 hierarchy rules and determine which HCC(s) remain after hierarchies and constraining.

4. Pull the V28 coefficient table rows for the beneficiary’s age/sex cell, each retained HCC, any disease interaction, and the payment-HCC count factor; sum → raw score.

5. Obtain the correct normalization factor and MA coding pattern adjustment from the CMS Rate/Advance Announcement applicable to your payment year / model blend; apply to raw score → final V28 RAF.

Illustrative V28 Worked Example (audit-ready, cited)

Below is an illustrative, fully worked V28 example you can paste into the blog. It demonstrates the pipeline from demographics → HCCs → interaction → normalization → MA coding adjustment, with digit-by-digit arithmetic and citations. This is illustrative (HCC choices and some coefficients drawn from public vendor & CMS examples). If you want the exact calculation for specific ICD codes, I will compute that next using the CMS V28 mapping/coefficient files and provide file/sheet/row citations.

Assumptions & sources

• We use realistic V28 coefficients published in CMS or industry worked examples. Where I reference a specific coefficient or factor, it’s cited to CMS or a reputable industry resource.

Example beneficiary (V28)

• Female, 76 years old (age bracket 75–79) — community resident, non-dual, not disabled.

V28 coefficients used (sources):

• Age/sex factor (Female, 75–79): 0.1949.

• Diabetes (V28 constrained coefficient): 0.166.

• Chronic systolic CHF (V28 example HCC): 0.360.

• Atrial fibrillation (V28 example HCC): 0.299.

• Disease interaction — Diabetes + CHF: 0.112.

• Payment-HCC count factor for 4 HCCs: 0.000 (no additive factor for exactly 4 in the referenced tables).

• Normalization factor (V28 model example): 1.045.

• MA coding pattern adjustment (example statutory/minimum): 0.0590 (5.90%).

Step-by-step arithmetic (digit-by-digit)

Step 0 — list the numeric inputs:

• Age/sex (F, 75–79) = 0.1949.

• Diabetes (V28) = 0.166.

• CHF (V28 example) = 0.360.

• Atrial fibrillation (V28 example) = 0.299.

• Interaction (Diabetes + CHF) = 0.112.

• Payment-HCC count factor for 4 HCCs = 0.000.

• Normalization factor (V28 model) = 1.045.

• MA coding pattern adjustment = 0.0590 (i.e., multiply by (1 − 0.0590)).

Step 1 — compute RAW RISK SCORE (sum of demographics + HCCs + interaction + count):

1. Age/sex: 0.1949

2. - Diabetes: 0.166 → subtotal = 0.3609

3. - CHF: 0.360 → subtotal = 0.7209

4. - Atrial fibrillation: 0.299 → subtotal = 1.0199

5. - Interaction (Diabetes+CHF): 0.112 → subtotal = 1.1319

6. - Payment-HCC count (4 HCCs): 0.000 → RAW risk score = 1.1319.

Step 2 — divide by normalization factor (1.045):
1.131900 ÷ 1.045 = 1.0831578947368423… → round to 3 decimals → 1.083.

Step 3 — apply MA coding pattern adjustment (5.90%): multiply by (1 − 0.0590) = 0.941
1.0831578947368423 × 0.941 = 1.0192515789473686… → round to 3 decimals → 1.019.

Final V28-adjusted RAF (rounded to 3 decimals): 1.019

Interpretation: Under this illustrative V28 example (specific HCCs and coefficients above), the beneficiary’s final RAF ≈ 1.019 — roughly 1.9% above the average (RAF = 1.000). Replace input HCCs / coefficients with the exact V28 rows for your precise sample to produce a production-ready table.

Sources (key load-bearing)

• CMS Risk Adjustment / V28 model downloads (ICD→HCC & model files)
  CMS Model Software & ICD-10 Mappings (2025)
  CMS Model Software & ICD-10 Mappings (2024)

• CMS Advance/Rate Announcement — normalization factors & MA coding-pattern adjustment
  CY 2025 Rate Announcement (PDF)
  CY 2026 Rate Announcement (PDF)

• Age/sex cell values (Female 75–79 = 0.1949) from V28 tables
  CMS Risk Adjustment Technical Specifications 2025 (PDF)

Practical tips & common pitfalls (V28 era)

• Always use official V28 files from CMS as the source of truth.

• Watch for constraining: V28 constrained many related HCCs to share coefficients. That can reduce the RAF impact of moving among more granular subcodes.

• Check model blending in the Rate Announcement — CMS may use a V28/V24 blend for particular payment years; use the stated blend weights and correct normalization factors.

• Avoid transcription errors (I vs 1, trailing spaces, code formatting) — small errors break mapping lookups.

• Build an auditable trail: for every HCC you publish, save the exact CMS file name, sheet/tab, and row number used as the evidence.

Tools & Resources — where to fetch V28 files

• CMS Risk Adjustment landing (Model Software & V28 downloads) — official V28 mapping & coefficient files
  CMS Model Software & ICD-10 Mappings (2025)
  CMS Model Software & ICD-10 Mappings (2024)

• CMS Advance / Rate Announcement — normalization factors, MA coding pattern adjustment, and model blending details
  CY 2025 Rate Announcement (PDF)
  CY 2026 Rate Announcement (PDF)
  2026 Medicare Advantage & Part D Advance Notice Fact Sheet

• CMS technical reports & implementation guides — description of V28 changes and HCC reconfiguration
  CMS Risk Adjustment — Other Model Related Documents
  CMS Risk Adjustment Technical Specifications 2025 (PDF)

FAQ (V28)

Q: Has V28 already been used for payments?
A: CMS has phased V28 in via blends for recent payment years (check the Rate/Advance Announcement for the exact blend used in your target payment year).

Q: Will RAFs generally go up or down under V28?
A: Many industry analyses and CMS documentation indicate average RAFs decline for many beneficiaries under V28 (fewer codes map to payment HCCs and constraining reduces some coefficients), but the net effect varies by population and the model-blend/normalization used for your payment year. Always compute using V28 and the correct normalization/coding adjustments.

Q: Where are the V28 mapping & coefficient files?
A: On the CMS risk-adjustment pages (Model Software / ICD-10 Mappings for 2024/2025/2026).

EDPS Submissions Explained: From 837 Claims to MAO Reports

A Complete Training Guide for Medicare Advantage Data Teams

Introduction: Why EDPS Submissions Matter

Every Medicare Advantage (MA) plan’s risk score and payment accuracy depend on one thing: clean, timely encounter data.

The Encounter Data Processing System (EDPS) is how MAOs transmit encounter (claim) information to CMS for validation, storage, and use in Risk Adjustment Suite of Systems (RASS) model runs.

Understanding EDPS — along with the 837 EDI structure, acknowledgment reports (999, 277CA), and CMS feedback files (MAO-001, MAO-002) — is essential for:

• Data operations teams ensuring connectivity and compliance

• Risk adjustment analysts validating submission quality

• Compliance and audit staff maintaining traceability across the RASS ecosystem

Part 1: What Is EDPS (Encounter Data Processing System)?

Overview

EDPS is the CMS system that processes encounter data submitted by Medicare Advantage Organizations (MAOs).
Encounter data represents adjudicated claim-level details (Professional, Institutional, and DME) from providers for MA beneficiaries.

These submissions are used by CMS to:

• Calculate risk scores for payment

• Calibrate and refine HCC model versions (e.g., V28)

• Perform utilization, quality, and cost analyses

What Does EDPS Include?

1. EDFES (Front-End System)
   Validates HIPAA compliance, syntax, and envelope structure before data reach EDPS. This ensures only properly formatted encounter files move forward for processing.

2. EDPS Core Processor
   Performs business and content validation, applies CMS-defined edits, and flags preliminary Risk Adjustment (RA) indicators for eligible diagnoses and services.

3. EODS (Encounter Operational Data Store)
   Stores all accepted encounter data after processing. The EODS is the official CMS repository used for reporting, analytics, and downstream model runs.

4. MAO Reports (MAO-001 & MAO-002)

   • MAO-001 — Identifies duplicate encounter data detected during processing (triggered by error 98325 – Service Line(s) Duplicated). It provides detailed duplicate line items for correction or resubmission.

   • MAO-002 — Provides encounter-level processing results from EDPS, including acceptance or rejection details and preliminary Risk Adjustment (RA) flags such as PA, PD, PN, or FR.

Why CMS Implemented EDPS

CMS transitioned from summary-level RAPS submissions to detailed encounter data to improve accuracy in:

• Risk score calculation

• Program integrity and auditability

• Clinical and cost analyses

EDPS data feeds directly into the Risk Adjustment Suite of Systems (RASS), where the risk adjustment model converts diagnoses into HCCs for payment.

Who Must Use EDPS?

All organizations offering Medicare Advantage coverage, including:

• MA Plans and MA-PDs

• SNPs (Special Needs Plans)

• Regional & Local PPOs

• Employer Group Waiver Plans (EGWPs)

• PACE, Cost, and MSA plans

• Religious Fraternal Benefit and PSO plans

What Data Must Be Submitted?

For each plan type, CMS requires different encounter data submissions:

• MA / MA-PD Plans — Must submit all adjudicated (accepted and denied) claims according to CMS specifications.

• PACE Plans — Submit claims-based encounters only.

• Cost Plans — Submit only Medicare-covered items or services for which costs are claimed on CMS Cost Reports.

• SNPs (Special Needs Plans) — Submit Medicare services following EDS guidelines.

Submission Timelines

CMS sets specific deadlines for encounter data submissions:

• Full Encounter — Must be submitted within 13 months of the Date of Service (DOS).

• Correct/Replace or Void/Delete Encounter — Must be submitted within 13 months of DOS and no more than 30 days after the adjustment date.

• Chart Review Encounter — Must be submitted within 25 months of the data collection period.

Setting Up EDS Connectivity

Before sending data, MAOs must:

1. Complete the Encounter Data EDI Agreement with CMS (via CSSC).

2. Establish secure connectivity using Connect:Direct, TIBCO, or Gentran.

3. Test and certify using EDFES test environments before production go-live.

Part 2: EDI 837 and the X12 Foundation

What Is EDI?

Electronic Data Interchange (EDI) enables the digital exchange of structured data between healthcare entities.
It replaces paper workflows, allowing providers to submit, and payers to receive, standardized claims.

What Is X12?

ASC X12 is the U.S. national standard for EDI healthcare transactions.

Common File Types:

• 837 — Healthcare Claim
Used by providers to submit Professional, Institutional, or Dental claim data to payers. This is the main file for transmitting encounter and billing details.

• TA1 — Interchange Acknowledgment
Confirms that the EDI file was received successfully and checks for envelope-level or formatting issues (e.g., ISA/GS segment errors).

• 999 — Implementation Acknowledgment
Verifies that the submitted EDI file meets syntax and structural standards. A failed 999 means the file will not move forward to claim-level validation.

• 277CA — Claim Acknowledgment
Provides business-level feedback for each individual claim — indicating whether it was accepted, rejected, or pended after processing.

X12 File Structure (Think of Nested Layers)

ISA  →  GS  →  ST  →  LOOP  →  SEGMENT  →  ELEMENT

Hierarchy:

• ISA/IEA — File envelope

• GS/GE — Functional group

• ST/SE — Individual transaction set (one claim)

• Loops (1000–2400) — Logical sections (submitter, patient, claim, service line)

• Segments (NM1, REF, DTP) — Data lines within loops

• Elements — Actual data fields

Example:
NM1*41*2*Health Payer System*****46*TGJ23~
→ identifies the billing provider submitting the claim.

Key Loops in an 837 File

1000 -> ASubmitter Information
1000B -> Receiver (CMS or Clearinghouse)
2000A -> Billing Provider Hierarchy
2000B -> Subscriber/Patient Info
2300 -> Claim Details
2400 -> Service Line Details

End-to-End Claim Flow

1. 837 claim is submitted by MAO or clearinghouse

2. TA1 confirms receipt and envelope validity

3. 999 validates syntax and structure

4. 277CA provides claim-level acceptance or rejection status

5. MAO-001 / MAO-002 reflect EDPS and CMS processing outcomes

Part 3: Understanding 999 and 277CA Acknowledgments

999 — Functional Acknowledgment

Confirms structural validity of an EDI 837 file.

Key Segments:

AK1 / AK2 -> Group & Transaction Acknowledgment
IK3 / IK4 -> Identify segment and element with errors
IK5 -> Final acceptance code (A = Accepted, E = Accepted w/Errors, R = Rejected)

Remember:
If your file fails at the 999 stage, it never reaches CMS for adjudication.

Common 999 Errors:

• Invalid ISA/GS control numbers

• Mismatched ST/SE pairs

• Invalid NM1 or CLM segments

277CA — Claim Acknowledgment

Tracks each individual claim within a submitted batch after syntax passes.

Key Codes:

Common Issues:

• Missing provider numbers (21)

• Invalid diagnosis codes (187)

• Duplicate claims (42)

• Rendering provider not enrolled (85)

Why 999 & 277CA Matter

• Early error detection = fewer denials

• Real-time visibility into claim movement

• Foundation for EDPS compliance

Best Practices

• Automate parsing and alerts for 999/277 responses

• Track rejection trends by error code

• Map TRNs to original claim IDs for quick troubleshooting

Part 4: MAO-001 & MAO-002 — CMS Response Reports

MAO-001 – Encounter Data Duplicates Report

The MAO-001 identifies duplicate encounter data submitted by MAOs to CMS.
It is triggered whenever a 98325 – Service Line(s) Duplicated error appears on your MAO-002 report.

Although not a direct risk-adjustment file, it ensures data integrity by flagging duplicate encounters that could distort payments.

Purpose

• Lists duplicated ICNs and service lines.

• Helps MAOs reconcile and correct duplicate records via void or replace transactions.

• Maintains clean encounter data for risk-adjustment accuracy.

File Structure

How to Use

1. Match 98325 errors from MAO-002 to entries in MAO-001.

2. Validate true vs. false duplicates.

3. Resubmit corrected void/replace transactions (837 frequency 7 or 8).

4. Investigate systemic duplicate creation issues.

Why It Matters

• Prevents duplicate encounter counting.

• Protects RAF and payment integrity.

• Keeps audit trail clean and CMS-compliant.

MAO-002: Encounter Data Processing Status Report

Once your data passes EDFES, it moves into EDPS.
The MAO-002 shows what CMS accepted or rejected after business rule and RA validation.

What’s Inside the MAO-002

Error Code Examples

-> Review both “Accepted with errors” and rejected lines — they can still affect downstream RA scoring.

RA Flags

Using MAO-002 Strategically

• Validate accepted encounters and error trends

• Identify coding or data patterns affecting risk scores

• Track RA-eligible diagnoses ahead of MAO-004

• Monitor provider-specific rejection clusters

MAO-001 vs MAO-002: At a Glance

Part 5: How It All Fits Together

Complete EDPS Lifecycle

837 Claim File
   ↓
TA1  (Envelope check)
   ↓
999  (Syntax/Structure)
   ↓
277CA (Claim-level status)
   ↓
MAO-001 (Front-end acceptance)
   ↓
EDPS Processing
   ↓
MAO-002 (Encounter-level acceptance)
   ↓
MAO-004 (Final RA/Payment reconciliation)

Each stage builds validation confidence — from structure → content → payment readiness.

Part 6: Best Practices for MAOs & Submitters

1. Automation & Monitoring

• Parse 999/277/MAO files automatically into a central repository

• Track ICN continuity from submission to payment

2. Error Management

• Build dashboards for error frequencies

• Trend by provider, diagnosis, or error code

3. Operational Governance

• Maintain audit trail linking 837s to MAO-002 and MAO-004

• Validate chart review linkage before submission

4. Timeliness

• Adhere to 13-month and 25-month deadlines

• Monitor CMS “cleanup runs” or system announcements

Appendix: Quick File Reference

Conclusion

The EDPS ecosystem is the lifeline of Medicare Advantage payments.
From the first 837 submission to the final MAO-004 reconciliation, every file — TA1, 999, 277, MAO-001, MAO-002 — tells part of your story.

By mastering each stage:

• You reduce rejections and resubmissions

• Improve encounter completeness

• Strengthen audit defensibility

• Protect risk score accuracy and revenue integrity

“In risk adjustment, every record counts — but only accepted encounters pay.”

 Understanding Model Runs in RASS: A Complete Training Guide

Introduction

In Medicare Advantage and Part D, risk scores directly drive plan payments. These scores aren’t automatic — they are calculated through a series of scheduled and ad hoc processes inside CMS’s Risk Adjustment Suite of Systems (RASS).

These processes are called model runs.
Understanding how model runs work, and how their outputs (like the MMR and MOR) connect to payments and risk transparency, is essential for finance, operations, and compliance teams within Medicare Advantage Organizations (MAOs) and Prescription Drug Plans (PDPs).

What Is a Model Run?

A model run is the process by which CMS calculates risk scores using diagnosis and enrollment data within RASS.

Each model run includes the following steps:

1. Extracting diagnosis data from:
   - EDPS (Encounter Data Processing System)
   - RAPS (Risk Adjustment Processing System for PACE)
   - FFS/IDR (Fee-for-Service / Integrated Data Repository)

2. Extracting demographic and enrollment data such as age, sex, Medicaid eligibility, disability, and institutional status from:
   - BIC (Beneficiary Information on the Cloud)
   - MDS (Minimum Data Set)

3. Applying the CMS-HCC model (V28 or blended version) to calculate the risk scores.

4. Producing outputs, including:
   - MOF (Model Output File): Raw file containing demographics, HCCs, and interaction factors.
   - RAF (Risk Adjustment Factor): Final risk score after normalization and coding adjustments.
   - MORE (Model Output Report for MAOs): Summary of member-level demographics and diagnostic components.

These scores are transmitted to MARx, which applies them for Medicare Advantage and Part D payments.

The Six Types of Model Runs

CMS performs six distinct model runs each year, each with unique timing, purpose, and impact on plan payments.

1. Initial Model Run

• Timing: September of the data collection year

• Data window: July of the prior year → June of the data collection year

• Purpose: Produces risk scores that determine payments for the first six months of the payment year.

2. Midyear Model Run

• Timing: March of the payment year

• Data window: January – December of the data collection year

• Purpose: Produces risk scores for the second half of the payment year.

3. Interim Final Model Run

• Timing: February following the payment year (or as needed)

• Purpose: Provides early reconciliation for the entire payment year.

4. Final Model Run

• Timing: August following the payment year (after interim final, if applicable)

• Purpose: Produces final reconciled payments for the full year.

5. Cleanup Model Run

• Timing: Ad hoc, post-final

• Purpose: Corrects data or applies updated CMS business rules.

6. Overpayment Model Run

• Timing: Ad hoc, as triggered by diagnosis deletions

• Purpose: Adjusts payments by removing unsupported diagnoses and recouping overpayments.

Timeline Example

A typical model run sequence follows this flow:

• Initial Run: July (prior year) → June (data collection year) → Payments for first half of payment year

• Midyear Run: January – December (data collection year) → Payments for second half

• Interim Final Run: Post-payment year → Early reconciliation

• Final Run: Post-payment year (August) → Final reconciliation

• Cleanup/Overpayment Runs: Ad hoc adjustments as required

Key CMS Reports in RASS: MMR and MOR

After each model run, CMS produces a set of output files and reports that bridge clinical validation, financial reconciliation, and audit transparency.
Two of the most important files MAOs receive are the MMR (Monthly Membership Report) and the MOR (Model Output Report).

RASS Output Flow:
EDPS/RAPS → RASS Model Run → MOF → MORE → MARx → MMR (Payments) + MOR (HCC Validation)

MMR (Monthly Membership Report)

Your Financial Blueprint from CMS

The MMR Detail File is the official CMS record that outlines monthly capitation payments, risk score logic, and adjustment activity for every beneficiary in a Medicare Advantage or Part D plan.

Purpose

• Tracks all capitated payments, retroactive adjustments, and risk factor updates.

• Enables MAOs to validate CMS payments and ensure that demographic and clinical data align with their internal systems.

Key Details

• Format: Fixed-width, 495-character record layout

• Delivery: Monthly

• Content: 91 fields grouped into demographics, risk adjustment, payments, and adjustments

Essential Fields to Monitor

• Contract/PBP/Segment IDs: Identify plan and region

• RAF Fields (24–25, 46, 72–85): Risk factors used in calculation

• ARC (Adjustment Reason Code): Explains why payment amounts changed

• Cleanup ID: Tracks CMS-wide retroactive adjustments

ARC Codes — The Audit Trail

ARC codes explain every change in CMS payments.
Key ones to monitor:

• 01: Death Notification (retro termination)

• 07: Retroactive Hospice

• 25: Part C RAF Reconciliation

• 36: Part D Rate Change

• 94: Cleanup-Related Adjustment

If your plan sees payment fluctuations — check ARC first. It’s your audit trail.

Strategic Uses

• Revenue Validation: Confirm that RAFs and demographics align with expected CMS payments.

• Compliance Readiness: Maintain documentation for all payment adjustments.

• Risk Optimization: Identify coding gaps when default risk factors are used.

V28 Model Considerations

The CMS-HCC V28 model introduced major changes (2,200+ ICD code removals).
Plans must monitor:

• ARC 25/26/37/41 increases tied to recalibrated RAFs.

• Default risk factor codes triggered by missing or partial risk data.

Bottom Line:
The MMR is your financial control center. It reveals how CMS’s model outputs turn into real dollars — and how to reconcile every adjustment.

MOR (Model Output Report)

Your Diagnostic Window into CMS’s Risk Engine

The MOR is CMS’s official feedback file showing which of your submitted diagnoses actually became paying HCCs after hierarchy and filtering.

Purpose

• Provides transparency into which diagnoses triggered HCCs.

• Validates that your submissions were accepted and applied correctly.

• Serves as your primary audit defense document during RADV or reconciliation.

Types of MOR Files

• MOR Report (HCCMODR):

  • Human-readable

  • Ideal for smaller plans or manual validation

• MOR Data File (HCCMODD):

  • Fixed-width, 200-byte (Part C) or 168-byte (Part D)

  • Designed for automation and dashboard integration

MOR Lifecycle

• Monthly MORs: Reflect live model runs (Jan–Jun and Jul–Dec).

• Final MOR: Released after the final model run — used for appeals and audit reconciliation.

From Diagnosis to Payment: The HCC Journey

1. Submit: Member has diagnosis E11.9

2. Map: CMS maps to CC 19

3. Group: CC 19 → HCC 19 (Diabetes)

4. Filter: CMS applies hierarchy (drops lower-level codes)

5. Pay: HCC 19 triggers on MOR = payment earned

Common Reasons for Exclusion

• Non-specific ICD-10 codes not mapping to a payment HCC

• Hierarchy overrides by more severe conditions

• Late or improperly formatted submissions

• Invalid encounter structure

Strategic Uses

• Coding Accuracy: Identify diagnoses that didn’t trigger payments.

• Revenue Assurance: Cross-check with MMR to ensure payment alignment.

• Provider Education: Use MOR data to guide documentation improvements.

• Audit Preparation: MOR = CMS’s proof of record for every payment-impacting diagnosis.

Bottom Line:
The MOR is your clinical mirror — it tells you exactly how CMS interpreted your diagnoses and which ones drove revenue.

Why Model Runs, MMR, and MOR Matter for Plans

• Revenue Forecasting: Model runs and MMR trends reveal payment cycles.

• Compliance Tracking: ARC and MOR exclusions show documentation gaps.

• Audit Defense: MORE and MOR link diagnoses → HCCs → payments.

• Operational Accuracy: MMR ensures payments align with member data; MOR ensures diagnoses align with payments.

• Financial Planning: Joint use of MMR and MOR provides full-cycle visibility into risk adjustment operations.

Knowledge Check (Training Style)

1. Which model run determines payments for the first half of a payment year?
A. Initial Run.

2. What is the purpose of the MOR?
A. To show which diagnoses triggered paying HCCs.

3. What file should you review to find the reason behind a payment change?
A. MMR — Check the ARC (Adjustment Reason Code).

4. When does CMS typically run the Final Model Run?
A. August following the payment year.

5. What is the relationship between MMR and MOR?
A. MMR shows payment adjustments; MOR shows which diagnoses drove them.

Practical Takeaways

• Always validate MMR and MOR files together — they complete the payment picture.

• Monitor ARC codes and default risk factors monthly.

• Use MOR insights to drive provider training and coding specificity.

• Track CMS model run schedules to anticipate payment adjustments.

• Maintain audit-ready documentation across RASS, MARx, and MMR/MOR.

Appendix: Detailed Notes from Training

• Model Run Inputs: EDRA (encounter/chart), RAPS (PACE), FFS/IDR, BIC, MDS.

• Outputs: MOF → MORE → MARx → MMR/MOR.

• Overpayment Logic: Triggered by deletes; reconciled in Cleanup runs.

• Operational Tip: Late submissions only apply in the next model run — track all cutoff dates.

• Audit Tip: MORE + MOR + MMR = complete CMS validation trail for plan payments.

Conclusion

Model runs, MMR, and MOR form the backbone of CMS’s risk adjustment ecosystem.
Together, they connect clinical documentation → diagnosis coding → risk scoring → payment flow.

By mastering this cycle, Medicare Advantage plans can ensure payment accuracy, compliance integrity, and operational excellence — from diagnosis to dollar.

Understanding Payment Reconciliation in Medicare Advantage: A Complete Training Guide

Introduction

In Medicare Advantage (MA), risk adjustment doesn’t end with a model run — it ends with payment reconciliation.

Payment reconciliation is where data meets dollars. It’s the process through which CMS aligns all plan payments with validated enrollment, diagnosis, and risk score data — ensuring every cent reflects actual member risk and eligibility.

For MAOs, mastering this process is vital. Reconciliation affects cash flow, revenue forecasting, audit preparedness, and even plan performance ratings.

This guide breaks down the entire reconciliation process — from model outputs to MARx adjustments — and how to use CMS reports like MMR, MORE, and MAO-004 to maintain financial accuracy and compliance.

The CMS Payment Ecosystem

Payment reconciliation sits at the intersection of multiple CMS systems. Understanding each system’s role is key:

1.  RASS (Risk Adjustment Suite of Systems)
   Calculates risk scores from submitted diagnoses and model runs (Initial, Midyear, Interim, Final). Outputs: MOF, RAF, and MORE.

2. EDPS (Encounter Data Processing System)
   Processes encounter-level claim data from MAOs. Feeds validated diagnoses to RASS for risk adjustment scoring.

3. MARx (Medicare Advantage and Prescription Drug System)
   Applies risk scores, enrollment status, benchmark rates, and rebates to generate monthly plan payments.

4. MMR (Monthly Membership Report)
   The financial DNA of your plan — showing capitation, adjustments, rebates, and risk factor details for every member.

5. MAO-004 (Risk Adjustment Data Validation File)
   Reflects final diagnosis acceptance and payment adjustment information used for risk score reconciliation.

Together, these systems ensure CMS payments are accurate, traceable, and supported by compliant data.

What Is Payment Reconciliation?

Payment reconciliation is the process of aligning CMS payments with the most current and validated data available.

It involves systematically updating plan payments based on:

• Member eligibility and enrollment changes

• Updated demographic or risk adjustment factors

• Results of RASS model runs

• RADV and overpayment recoveries

• Late-submitted encounters or corrections

CMS performs this reconciliation through scheduled model runs and ad hoc adjustments, ultimately leading to a Final Reconciliation for the Payment Year.

Payment Year vs. Data Collection Year

A key concept in understanding reconciliation is the offset between data collection and payment.

• Data Collection Year: The calendar year in which services are rendered and diagnoses are submitted (e.g., 2024).

• Payment Year: The year following, when CMS uses those diagnoses to calculate payments (e.g., 2025).

This lag allows CMS to process all encounters, corrections, and RADV adjustments before determining the final payment.

The Payment Reconciliation Cycle

CMS conducts several model runs that culminate in final payment reconciliation: 

1. Initial Model Run

• Performed in September of the data collection year

• Uses partial encounter data (July prior year – June current year)

• Sets payments for the first half of the payment year (January–June)

2. Midyear Model Run

• Performed in March of the payment year

• Uses full calendar year encounter data (Jan–Dec)

• Adjusts payments for July–December

3. Interim Final Run

• Conducted in February after the payment year

• Provides early reconciliation of all payments for that year

4. Final Model Run

• Conducted in August following the payment year

• Reflects the definitive risk scores and payments for that period

5. Cleanup & Overpayment Runs

• Ad hoc runs triggered by RADV results, deletes, or systemic corrections

• Ensure post-final adjustments are properly reconciled

Key Data Sources in Reconciliation

CMS integrates multiple data streams into reconciliation calculations:

• EDPS Data: Encounter-level records used for primary risk score calculation

• RAPS Data: Legacy summary data (still partially used for blend years)

• MAO-004 Files: Confirmed diagnosis-level risk adjustment data

• MMR Files: Reflect all capitation payments, rebates, and adjustments

• MORE Reports: Monthly summaries of model output and risk score derivations

• RADV Results: Overpayment recoveries and deletions integrated post-audit

Together, these ensure that every dollar paid is supported by a valid, auditable diagnosis record.

How CMS Calculates Reconciled Payments

At each model run and reconciliation stage, CMS recalculates payments using this general logic:

Final Payment = (Base Rate + Rebates + Add-ons) × Normalized RAF × (1 − Coding Adjustment)

Where:

• Base Rate: County benchmark or bid rate

• RAF: Derived from the latest RASS output

• Normalization Factor: Adjusts scores so national average = 1.0

• Coding Adjustment: CMS adjustment for documentation patterns across MA vs. FFS

CMS uses MARx to apply these calculations and issue monthly payments reflected in the MMR file.

Reconciliation Triggers and Adjustments

Reconciliations can occur for many reasons:

• Late-submitted or corrected encounters

• Member retroactive disenrollment or death notifications

• Risk score recalculations (post-RASS updates)

• Chart review additions or deletions

• RADV overpayment recoveries

• CMS Cleanup Model Runs

Each event prompts recalculation of risk scores and adjustments in MARx payment streams.

Example: The Flow of Reconciliation

1.  Encounter submitted via EDPS

2. Diagnosis accepted and mapped to HCC

3. RASS model run produces RAF and MOF

4. MARx applies risk score and demographic data to payment

5. MMR reflects updated payment and ARC codes

6. RADV deletes trigger overpayment adjustment

7. Final Model Run reconciles all data sources

The result: each beneficiary’s payment reflects real, validated, and auditable data — nothing more, nothing less.

Why Payment Reconciliation Matters

1.  Financial Accuracy
   Ensures every payment is based on verified diagnoses and correct demographics.

2. Compliance & Transparency
   Aligns plan data with CMS audit requirements (RADV, OIG, and internal audits).

3. Forecasting & Budgeting
   Enables accurate RAF and revenue projections for finance teams.

4. Audit Readiness
   Ensures MAOs can trace every payment to source data and supporting documentation.

5. Operational Integrity
   Encourages proactive data correction and timely submission practices.

Common Reconciliation Challenges

• Late encounter submissions missing cutoff dates

• Improperly linked chart reviews (causing rejected diagnoses)

• Incorrect or missing provider identifiers in EDPS files

• RAPS/EDPS blending confusion (especially during transition years)

• Failure to monitor ARC codes in MMR files

• Unresolved RADV findings not reflected in financial ledgers

Each issue can create discrepancies between CMS-calculated and MAO-expected payments.

Best Practices for MAOs

1. Align Operations and Finance Teams
   Ensure coding, reconciliation, and accounting teams share a unified data view.

2. Automate File Tracking
   Monitor EDPS → MAO-002 → MAO-004 → MMR chain using dashboards.

3. Validate Monthly
   Compare internal RAFs with CMS MORE and MMR outputs.

4. Watch Cleanup Runs
   Cleanup and overpayment runs can trigger unexpected payment shifts — plan reserves accordingly.

5. Leverage Technology
   Use ETL pipelines to link encounter IDs, HCCs, RAFs, and payments end-to-end.

6. Document Everything
   Maintain clear audit trails from ICD-10 codes to payment records.

Key CMS References

• CMS Risk Adjustment Resources

• Medicare Managed Care Manual, Chapter 7: Risk Adjustment

• RADV Final Rule (CMS-4185-F2, 2023)

• RADV FAQs (Contract-Level RADV)

Conclusion

Payment Reconciliation is the finish line of the risk adjustment lifecycle.

From EDPS submissions to RADV recoveries, it’s where every data point meets financial accountability.

Plans that actively track their reconciliation events, validate their CMS outputs, and maintain complete audit documentation are those that thrive — not just survive — under CMS scrutiny.

“Reconciliation ensures every dollar earned is a dollar justified.”

By mastering this process, your organization can confidently connect data, compliance, and dollars — the foundation of sustainable Medicare Advantage operations.

Understanding RADV Audits: CMS Risk Adjustment Data Validation — A Complete Training Guide

Introduction

In Medicare Advantage (MA), risk scores directly drive plan payments — but accuracy is everything.
When CMS suspects that submitted diagnoses may not be fully supported by medical documentation, it initiates a Risk Adjustment Data Validation (RADV) audit.

The RADV audit process ensures that every dollar paid to MAOs aligns with the true clinical documentation in beneficiary medical records.

Understanding how RADV works — from sampling and validation to extrapolation and overpayment recovery — is essential for MA compliance, finance, and risk adjustment teams.

What Is RADV?

Risk Adjustment Data Validation (RADV) is CMS’s audit process used to confirm that diagnoses submitted for risk adjustment are supported by medical records.

The goal:
To verify that Medicare Advantage Organizations (MAOs) receive appropriate payments — not more, not less — based on accurately documented conditions.

RADV audits are required under:

• Social Security Act §1853(a)(1)(C)

• 42 CFR §422.310(e)

CMS performs these audits to detect errors, calculate payment discrepancies, and ensure compliance with risk adjustment data submission and documentation standards.

Types of RADV Audits

1. Contract-Level RADV (CL-RADV)

• Conducted at the contract level (H-number)

• Statistically valid sample of enrollees

• Extrapolation applied across contract payments

• Used by CMS as the primary audit mechanism since PY 2018

2. National RADV (NRADV)

• Nationwide review across multiple plans

• Used for model calibration, research, and quality control

3. Targeted or OIG-Led RADV

• Conducted by the Office of Inspector General (OIG)

• Focused on high-risk areas or conditions showing anomalous coding patterns

RADV Audit Flow: From Start to Recovery

1. Notification

• CMS notifies selected MAOs via official correspondence.

• Each contract receives a sample of enrollees for review.

2. Medical Record Submission

• MAOs submit medical records to the CMS Central Data Abstraction Tool (CDAT).

• Records must be legible, complete, and properly linked to each diagnosis submitted.

• MAOs typically have 12–16 weeks to submit documentation.

3. Validation

• CMS and its contractors review records against the submitted diagnoses.

• Each diagnosis is classified as:

  • Confirmed — Supported by the medical record

  • Discrepant — Documentation mismatch or incomplete

  • Invalid — No support found

  • Confirmed Higher/Lower — Hierarchy or specificity differs

4. Error Rate Calculation

• CMS computes an enrollee-level payment error by comparing the payment-weighted risk scores for confirmed vs. unconfirmed conditions.

5. Extrapolation

• The contract-level error rate is extrapolated from the audited sample to all members under that contract.

• This step began with Payment Year 2018, as finalized under the RADV Final Rule (CMS-4185-F2).

6. Appeal and Recovery

• MAOs may appeal findings within established timelines.

• CMS issues an Extrapolated Overpayment Recovery Notice for confirmed payment errors.

• Payment adjustments follow if no appeal is sustained.

How CMS Calculates Payment Error

Derived from the Payment Error Calculation Methodology (2025 update):

• CMS calculates each enrollee’s difference between original and validated risk scores.

• All enrollee differences are aggregated into a contract-level mean error.

• The mean error is multiplied by the total contract population to determine the estimated total payment error.

• No “fee-for-service adjuster” is applied — CMS now uses actual MA data only.

Formula (simplified):

Payment Error = (Σ Validated RAF - Σ Submitted RAF) / n * Contract Enrollee Count

Preliminary Findings and Discrepancies

During review, each diagnosis receives one of several possible results:

• ✅ Confirmed — Supported exactly as submitted

• ⚠️ Discrepant — Supported by record but coded to a different HCC

• ❌ Invalid — Unsupported diagnosis or incorrect documentation

• ⬆️ Confirmed Higher — More specific diagnosis found (e.g., diabetes with complications instead of unspecified)

• ⬇️ Confirmed Lower — Less specific or downgraded version validated

Each enrollee’s results contribute to the overall sample error rate, which is the foundation for contract-level extrapolation.

The Role of Overpayments & Self-Reporting

Per Section 1128J(d) of the Social Security Act, MAOs must report and return overpayments within 60 days of identification.

If RADV identifies overpayments, plans are required to:

• Validate internally whether additional contracts are affected.

• Correct and report identified overpayments to CMS.

• Maintain documentation demonstrating compliance.

Record Retention and Documentation Standards

Under 42 CFR §422.504(d) and (i), MAOs must:

• Retain supporting documentation for 10 years after the final payment determination.

• Maintain audit-ready records linking each submitted diagnosis to a valid medical record.

• Ensure each record includes patient name, date of service, provider signature, and credentials.

Incomplete or unsigned records are automatically considered invalid for RADV validation.

Sampling and Extrapolation Explained

CMS uses statistically valid sampling methods (as detailed in your uploaded Contract-Level RADV FAQ).

• Each sample is randomly drawn from the contract’s enrollee population.

• Stratification ensures representation across key variables (age, gender, HCC profile).

• Extrapolation applies only to Payment Year 2018 and onward.

CMS no longer applies the “FFS Adjuster” methodology — aligning MA audits more closely with commercial audit standards.

Appeals and CMS Process

1.  Request for Reconsideration (Reopenings)
   MAOs can request review of findings and submit additional documentation.

2. CMS Reconsideration Determination
   CMS issues an official determination following internal review.

3. Hearing Official Review (2nd Level)
   Independent Hearing Official reviews disputes on methodology or evidence.

4. Final Agency Decision
   The CMS Administrator or delegate issues a final decision.

Payment recovery follows, and MAOs must comply with debt collection procedures under 45 CFR Part 30.

Common RADV Error Themes

• Coding without documentation: Diagnoses reported but not supported by the chart.

• Incorrect provider type: Notes signed by unqualified providers.

• Date mismatches: Documentation not matching the service year.

• Illegible or incomplete records: Missing key identifiers or signatures.

• Unsupported hierarchical coding: Submitted at higher specificity than documented.

• Chart Review linkage errors: Missing or mislinked chart reviews to encounters.

Compliance Best Practices

• Maintain clear traceability: ICD → HCC → medical record evidence

• Audit internal submissions monthly against CMS reporting

• Train coders on RADV audit findings and documentation rules

• Automate error tracking from MAO-002 and RADV reconciliations

• Prepare an “Audit Binder” — a consolidated record of all documentation tied to each diagnosis submission

Key CMS References & Tools

• CMS RADV Resources Portal

• RADV Final Rule (CMS-4185-F2, January 2023)

• [RADV Sampling & Calculation Methodology Memo, May 2025]

• [CMS Medicare Managed Care Manual, Chapter 7, §40 – Risk Adjustment Data Validation]

Conclusion

RADV is not just an audit — it’s a system-wide check on data integrity and compliance.

Every plan’s financial accuracy, audit readiness, and CMS reputation depend on maintaining precise, well-documented diagnosis reporting.

In Medicare Advantage, documentation drives payment — and RADV ensures the documentation stands behind every dollar.

By mastering the RADV process — from EDPS submission to extrapolated overpayment reconciliation — your team can stay ahead of compliance risk and build a sustainable, audit-ready risk adjustment operation.

Inside Medicare Advantage 2025 — What’s Changing, What’s Growing, and What It Means for Everyone

The Big Picture: Medicare Advantage’s Unstoppable Momentum

More than 33 million Americans are now enrolled in Medicare Advantage (MA) — and that’s not just a statistic, it’s a transformation.
In 2025, for the first time in history, over half of all Medicare-eligible seniors (54%) are choosing MA over traditional Medicare.

This massive shift reflects more than cost and coverage. It’s about simplicity, access, and personalization.

The latest trends show a program that’s not only growing fast but reaching deeper into underserved populations:

• 52% of enrollees have incomes below $30,000.

• Nearly half identify as racial or ethnic minorities.

• Over 20% are dually eligible for Medicare and Medicaid.

In other words — Medicare Advantage isn’t just expanding. It’s democratizing access to coordinated care.

Why People Choose Medicare Advantage (and Stay)

Let’s face it: navigating traditional Medicare can feel like trying to read a 500-page manual in another language.
Medicare Advantage simplified that — and seniors noticed.

Surveys continue to show that:

• 94% of MA enrollees are satisfied with their coverage.

• 80% report lower out-of-pocket costs.

• 85% say they’re getting better coordinated care than before.

So what’s driving the love?

• Predictable spending: Annual caps on out-of-pocket costs.

• Extra benefits: Dental, vision, hearing, meals, transportation — all rolled in.

• One-stop simplicity: Parts A, B, and D bundled under one plan.

• Preventive focus: Plans are incentivized to keep people healthy, not just treat illness.

The result? Fewer hospitalizations, better chronic disease management, and higher satisfaction year after year.

Equity in Action — A More Inclusive Medicare

Perhaps the most underreported success story of MA is how well it serves diverse and low-income communities.

Recent data highlights how Medicare Advantage plans have:

• Narrowed racial disparities in hypertension control and diabetes management.

• Improved preventive care rates in Black and Hispanic populations.

• Expanded access to telehealth, which jumped over 30% since pre-pandemic levels.

That’s not just a quality story — it’s an equity story.
Traditional Medicare still struggles to reach these populations effectively, but MA’s flexibility and supplemental benefits make it possible.

“Medicare Advantage is closing gaps in care not through slogans, but through structure.”
— Health Data Max Editorial

The Numbers Behind the Growth — Key 2025 Enrollment Trends

A closer look at enrollment data shows where this growth is happening — and who’s driving it.

• One in two Medicare beneficiaries nationwide is now in an MA plan.

• Enrollment is especially concentrated in Florida, Minnesota, Ohio, and Pennsylvania, where MA penetration exceeds 60%.

• Five parent companies — including UnitedHealth, Humana, CVS/Aetna, Kaiser Permanente, and Elevance — account for roughly three-quarters of total MA enrollment.

• Regional and community-based plans continue to thrive, often driving innovations in care delivery and chronic management.

Even as national consolidation grows, competition remains fierce at the local level.
Counties across the U.S. now have dozens of MA plan choices, with some urban areas offering over 60 plans per beneficiary.

Choice is good — but it means CMS has to keep a closer eye on consistency, quality, and oversight.

The Oversight Era — CMS and the Utilization Management Shift

In 2025, CMS added a new layer of accountability through the Medicare Part C Utilization Management (UM) Annual Data Submission.
It sounds bureaucratic — but it’s actually a major modernization move.

Starting with the April 2026 submission cycle, every MA plan must report:

• Which Part C services require prior authorization.

• The coverage criteria used for medical necessity decisions.

• How Part B drugs and specialty procedures are managed.

• Which internal policies differ from national or local coverage determinations (NCDs/LCDs).

CMS will collect this data through the Health Plan Management System (HPMS) — and while they dropped the proposed “audit protocol” for now, that’s likely a temporary reprieve.

“This isn’t another audit—it’s a flashlight. CMS is asking plans to show how the rules are applied, not just if they’re followed.”
— Health Data Max

What’s the goal? Transparency.
CMS wants to make sure medical management aligns with national standards and doesn’t become a barrier to medically necessary care.

What Plans Need to Do — The Operational Checklist

Let’s break this down into practical steps for Medicare Advantage organizations.

By April 2026, plans should:

1. Map internal coverage policies to ensure every prior authorization aligns with CMS criteria.

2. Centralize documentation — build a structured repository for all UM and clinical decision policies.

3. Implement submission workflows through HPMS, tested for compliance.

4. Review denials and appeals to identify systemic inconsistencies.

5. Use automation and AI validation tools to pre-verify data before submission.

Even though CMS paused the audit portion, this requirement essentially turns every submission into an audit-ready file.
Plans that treat it that way will avoid surprises when oversight expands in 2027.

Risk Adjustment, Data Accuracy, and the 2026 Model Transition

While the UM data collection takes center stage in 2025, CMS’s risk adjustment evolution continues in parallel.
The CMS-HCC V28 model is now being phased in fully by 2026, with updated mappings, constrained hierarchies, and normalization adjustments.

That means:

• Diagnoses that used to map to one HCC may now split or share coefficients.

• Average Risk Adjustment Factors (RAFs) may shift downward slightly as coefficients stabilize.

• CMS is gradually transitioning from SAS to Python-based models, modernizing the underlying software and validation process.

“Why the V28 transition matters — It’s not just math, it’s measurement.”

This new environment makes data accuracy a strategic advantage.
Plans that build audit trails from member chart to CMS submission will outperform peers on both payment integrity and compliance confidence.

Where Smart Tech Fits In — Agentic AI in Action

This is where Agentic AI and fine-tuned Large Language Models (LLMs) step into the Medicare Advantage world.

Imagine a system that:

• Reads CMS submission files like an auditor.

• Cross-checks prior authorization criteria with real-time claims and chart data.

• Flags missing HCC support before it ever reaches CMS.

• Summarizes documentation using RADV and MEAT logic automatically.

That’s not science fiction.
It’s how leading risk adjustment platforms, like Health Data Max, are reinventing operational validation.

AI in Medicare Advantage isn’t about replacing people — it’s about replacing blind spots.
It’s the difference between reactive compliance and continuous assurance.

The Future of MA — Smarter, Fairer, and More Transparent

Looking beyond 2025, the trends are clear:

• Enrollment will surpass 35 million by 2026.

• Star Ratings and Quality Measures will evolve to reflect health equity.

• Public transparency dashboards for prior authorization and outcomes will likely appear by 2027.

• CMS will expect plans to use predictive analytics to identify and prevent inappropriate denials.

Medicare Advantage is becoming a smart ecosystem — one that rewards both performance and precision.
The next phase of growth won’t be about adding members; it’ll be about earning trust through clarity and accuracy.

The Takeaway — Bigger Isn’t Enough; Better Is Required

Medicare Advantage 2025 proves two things can be true at once:

• The program is thriving, driving satisfaction and equity like never before.

• It’s also tightening, as CMS and the public expect transparency and fairness in every decision.

The future of Medicare Advantage will belong to organizations that embrace both sides — growth and governance.

“Medicare Advantage continues to deliver on its promise — better outcomes, lower costs, and broader access for America’s seniors.”

And as CMS makes the program more data-driven, that promise only gets stronger.

Resources

2025-State-of-Medicare-Advantage.pdf

FAQs

Q. How is CMS increasing oversight for Medicare Advantage plans?

A: CMS has implemented a Medicare Part C Utilization Management Annual Data Submission requirement. Starting with the 2026 cycle, MA organizations must report, via HPMS, the internal coverage criteria they use to process Part C services that require prior authorization, including policies for Part B drugs. CMS’s stated aim is transparency and alignment with national Medicare coverage standards; while CMS did not finalize an audit protocol in the 2025 rule, the data may inform future oversight activities.

Q. What does the V28 Risk Adjustment model mean for plans?

A: The CMS-HCC V28 model updates ICD→HCC mappings, reorganizes some HCC families (including constrained/coefficient-sharing rules), and revises coefficients and normalization factors. Plans should expect mapping and coefficient changes that can alter RAF calculations; the model is being phased in per CMS guidance and some programs (e.g., PACE) may have special blends. Plans must ensure coding accuracy and maintain end-to-end audit trails.

Q. Why are Agentic AI and LLMs important for Medicare Advantage operations?

A: Agentic AI and fine-tuned LLMs are operational tools (not CMS mandates) that many organizations use to automate validation tasks: cross-checking CMS submission files, reconciling claims and chart documentation, flagging missing HCC support, and generating audit-ready evidence. These technologies can materially reduce manual errors and improve readiness for UM and risk-adjustment submissions — plans should treat them as augmentations to expert review. (CMS encourages accurate, auditable submissions but does not require specific automation approaches.)