Federal Watchdog Agency Finds Medicare Advantage Overpayments for Unsupported Diagnoses

A new report from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) found that Medicare may have overpaid Medicare Advantage (MA) plans by millions for unsupported acute stroke diagnoses.

Coding Abuses and MA Payment

The Centers for Medicare & Medicaid Services (CMS) pays Medicare Advantage (MA) plans a set amount for each enrollee, increasing payments for people who are sicker, as they would be expected to use more health care resources than healthier enrollees do. To arrive at this health status determination, CMS relies on MA plans to collect and submit enrollee diagnosis codes.

These higher payments can help ensure plans cover beneficiaries regardless of health status, but they can also incentivize plans to make their enrollees look sicker than they really are. This may include “upcoding,” the practice of recording diagnoses unsupported by the patient’s medical record.

MA overpayments are on track to reach more than $1 trillion dollars over the next decade.

Coding exploitation is not a new phenomenon. Research from independent experts has long and consistently shown that some MA plans inflate diagnoses. These abuses contribute to the problem of MA overpayments, which are on track to reach more than $1 trillion dollars over the next decade.

Effect on People With Medicare and the General Public

Overpayments to MA plans can worsen affordability for current and future Medicare enrollees. They increase premiums for all beneficiaries—not just MA enrollees. In 2025, MA overpayments drove up Part B premiums by $212 per person, for a total of $13.4 billion. Taxpayers are also affected. Medicare enrollees pay for about 85% of the added premium costs, with the remainder falling on those paying federal (9%) and state (6%) taxes.

OIG Findings

The OIG report notes that some diagnoses, including for acute stroke, are at higher risk of miscoding. To examine this, OIG conducted an audit of the 240,401 MA enrollees whose plans submitted such codes to CMS in 2020, ultimately selecting a stratified random sample of 97 enrollees. OIG found that for 100% of these enrollees, the plan-submitted acute stroke diagnosis codes were not supported by medical records. Based on this prevalence, OIG estimates plans were overpaid by $462 million in 2021 alone. To prevent such abuses and excess payments in the future, OIG recommends that CMS establish processes to better identify problematic submissions.

Policy Solutions

Medicare Rights agrees that stronger oversight is needed. Although proponents of MA argued that it would reduce Medicare expenditures through competition and efficiencies, private Medicare plans have always cost more than the government-run coverage of Original Medicare (OM). Per person, Medicare spending is higher and growing faster for MA beneficiaries than for those with OM, and plan abuses too often go unchecked. The resulting overpayments reward insurers with greater profits but penalize beneficiaries through higher Part B premiums and taxpayers through increased costs, while weakening Medicare’s financial footing. Absent correction, these impacts will only deepen.

CMS has meaningful, if underutilized, tools to address coding abuse.

Medicare Rights urges policymakers to intervene without delay, including by addressing fraud, waste, and abuse within MA. Coding abuse is well documented, and CMS has meaningful, if underutilized, tools to address it. These commonsense reforms are urgent and non-negotiable. More accurate MA payments and enhanced insurer accountability are necessary to ensure ongoing beneficiary access to affordable, high-quality coverage and care.

Read more about Medicare Advantage history, trends, and overpayment.