CMS’ Scrutiny is Intensifying. Is Your Medicare Advantage Plan Ready?

For years, Medicare Advantage (MA) plans could absorb a poor audit, a low Star rating, or a claims backlog in isolation. In 2026, these three pressures are converging, and the Centers for Medicare & Medicaid Services (CMS) is no longer treating audits as occasional check-ins.

The financial logic behind this shift is straightforward: The CMS believes a material share of MA risk-adjustment payments each year rests on diagnosis data that plans cannot fully support, and it intends to close that gap. For a health plan, that turns coding accuracy from a documentation exercise into a direct line to the balance sheet.

At the same time, Star rating performance now carries a real financial swing in either direction. A single Star rating point can move tens of millions of dollars in quality bonus payments and member retention for a plan of meaningful size.

Yet in the past two years, Star ratings have also proven more volatile than plans assumed, with a wide swath of the MA industry seeing ratings decline or stagnate rather than improve. Add medical loss ratios that have climbed since 2023, and the room for error in claims and coding has almost disappeared.

Medicare Advantage plans still treating audit exposure, Star rating volatility, and margin compression as separate issues are already losing ground. The plans pulling ahead are approaching them as one integrated challenge, covering audit readiness, coding accuracy, and claims velocity. This approach is what protects margin and drives Star ratings up.

The Triple Pressure on MA Plans: Audits, Margins, and Claims Velocity

Medicare Advantage plans are under simultaneous pressure from three sources, each threatening margin and operating continuity.

Challenge 1: RADV Audit Risk is Accelerating

CMS has moved from auditing a small, rotating sample of plans to a near-universal audit posture, with all eligible Medicare Advantage plans now facing annual review. To support this expansion, CMS has scaled its team of coders from 40 to roughly 2,000 and is layering in AI tools to flag unsupported diagnoses faster than ever before. Under this accelerated model, plans face audit exposure continuously, with 2026 Payment Year audits already underway.

The financial exposure is staggering. CMS’ own estimate puts unsupported diagnosis overpayments at approximately $17 billion annually across the industry. For any single plan, an audit finding at that scale is no longer a routine compliance cost, but a direct hit to the bottom line, and is increasingly a board-level conversation.

The 2027 draft payment rule adds another layer of risk: CMS proposes excluding chart reviews from risk scoring, eliminating the financial incentive for plans to code diagnoses members are not receiving care for. This closes one common audit finding, but plans must now prepare for tighter documentation standards and potential records of historical submissions.

Challenge 2: Star Rating Volatility and Margin Compression

The Star rating system is the financial engine of Medicare Advantage. A single-star improvement can increase a plan’s revenue by millions of dollars (depending on size) through quality bonus payments and member retention. Conversely, a single-star decline can be catastrophic.

Yet most MA plans saw their Star ratings decline or stagnate from 2024 to 2025, and a key trend in 2026, as stated by , is the difficulty of attaining four or more stars. This is not random; it reflects industry-wide coding challenges, care coordination gaps, and customer service metrics, which now feed directly into a rating that can swing a plan’s revenue in either direction.

That leaves no room for slack elsewhere. Plans can no longer offset a soft Star rating by simply growing membership. The economics now demand precision: clean claims, accurate coding, and consistent care coordination, all at once.

Meanwhile, medical cost trends across the industry have continued to climb, tightening the margin available to absorb any missteps in claims or coding. Plans that once had room to be a step slow on accuracy no longer do.

Challenge 3: Claims Inventory Backlogs Threaten Audit Readiness

Growing claims backlogs create four problems simultaneously.

• First, cash flow slows. Unpaid claims become aging receivables and members remain unsatisfied.
• Second, audit risk increases. Unprocessed claims are a red flag for auditors.
• Third, Star rating metrics plummet. Late claims processing correlates with member satisfaction penalties.
• Fourth, coding accuracy suffers. Claims processed in high-volume triage mode are more likely to contain errors.

For MA plans facing concurrent RADV audits, this is a poor position. Discovery of material claims inventory backlog during audits can suggest systemic processing problems, which then invites a deep-dive review of claims accuracy and coding practices.

The backlog that started as a temporary operational problem now becomes audit evidence of systemic control failures.

Three Strategic Imperatives for RADV Readiness

Leading MA plans are responding with three interconnected strategies: audit preparation, claims accuracy, and operational velocity.

• First, audit preparation as a permanent capability. Plans that wait for audit notices to begin preparation are already losing.

  The best-prepared plans have permanent audit-readiness teams that continuously review claims and documentation against RADV standards, flag high-risk diagnoses, verify supporting medical records, and maintain detailed audit work papers.

  This means plans know their own exposure before CMS does. Some plans are requesting voluntary audits on specific diagnosis codes or member cohorts to surface and correct issues before CMS audits them. This shifts the narrative from ‘We were caught’ to ‘We found and fixed it ourselves.’

• Second, coding accuracy and documentation standards. The industry best practice is now moving toward ‘conservative coding’, capturing legitimate diagnoses that members are actually receiving care for, but avoiding marginal or unsupported codes that create audit risk.

  This may temporarily reduce risk adjustment revenue, but it eliminates millions in potential audit exposure. Plans implementing conservative coding, combined with intensive medical records review, are significantly reducing audit findings.

• Third, claims processing velocity and inventory discipline. Claims backlogs are incompatible with audit preparation. Plans must prioritize claims processing speed, which means investing in automation, shared services, and dedicated staffing for high-volume periods.

  The operational standard is 30–45 days from claim submission to final payment; anything longer is both an audit risk and a Star rating risk. This requires significant operational discipline and often external partnerships to handle volume fluctuations.

  These three capabilities reinforce each other. A plan executing all three has a defensible audit position, maintains Star rating performance, and protects margin. A plan skipping any one of the three will struggle.

The Audit and Operations Partner: Managing Risk at Scale

Building permanent audit-readiness, conservative coding, and claims velocity capabilities in-house is a major operational undertaking.

It requires medical director time, dedicated compliance staff, and claims operations leadership that many plans had not needed to fully build out at this scale before now. A partner specializing in RADV audit support and claims operations closes that gap without the plan taking on that infrastructure directly.

In practice, this looks like three connected capabilities:

• First, continuous chart-level review: Cross-referencing and cleaning electronic health records so that every documented diagnosis is backed by medical necessity, before an auditor ever asks for it.
• Second, pre-payment claims verification: Validating provider billing against CMS guidelines before funds leave the plan, rather than recovering errors after the fact.
• Third, workforce extension for the high-volume administrative load that RADV readiness creates: Enrollment data validation, provider credentialing, and documentation review, handled through a blended delivery model built for scale.

The result is a plan that stays lean on fixed headcount while gaining a defensible audit position, cleaner claims, and improved operational efficiency across the functions RADV audits scrutinize most closely.

Conclusion

Every health plan CFO and COO knows what happens when three warning lights come on at once. In Medicare Advantage today, they have: audit exposure, Star rating volatility, and margin compression, all flashing simultaneously. Look closely, and all three trace back to the same operational root: how fast and how accurately a plan processes claims and documents diagnoses.

This is, in one sense, good news. A problem with one root cause has, essentially, one fix. Plans that treat audit readiness, coding accuracy, and claims velocity as three disconnected tasks will keep firefighting all three.

Plans that build them as a single, permanent operating discipline get something more valuable than compliance; they get predictability in their margin, in their Star rating trajectory, and in how they walk into their next CMS audit.

That distinction, reactive versus prepared, is what will separate the Medicare Advantage plans that protect profitability over the next several years from the ones still explaining variance to their board.

For plans weighing how to build that readiness, whether in-house or through an operational partner, the conversation is already underway, including at this year’s Medicare Advantage Strategy Summit.

Silverskills brings over 25 years of experience in helping clients navigate complex, high-stakes operational demands, with deep industry knowledge built around the healthcare payer landscapes MA plans operate in. That experience shows up in our client-centric approach: solutions built around each organization’s specific requirements, not a one-size-fits-all model.

If you’re attending the Summit and would like to meet our leaders, or want to explore what a streamlined operating discipline could look like for your organization, connect with us today.