In 2023, OIG found an estimated $7.5 billion in MA risk-adjusted payments. That stat alone should make every Medicare Advantage (MA) plan executive pause.
In May 2025, CMS dropped its Spring RADV Memo, shaking up the landscape for risk adjustment audits.
Whether you’re a compliance lead, MA plan leader, or health tech decision-maker, this memo is more than regulatory noise, it’s a roadmap to how CMS will be sampling and scrutinizing your data.
Let’s break it down: what changed, why it matters, and how to prepare for it using AI-driven tools like RAQ+ by Bulwark.
When Do RADV Audits Come In
Risk adjustment is the method CMS uses to ensure fair payment across Medicare Advantage plans. The goal: compensate plans based on the health status of the members they serve.
Sicker populations should generate higher reimbursements. Healthier ones, less. That fairness, though, hinges on one thing: accurate documentation of chronic and acute conditions.
Each diagnosis captured by a provider is mapped to a Hierarchical Condition Category (HCC), which contributes to a member’s Risk Adjustment Factor (RAF) score.
If a condition isn’t captured or is poorly documented plans get paid inaccurately.
That’s where RADV audits come in.
How does risk adjustment work in healthcare?
Every diagnosis captured by providers turns into a Hierarchical Condition Category (HCC). These HCCs are used to calculate a member’s Risk Adjustment Factor (RAF) score, a metric that ultimately determines reimbursement.
If the documentation is wrong? Your plan could face massive clawbacks from CMS during RADV audits.
So yes, the stakes are high.
What is the latest cms RADV memo about?
CMS’s Spring 2025 RADV memo outlines a refined methodology for how RADV sampling will occur. Here’s what’s new:
- Stratified Sampling: CMS will focus on segments with historically high error rates (e.g., specific HCCs or provider types).
- Payment Year Alignment: Sample selection will more directly align with payment years to reflect real-timperformance.
- Error Weighting: Errors will now be weighted by financial impact meaning a missed major HCC could have a higher penalty than before.
Role of AI in risk adjustment
Traditional RADV prep is a nightmare: manual audits, siloed EMR systems, and mountains of PDFs. That’s where AI comes in.
AI helps by:
- Flagging documentation gaps before CMS does
- Identifying missed HCCs using NLP (Natural Language Processing)
- Prioritizing high-impact errors for audit readiness
Platforms like Bulwark’s RAQ+ aren’t just digital filing cabinets, they’re proactive compliance tools. You don’t just react to RADV audits. You get ahead of them.
How Bulwark helps with risk adjustment
RAQ+ was built for this moment. Here’s how it supports Medicare Advantage plans:
- Real-Time HCC Validation: Ensures claims are supported with valid documentation before submission
- RADV Simulation Engine: Run mock audits using CMS’s latest sampling logic
- Provider Education Tools: Pinpoint providers with recurring documentation gaps
- Stratified Reporting Dashboards: Visualize audit risk by HCC, region, or provider group
RAQ+ lets you shift from defensive to offensive in your risk adjustment strategy.
FAQs
1. What is RADV sampling in Medicare Advantage?
It’s how CMS selects a subset of members for audit to validate risk-adjusted payments.
2. How has the 2025 CMS RADV memo changed sampling?
CMS now uses stratified, error-weighted sampling aligned with payment years.
3. What are the consequences of a failed RADV audit?
Overpayments must be returned and CMS may expand the sample.
4. What tools can help with RADV audit prep?
AI-powered solutions like RAQ+ identify HCC gaps and simulate audit outcomes.
5. How often do RADV audits occur?
CMS selects plans annually, focusing on those with high risk scores or outliers.
6. Can AI improve risk adjustment accuracy?
Absolutely. It streamlines validation, highlights documentation issues, and improves compliance.
7. Is risk adjustment only relevant to Medicare Advantage?
No Medicaid managed care and ACA plans also use risk adjustment models.
Conclusion
Let’s be real: CMS isn’t slowing down. With $23 billion in improper payments on the line, RADV audits are only getting sharper and more punitive.
If your current RADV prep still involves If you’re still relying on spreadsheets and blind hope, it’s time to evolve. With RAQ+, Medicare Advantage leaders can finally shift from last-minute audit panic to long-term strategic control.
Don’t wait for the audit letter to hit your inbox.
Book a demo with Bulwark and get RADV-ready the AI-powered way.
