Risk adjustment is now a high-stakes revenue and compliance priority for Medicare Advantage CFOs, Compliance Leaders, and Value-Based Care Program Directors. 

The HHS Office of Inspector General (OIG) found error rates as high as 96% for certain high-risk diagnosis codes such as acute stroke and breast cancer, highlighting the scale of financial exposure. 

Combined with CMS v28 changes and intensifying RADV audits, the compliance stakes have never been higher.

This isn’t academic, it’s about protecting millions in revenue and avoiding penalties.

The Compliance Reality for Healthcare Leaders

Executives face two urgent challenges:

• RADV audits & OIG oversight – More frequent, data-driven, and targeting specific code groups.
• CMS v28 changes – Thousands of ICD-10-CM codes removed, HCC categories restructured, phased in as:
  • 2024: 67% v24 + 33% v28
  • 2025: 33% v24 + 67% v28
  • 2026: 100% v28

Failure to adapt quickly risks immediate revenue loss and long-term compliance issues.

Source: https://oig.hhs.gov/

What is Risk Adjustment?

Risk adjustment predicts patient healthcare costs using demographics and diagnosis coding, converting them into a risk score. 

Higher scores = higher expected costs and higher payments from CMS. It ensures fair compensation for plans managing sicker populations.

 Recommended Read: New CMS Rules That Are Redefining Risk Adjustment

Why Risk Adjustment Matters to Executives

• Financial impact: Missed HCCs can cost millions annually.
• Market stability: Prevents cherry-picking of healthy patients.
• Compliance risk: Unsupported codes trigger paybacks after RADV audits.
• Value-based care alignment: Accurate risk capture underpins fair benchmarks.

What is Risk Adjustment Factor in Health Care?

The risk adjustment factor (RAF) is recalculated annually based on:

• Accurate HCC coding
• Demographics (age, sex, disability)
• Annual recapture of chronic conditions

Every RAF point matters – CMS has projected RADV audits could recover billions by 2030 (CMS Fact Sheet).

What Causes Risk Scores to Drop?

• Missing diagnoses in reporting year
• Coding errors or unsupported codes
• Chronic conditions not redocumented annually

Risk Adjustment Audits 

Risk adjustment data validation (RADV) audits verify diagnosis codes are supported by medical records. OIG found up to 96% error rates in some code categories. 

The result? Payment clawbacks, public audit findings, and tighter scrutiny.

 Recommended Read:  OIG Semiannual Report 2025

 

Role of AI in Risk Adjustment

AI is no longer a nice-to-have. It’s the engine driving accuracy, compliance, and speed in modern risk adjustment. 

In today’s audit-heavy landscape, real-time insights and automated validation are critical to protecting both revenue and reputation.

AI enables:

• Mining structured/unstructured data for undocumented HCCs
• Validating documentation for compliance
• Predicting RAF score impacts pre-audit
• Automating encounter-to-claims reconciliation

Why RAQ+ is Different

For executives facing tighter audits and shrinking margins, the real question is not whether to adopt AI, but which solution can deliver measurable compliance and revenue protection.

While many tools offer partial automation, Bulwark’s RAQ+ delivers:

• 100% in-year HCC recapture
• Documentation validation for audit-proof compliance
• Concurrent risk adjustment to reduce costly retrospective reviews
• Encounter data reconciliation for real-time alignment
• Population health integration with quality measures, risk stratification, and care gap closure
• Performance dashboards for RAF, quality, and STARS tracking

Impact:

• Increase in productivity
• Reduction in clinician burden
• Administrative expense cut
• Care gaps closed in the same year

Book a Demo with Bulwark to see how RAQ+ suits your custom needs.

3 Next Steps for Executives

Taking action now can prevent both revenue leakage and compliance pitfalls. 

Each of these steps is designed to give executives clarity and control over their risk adjustment strategy.

• Audit your RAF trends: Identify year-over-year drops and pinpoint the specific drivers behind them, from missed codes to demographic shifts.
• Assess your HCC gap closure rate: Anything under 95% signals lost revenue; also review which provider groups or regions are underperforming and why.
• Schedule a RAQ+ demo: See how AI can close compliance and revenue gaps, and explore specific workflows tailored to your organization’s value-based care goals.

Conclusion

Risk adjustment is a compliance and financial survival strategy. 

With RADV audits, OIG oversight, and CMS v28 changes, inaction means direct revenue loss.

RAQ+ provides the AI-driven accuracy, speed, and compliance readiness needed to thrive in this environment.

If protecting revenue and staying audit-proof is on your agenda, Book a Demo with Bulwark today.