What the Latest Court Ruling Means for Medicare Advantage Audits

If you get your coverage through a Medicare Advantage plan, you may have seen headlines about a court case involving CMS — the Centers for Medicare & Medicaid Services. CMS is the federal agency that runs Medicare and Medicaid, and it writes the rules that insurance companies must follow.

On Sept. 25, 2025, a federal court in Texas struck down a CMS rule from 2023 that changed how the government audits Medicare Advantage plans. The rule, known as the “RADV rule,” would have let CMS use small samples to estimate much bigger payment errors and recover more money from insurers. The court said CMS didn’t follow the proper steps when it created the rule — so for now, it’s been thrown out.

So, what does this mean for you? The short answer is: nothing changes in your coverage today. But over time, rules like this can affect how much insurers spend, which may influence premiums and extras (like dental or vision). That’s why it’s worth knowing the basics.

Stay up to speed on changes like this by registering a BenefitKarma account ASAP.

First, some quick definitions:

• CMS (Centers for Medicare & Medicaid Services): The federal agency that oversees Medicare and Medicaid.

• Medicare Advantage (MA): Private health plans that cover Medicare Part A and B benefits, often with extras.

• RADV audit (Risk Adjustment Data Validation): A check CMS does to make sure diagnoses used to set plan payments are backed by medical records.

• Extrapolation: Looking at a small sample of records and applying that error rate to the entire plan.

• FFS (fee-for-service) adjuster: A past offset CMS used to keep audits fair when comparing Medicare Advantage to traditional Medicare data.

What were the audit rules before 2023?

For years, CMS ran RADV audits in a much narrower way:

• Checked individual diagnosis codes: If a member’s medical record didn’t back up a diagnosis, CMS took back that specific payment.

• Did not extrapolate to the whole plan: Recoveries were tied only to the audited cases, not the entire contract.

• Used the FFS adjuster: This offset recognized that traditional Medicare’s data isn’t double-checked against medical records either, so it kept Medicare Advantage from being held to a stricter standard.

This meant audits were smaller in scale, and plans faced limited financial exposure compared to what CMS later proposed.

Why did CMS want to change it?

CMS believed the old approach was leaving money on the table. Because audits only recouped money from specific cases, the government argued it was missing out on billions in overpayments.

The 2023 rule was designed to:

• Use extrapolation: Apply findings from a small sample across an entire plan, multiplying the financial recovery.

• Remove the FFS adjuster: CMS said the offset wasn’t necessary anymore and that keeping it would create unfair differences between audited and non-audited plans.

Insurers like Humana pushed back hard, arguing these changes would lead to systematic underpayment and could hurt beneficiaries through higher costs or reduced extras.

What did the court decide?

The court ruled that CMS didn’t give the public fair notice before finalizing the 2023 audit rule. Here’s why that matters:

Federal agencies must go through “notice-and-comment” when they make new rules. That means publishing a draft, explaining the reasons behind it, and letting the public weigh in. The final rule has to be a logical outgrowth of the draft.

In this case, the judge found that CMS changed its reasoning at the last minute. The final rule relied on new justifications that the public never had a fair chance to comment on. That violates the law.

Because of this misstep, the court vacated (canceled) the 2023 RADV rule and sent it back to CMS. CMS can appeal to a higher court or start over with a new proposal, but for now, the 2023 audit framework is not in effect.

Is this ruling good or bad for Medicare Advantage members?

In the short term, it’s mostly good news:

• The court’s decision stops CMS from using a rule that could have led to big, plan-wide clawbacks.

• That eases financial pressure on insurers right now, which makes it less likely they’ll cut extras (like dental, vision, or grocery cards) or raise premiums immediately.

• Your 2025 coverage is safe and unchanged.

In the long run, it’s more complicated:

• If CMS can’t recover money as aggressively, critics say some overpayments may stay in the system. That can drive up Medicare costs overall, which could lead to higher taxpayer spending or future premium increases for everyone.

• CMS may also come back with a new version of the rule — one that could still increase audit recoveries, just in a way that passes legal muster.

What does this mean for you?

• Your plan today: No change to your coverage or costs.

• Your benefits next year: Still determined by your Annual Notice of Change (ANOC) and the Fall Open Enrollment process.

• Long term: If CMS rewrites the rule or wins on appeal, it could affect how insurers budget, which may influence premiums or extras in future years.

What you should do now?

• Read your Annual Notice of Change (ANOC) letter: This outlines changes to your plan for the next year.

• Compare during open enrollment: Look at premiums, copays, and extras you actually use.

• Keep your paperwork: Save your Explanation of Benefits (EOBs) and plan letters in case you need to appeal a claim.

FAQs

Does this change my 2025 coverage?
No. Your plan benefits and costs stay the same.

Can CMS still audit plans?
Yes. CMS can still do audits, but it can’t use the now-vacated 2023 framework as written.

Will my premiums go up or down?
Not immediately. Future prices may shift once CMS decides its next move.

Do I need to call my plan?
No. Unless you get a letter asking you to, there’s nothing you need to do.