Medicare Advantage Compliance Audit - Priority Health Diagnosis Codes

HHS OIG Reports

Filed March 31st, 2026

Detected April 2nd, 2026

Summary

HHS OIG completed a compliance audit of Priority Health (Contract H2320) examining diagnosis codes submitted for Medicare Advantage risk adjustment. The audit found that 252 of 300 sampled enrollee-years had medical records that did not support the submitted diagnosis codes, resulting in $828,010 in net overpayments for the sample. Extrapolating to the full population, OIG estimated Priority Health received at least $4.4 million in net overpayments for 2018 and 2019. Priority disagreed with the findings and recommendations.

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What changed

HHS OIG audited Priority Health's submission of diagnosis codes to CMS for use in Medicare Advantage risk adjustment. Reviewing 300 sampled enrollee-years, OIG found 252 cases where medical records did not support the submitted diagnosis codes, resulting in $828,010 in net overpayments for those sampled cases. Based on statistical extrapolation, OIG estimated Priority Health received at least $4.4 million in net overpayments for 2018-2019. Priority Health's policies and procedures to prevent, detect, and correct noncompliance with CMS requirements could be improved.\n\nHHS OIG recommends Priority Health refund the $4.4 million in estimated net overpayments, identify similar instances of noncompliance occurring after the audit period and refund any resulting overpayments, and enhance compliance procedures to ensure high-risk diagnoses comply with Federal requirements when submitted for risk adjustment. Priority Health disagreed with the findings and all recommendations. CMS is listed as the HHS agency involved.

What to do next

Refund the estimated $4.4 million in net overpayments to the Federal Government
Identify similar instances of noncompliance with high-risk diagnosis codes occurring after the audit period and refund resulting overpayments
Enhance compliance procedures to ensure diagnosis codes at high risk for being miscoded comply with Federal requirements when submitted to CMS for risk adjustment

Penalties

Refund of $4.4 million in estimated net overpayments recommended; non-compliance with Federal requirements for diagnosis coding in Medicare Advantage program

Source document (simplified)

Medicare Advantage Compliance Audit of Specific Diagnosis Codes That Priority Health (Contract H2320) Submitted to CMS

Issued on

03/31/2026

| Posted on

04/02/2026

| Report number: A-07-22-01208

Report Materials

Why OIG Did This Audit

Under the Medicare Advantage (MA) program, CMS makes monthly payments to MA organizations based in part on the health status of the enrollees being covered.
To determine the health status of enrollees, CMS relies on MA organizations to collect diagnosis codes from their providers and submit these codes to CMS. Some diagnoses are at higher risk for being miscoded, which may result in overpayments from CMS.
This audit of Priority Health (Priority) is part of a series of audits in which we are reviewing high-risk diagnosis codes that MA organizations submitted to CMS for use in its risk adjustment program.

What OIG Found

Most of the selected diagnosis codes that Priority submitted to CMS for use in CMS’s risk adjustment program did not comply with Federal requirements.

For 252 of the 300 sampled enrollee-years, medical records did not support the diagnosis codes and resulted in $828,010 in net overpayments.
On the basis of our sample results, we estimated that Priority received at least $4.4 million in net overpayments for 2018 and 2019. As demonstrated by the errors found in our sample, Priority’s policies and procedures to prevent, detect, and correct noncompliance with CMS’s program requirements, as mandated by Federal regulations, could be improved.

What OIG Recommends

We recommend that Priority:

refund to the Federal Government the $4.4 million of estimated net overpayments;
identify, for the high-risk diagnoses included in this report, similar instances of noncompliance that occurred after our audit period and refund any resulting overpayments to the Federal Government; and
continue its examination of its existing compliance procedures to identify areas where improvements can be made to ensure that diagnoses that are at high risk for being miscoded comply with Federal requirements (when submitted to CMS for use in CMS’s risk adjustment program) and take the necessary steps to enhance those procedures. Priority disagreed with some of our findings and all of our recommendations.

Report Type Audit HHS Agencies Centers for Medicare and Medicaid Services Issue Areas Contracts Financial Stewardship Managed Care Target Groups Elderly Financial Groups Medicare C