Unlinked Chart Reviews

The CY 2027 advance notice proposed a net payment increase of 0.09%, but the number that matters more is $7.2 billion. That is CMS’s estimate of the payment reduction that would result from excluding diagnoses found through chart review records that are not linked to a specific beneficiary encounter. It is the largest single-mechanism payment reduction CMS has proposed in the history of the Medicare Advantage program. It is also, in CMS’s own framing, not a reduction at all. It is the elimination of payments for diagnoses that were never validated by a clinician during a face-to-face visit.

The chart review exclusion did not emerge from a vacuum. HHS OIG published findings in 2019 estimating $2.7 billion in potential overpayments from unlinked chart review records in 2017 alone. A follow-up OIG report in 2024 estimated $7.5 billion in increased MA payments from health risk assessments where no follow-up care, procedures, or tests were provided to 1.7 million enrollees. A Health Affairs study published in July 2024 found that encounter-based risk scores for MA enrollees were 7.4% higher when in-home health risk assessments and chart reviews were included than they would have been without those mechanisms. MedPAC’s March 2024 Report to Congress estimated that CMS pays roughly 20% more for MA enrollees than comparable beneficiaries would cost in Traditional Medicare, a differential that amounts to an estimated $84 billion in 2025, with approximately $40 billion attributable to coding differences.

On January 15, 2026, eleven days before the advance notice dropped, the Senate Judiciary Committee released a report based on Senator Grassley’s investigation of UnitedHealth Group, concluding that UHG had turned risk adjustment into a profit-centered strategy through aggressive diagnosis-capture tactics and AI-driven coding capabilities. One day before that, DOJ announced that Kaiser Permanente affiliates had agreed to pay $556 million to resolve False Claims Act allegations that they submitted unsupported diagnosis codes for MA beneficiaries, the largest FCA settlement involving MA risk adjustment fraud in the statute’s history. The policy and enforcement trajectories converged in the same two-week window. The chart review exclusion is where they landed.

What Chart Reviews Are and How They Work

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Medicare Advantage plans are paid through risk-adjusted capitation. CMS assigns each enrolled beneficiary a risk score derived from demographic characteristics and Hierarchical Condition Category codes mapped from ICD-10 diagnosis codes submitted by the plan. A beneficiary with diabetes, heart failure, and COPD generates a higher risk score than a demographically similar beneficiary with no chronic conditions, and the plan receives proportionally higher monthly capitation for that person. The higher the risk score, the higher the payment.

Chart reviews are a retrospective documentation process. Plan-contracted coders, clinical abstractors, or third-party review companies examine medical records at provider offices to identify diagnoses documented in the clinical record but not submitted on claims or encounter data tied to a specific visit. The “unlinked” distinction is the critical one: an unlinked chart review record identifies a diagnosis found in the medical chart that is not associated with a face-to-face encounter where the provider assessed and managed that condition. The diagnosis may appear in a problem list, a historical note, a prior hospitalization summary, or a specialist consultation from a previous year. It exists in the chart. But no provider evaluated the patient for that condition during a documented visit in the relevant payment year.

The revenue logic is straightforward. Every HCC code captured through chart review and submitted to CMS via a chart review record generates incremental risk-adjusted capitation. A single HCC for a condition like vascular disease, major depression, or diabetes with chronic complications can add hundreds or thousands of dollars in annual capitation for one beneficiary. Multiply that across millions of enrollees, and chart reviews become a multi-billion-dollar revenue stream.

This created an industry. Third-party coding companies built their entire business model around retrospective chart extraction for MA plans. In-house coding operations at the largest insurers grew to thousands of staff dedicated to chart review workflows. Provider organizations entered into contracts with plans to facilitate chart access, often with financial incentives tied to the volume or revenue impact of diagnoses identified. The coding vendor ecosystem, estimated to include dozens of national and regional firms, exists because retrospective chart review became one of the highest-return-on-investment activities available to an MA plan.

The legitimacy of chart reviews operates on a spectrum. At one end sits genuinely appropriate clinical documentation improvement: a provider is actively managing a patient’s COPD but failed to document it with sufficient specificity on a particular claim, and a chart review identifies the documentation gap so the provider can address it at the next visit. This is coding accuracy work. It closes a gap between what the provider knows clinically and what the administrative record reflects.

In the middle sits a gray zone: a diagnosis appears in the chart from a prior year, the patient has not been seen for that condition recently, and the chart review flags it for potential resubmission. The diagnosis may still be clinically active, or it may have resolved. No provider has made that determination in the current period.

At the far end sits the practice CMS and OIG have flagged as problematic: capturing diagnoses from old records, problem lists, historical notes, or incidental documentation that do not reflect conditions the provider is currently treating. The OIG’s 2024 report found that 1.7 million enrollees had diagnoses added through health risk assessments with no subsequent follow-up visits, procedures, or tests, suggesting either that the diagnoses were inaccurate or that enrollees were not receiving appropriate care for conditions their plans were being paid to manage. Thirteen conditions drove 75% of the $7.5 billion in risk-adjusted payments, led by vascular disease ($967 million), major depressive disorders, immunity disorders, morbid obesity, and COPD.

What CMS Is Proposing and Why

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The exclusion rule is technically simple. Starting in CY 2027, CMS will exclude from risk score calculation any diagnosis submitted through a chart review record that is not linked to a specific beneficiary encounter. “Linked” means the diagnosis was assessed by the provider during a documented face-to-face visit and submitted through encounter data or claims tied to that visit. MA organizations may continue to submit diagnoses using unlinked chart review records. CMS will accept the data. But those diagnoses will no longer count toward the risk score that determines capitation payment.

CMS also proposes to exclude diagnoses from audio-only telehealth encounters from risk adjustment, further narrowing the documentation channels that generate payment-eligible diagnoses.

The rationale tracks the enforcement and oversight trajectory that preceded it. Risk scores should reflect conditions providers are actively managing during encounters, not conditions that exist in historical documentation. Unlinked chart reviews inflate risk scores beyond what the beneficiary’s actual care utilization justifies. CMS Director of Medicare Chris Klomp articulated this position directly after the advance notice release: the agency does not want risk adjustment to function as a source of competitive advantage. Its purpose is preventing adverse selection, not maximizing revenue.

The $7.2 billion estimate reflects CMS’s actuarial projection of the payment difference between including and excluding unlinked chart review diagnoses from risk scores across the full MA population. The actual savings will depend on plan behavioral response. Plans will attempt to convert some portion of currently unlinked chart review activity into encounter-linked processes, reducing the realized savings below the gross estimate. How much of the $7.2 billion CMS actually recovers depends on how quickly and effectively plans can restructure their documentation workflows, a question addressed below.

The estimate also interacts with the coding pattern adjustment. The 5.9% CPA already reduces MA payments to account for the aggregate coding intensity differential between MA and Traditional Medicare. The chart review exclusion targets a specific mechanism within that differential that the CPA was not designed to fully capture. The two adjustments are cumulative. Plans absorb both simultaneously, which is why the combined payment impact is more severe than either adjustment alone suggests.

Who Is Most Exposed

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The chart review exclusion does not affect all plans equally. Exposure varies directly with how much of a plan’s risk-adjusted revenue derives from unlinked retrospective reviews rather than encounter-based documentation.

National carriers with large MA footprints and mature chart review operations face the most significant revenue compression. The Senate Judiciary Committee’s January 2026 investigation of UnitedHealth Group documented extensive diagnosis-capture infrastructure including data-mining tools, provider query systems, and AI-driven coding capabilities designed to identify submittable diagnoses from chart data. UnitedHealth holds roughly 30% of national MA enrollment. The dollar exposure scales with enrollment and chart review intensity together. Analyst estimates have flagged CVS Health’s Aetna unit as particularly exposed, with Mizuho noting that unlinked chart reviews may touch an outsized share of Aetna’s MA enrollee population relative to competitors. Humana’s exposure is proportional to its 17% national enrollment share and its documentation practices, though less granular public data is available on Humana’s chart review intensity relative to UnitedHealth and CVS.

The vendor ecosystem faces an existential question. Third-party chart review companies built their business around retrospective diagnosis extraction. If unlinked chart reviews no longer generate risk-adjusted payment, the service they sell has lost its primary revenue justification for plan customers. Some vendors will pivot toward encounter-based documentation support, prospective coding education, and clinical documentation improvement consulting tied to point-of-care workflows. Others, particularly firms whose sole product is retrospective chart abstraction, face revenue collapse. The workforce built around chart review, which includes coders, clinical abstractors, chart retrieval specialists, and review coordinators, numbers in the tens of thousands nationally.

Provider organizations that contracted with plans to facilitate chart reviews face pressure from both directions. Plan payments decrease because unlinked chart review diagnoses no longer generate capitation. Provider contract revenue from chart review facilitation decreases because plans will restructure or terminate those contracts. Health systems and physician groups that built clinical documentation improvement programs around chart review support will need to redirect that infrastructure toward encounter-based documentation completeness, a different operational capability that requires different workflows, training, and technology.

The CDI Compliance Line

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The chart review exclusion draws a clearer line between legitimate clinical documentation improvement and problematic diagnosis capture than prior CMS guidance provided. Understanding where that line falls is an operational necessity for every MA plan and provider organization with a CDI program.

Legitimate CDI operates within the encounter. It involves reminding a provider that a patient’s diabetes or heart failure should be assessed and documented during an annual wellness visit if the condition is still clinically active. It means ensuring providers understand the documentation specificity required for HCC mapping, so that a provider who is clinically managing diabetes with chronic kidney disease stage 3 documents at that specificity level rather than coding only “diabetes” generically. It includes coding education on HCC classification rules so providers document what their clinical assessment actually supports.

What crosses the line is separable from CDI by the role of the provider’s independent clinical judgment. Presenting providers with pre-populated diagnosis lists generated by the plan’s coding analytics and asking them to confirm or add codes without conducting an independent clinical assessment is not CDI. Directing providers to document diagnoses they did not independently evaluate during the visit is not CDI. Creating financial incentives for providers to add diagnoses based on plan-directed coding prompts rather than their own clinical determination is not CDI. Using retrospective chart data to generate lists of diagnoses the provider should “recapture” at the next visit, regardless of whether the provider independently concludes those conditions are clinically active, is not CDI. It is diagnosis capture for payment purposes.

The enforcement landscape reinforces the line. Of 44 managed care audits conducted by HHS OIG since 2017, 42 have focused on accurate diagnosis coding. DOJ’s FCA enforcement in the MA space has accelerated dramatically. FY 2025 produced a record $6.8 billion in total FCA settlements and judgments, with healthcare accounting for over $5.7 billion and MA risk adjustment as a stated priority lane. The Kaiser Permanente settlement ($556 million, January 2026) involved allegations of data mining to identify unsubmitted diagnoses and provider queries encouraging addenda to medical records months to more than a year after patient visits. The Independent Health settlement ($98 million, February 2025) resolved allegations of invalid diagnosis codes submitted through retrospective chart reviews and physician queries. The Seoul Medical Group settlement ($62 million, March 2025) involved false spinal-condition coding. The Cigna settlement ($172 million, 2023) addressed chart review and in-home assessment practices.

The DOJ-HHS FCA Working Group, relaunched in July 2025, identified MA risk score integrity as its first priority lane. CMS Administrator Oz stated during his confirmation hearing that combating upcoding would be a priority. The No UPCODE Act, reintroduced in March 2025, would prohibit coding submissions from chart reviews and health risk assessments entirely if enacted. The legislative and enforcement signals converge: chart review-driven risk score inflation carries growing legal exposure under the False Claims Act, and the chart review exclusion may actually reduce FCA liability for plans by removing the payment incentive that created the problematic practices in the first place (see MCR-04.10 for the compliance architecture plans need).

The Payvider Differential

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Payviders occupy a structurally different position with respect to chart review exposure, and the differential matters for competitive analysis under the current rate environment.

Organizations where the plan and the delivery system operate within the same entity, such as Kaiser Permanente, UPMC, Geisinger, and CareOregon, capture risk scores through encounter-based documentation at the point of care. Their clinicians are employees or closely integrated partners. Documentation accuracy is an internal operational matter managed through the same organizational structure that delivers care, not a contracted vendor relationship with a third-party coding company. No arm’s-length chart review process is necessary because the plan and the provider share a clinical and financial infrastructure.

The chart review exclusion removes a payment stream payviders were not structurally dependent on. Their risk scores are already generated primarily through encounters. The $7.2 billion reduction falls disproportionately on standalone insurers that built revenue around retrospective documentation practices that payviders did not need.

The competitive implication is direct. The 0.09% rate environment combined with the chart review exclusion creates a payment structure that punishes plans with high chart review dependence and rewards plans with encounter-based documentation systems. This is a structural advantage for payviders under the current regulatory trajectory, and it strengthens the strategic case for delivery system integration among plans that are considering the payvider pathway (see MCR-05.02). The irony of the Kaiser settlement is worth noting: Kaiser paid $556 million to resolve allegations about historical diagnosis-capture practices, but its integrated model is precisely the type of organization the chart review exclusion was designed to favor going forward.

How Plans Will Adapt

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Plans will not absorb a $7.2 billion revenue reduction passively. Adaptation will follow three primary pathways.

The first is the shift from retrospective to prospective documentation. Plans will invest in point-of-care documentation tools, EHR-integrated coding prompts, and clinical decision support systems that surface relevant HCC opportunities during the encounter rather than after it. The goal is to ensure that every clinically valid diagnosis is captured at the moment the provider assesses the patient, so that no chart review is needed to identify what should have been documented. This requires technology investment, provider training, and workflow redesign, all of which take time and capital.

The second is the “linked” chart review pivot. Plans will attempt to restructure chart review workflows so that every diagnosis identified through retrospective review triggers a follow-up encounter where the provider assesses and documents the condition face-to-face. If the chart review identifies that a patient’s COPD has not been documented in the current year, the plan schedules or prompts a visit where the provider evaluates the patient and, if clinically appropriate, documents the condition. That diagnosis would then be linked to the encounter and eligible for risk adjustment.

The compliance question embedded in this pivot is significant: at what point does a chart-review-triggered confirmation visit become a documentation formality rather than a genuine clinical assessment? If a provider is handed a pre-populated list of diagnoses to “confirm” during a visit, and the visit exists primarily to create a linkable encounter for each diagnosis, the compliance risk has not been eliminated. It has been restructured. CMS has not yet addressed this boundary in detail, and the space between legitimate prospective CDI and manufactured encounter-linkage will be contested terrain for the foreseeable future.

The third pathway is encounter data quality investment. Plans must ensure their encounter data submission infrastructure is accurate, complete, and auditable. The chart review exclusion is the first step in a trajectory where only encounter-linked diagnoses matter for payment. The encounter-based risk adjustment future that CMS has signaled (see MCR-02.04) makes encounter data quality a foundational operational capability, not a compliance afterthought.

CMS has signaled this trajectory for three years. The V28 HCC model reform removed diagnosis categories vulnerable to coding manipulation. The coding pattern adjustment addresses aggregate coding intensity differential. The chart review exclusion targets the specific mechanism of unlinked retrospective review. The encounter-based RA future, when it arrives, will complete the arc by making encounter data the sole source of risk-adjustment-eligible diagnoses. Each step narrows the gap between what MA plans are paid and what the beneficiaries they serve would cost in Traditional Medicare. The $7.2 billion is the price of the current step. What comes next will be larger.

Related Reading

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MCR-04_10 Medicare Fraud, Waste, and Abuse: The $60 Billion Structural Problem MCR-05_02 Becoming a Payvider: The Strategic Case for Provider Plan Ownership MCR-12_01 The MA Plan Landscape Under Pressure: UnitedHealth, Humana, CVS/Aetna, Elevance, and the Regional Plans