Medicare Advantage (Part C) Department of Health and Human Services

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, beneficiaries can opt to receive their Medicare benefits through a private health plan. Currently, more than 16 million beneficiaries are enrolled in Medicare Advantage plans.

Agency Accountable Official: Ellen Murray, Assistant Secretary for Financial Resources

Program Accountable Official: Shantanu Agrawal, M.D., Deputy Administrator for the Center for Program Integrity, Centers for Medicare & Medicaid Services

Total Payments
Improper Payments
Improper Payment Rate

Supplemental Measures

Current Measure: 4.0%

Target: 4.0%

Description: Payments to Medicare Advantage organizations are partly based on enrollee health status. This annual supplemental measure analyzes the ten CMS Hierarchical Condition Categories (CMS-HCCs) that have the highest rates of error. CMS-HCCs are the disease groups that determine the disease component of risk-adjustment payment. The measure aggregates the CMS-HCCs that have the highest percentage of error as compared to the entire sample of CMS-HCCs, and divides that number of discrepancies by the overall number of CMS-HCCs in the sample. The ten condition categories that make up this measure for FY 2016 are: Ischemic or Unspecified Stroke; Aspiration and Specified Bacterial Pneumonias; Unstable Angina and Other Acute Ischemic Heart Disease; Metastatic Cancer and Acute Leukemia; Bone/Joint/Muscle Infections/Necrosis; End-Stage Liver Disease; Intestinal Obstruction/Perforation; Diabetes with Ophthalmologic or Unspecified Manifestation; Acute Myocardial Infarction; Breast, Prostate, Colorectal and Other Cancers and Tumors

Update Frequency: Annually

Data Current as of: November 2016

Program Comments

The Department of Health and Human Services (HHS) reports an annual Medicare Advantage (Part C) program payment error rate, which represents the impact on payments from errors in risk scores used to adjust benefit payment amounts to Medicare Advantage plans. HHS pays Medicare Advantage plans on a risk-adjusted basis. In other words, private health plans are paid greater amounts for coverage of sicker beneficiaries. HHS uses a methodology that takes into account the varying costs associated with treating beneficiaries based on their health status. Risk scores are based on, among other factors, beneficiaries’ clinical diagnoses submitted by private health plans to HHS. Beneficiary risk scores are a key source of potential error in HHS’ payments to Medicare Advantage plans. The Fiscal Year (FY) 2016 Medicare Advantage payment error estimate is based on Calendar Year 2014 payments. There is a two-year lag between the payment year and the error rate reporting year because medical record reviews cannot begin until after completion of the risk score reconciliation for a payment year. This reconciliation occurs about eight months after the end of a payment year. Upon conclusion of this reconciliation, HHS can begin implementation of the risk adjustment data validation. A random sample of beneficiaries is selected and HHS’ contractors conduct medical record review to validate the accuracy of plan submitted diagnoses for each sampled beneficiary. The medical record review process is rigorous and thorough. HHS analyzes the resulting data to develop an error estimate.

HHS has an aggressive, comprehensive audit process that will recover payments made in error. Our audit program is based on a highly rigorous, statistically-valid protocol for review of medical records. Additional information on the program is also provided annually in the Department's Agency Financial Report (available at