CMS threat to Elevance could bring financial consequences

CMS and Elevance are playing a game of Risk.

In a Feb. 27 letter, the federal regulator threatened sanctions that would be effective March 31—including freezing new Medicare Advantage Prescription Drug (MA-PD) plan enrollment—in response to the payer’s alleged “substantial and persistent noncompliance” with Center for Medicare and Medicaid Services (CMS) rules.

The letter claims Elevance hasn’t been properly uploading necessary data to calculate patient risk scores, a metric that determines the size of government payments to MA plans. Elevance allegedly didn’t report or return associated overpayments, either.

“Elevance’s conduct demonstrates a pattern of knowing noncompliance that has persisted for over seven years despite repeated clear directives from CMS,” the letter reads.

These CMS sanctions come a month after the agency released lower-than-expected MA payment rates for 2027 alongside a proposed adjustment to how risk-based payments will be calculated. Both moves upset plan carriers but excited reform advocates.

“We hope this action signals an enhanced effort by the regulator to ensure that MA plans are complying with program rules,” David Lipschutz, codirector and attorney for the nonprofit Center for Medicare Advocacy, told Healthcare Brew via email.

Let’s back up. Elevance, like all MA carriers, is supposed to ensure that patient diagnoses are backed up by medical records, and if not, submit a correction to CMS so risk scores are accurately calculated. In tandem with this, Elevance is expected to refund overpayments to the government within 60 days of discovering an unsupported diagnosis.

But rather than uploading corrections directly to CMS’s electronic systems, the agency says the fourth-largest MA carrier has been submitting the data via encrypted USB flash drives since November 2018.This is a format CMS has “explicitly rejected,” the letter alleges.

CMS is asking Elevance to send corrections by March 30 for data submitted between Nov. 13, 2018 and Oct. 10, 2025, or be cut off from new enrollment and from communicating with its beneficiaries.

Elevance spokesperson Leslie Porras told Healthcare Brew in an emailed statement on Tuesday the company is reviewing the CMS letter.

“We stand firmly behind the compliance and integrity of our Medicare Advantage program, which is supported by rigorous oversight, comprehensive monitoring, and established governance processes,” the statement read.

Some context. The good news for Elevance is that the payer was already planning to shrink its MA enrollment this year to cope with rising medical costs. Plus, the freeze would take effect after the end of the MA open enrollment period, so it would only affect people who are newly eligible to enroll.

But CMS is also asking Elevance to send new overpayment reports for unsupported diagnoses.

It’s not unheard of for CMS to bar Medicare plans from communicating with or enrolling new members, Arielle Trzcinski, principal analyst at advisory firm Forrester, told Healthcare Brew via email.

The agency barred Cigna from marketing and enrolling people in its MA and Part D plans in January 2016 in response to violations that allegedly increased enrollees’ out-of-pocket costs and led to unnecessary delays and denials of care. Cigna couldn’t resume until it fixed all the identified issues, a long process that lasted until June 2017.

There’s a unique concern this time around, though, Trzcinski said: What if Elevance has to refund the overpayments it has received?

CMS did not respond to a request for comment on whether Elevance would need to recoup the payments. It’s not clear how big that cost would be, either.

The Medicare Payment and Advisory Commission—an independent, nonpartisan agency—estimates the federal government overpays Medicare Advantage by tens of billions of dollars every year. It projects the government will pay MA plans $76 billion more for enrollees in 2026 than what it would pay if they had traditional fee-for-service Medicare.

“I can’t recall another example where an enrollment pause was paired with this level of potential recoupment exposure,” Trzcinski said. “If recoupment is part of the outcome, the financial implications would be meaningfully more significant than the enrollment suspension.”