The Practice That Built the Industry's Biggest Liability
Chart mining, the practice of sending coders into historical medical records to find diagnosis codes that were clinically present but never submitted to CMS, has been a cornerstone of Medicare Advantage risk adjustment for nearly two decades. Health plans hired vendors to process millions of charts annually. Coders identified diagnoses. Codes were submitted. Risk scores increased. Revenue followed.
The practice is legitimate when done properly. Providers frequently underdocument. Initial claims processing can miss clinically valid diagnoses. Plans have a right to submit supplemental data that accurately captures their members' true disease burden. CMS created the supplemental data submission process for exactly this purpose.
What appears to have gone wrong, based on recent federal enforcement actions and regulatory guidance, is that a widely adopted approach to chart mining was designed to add codes without a corresponding mechanism to remove unsupported ones. Many programs were measured primarily on volume: how many charts reviewed, how many codes found, how much RAF uplift generated. Few organizations systematically measured how many unsupported codes were identified and removed, or whether previously submitted diagnoses still had current clinical support.
The consequences of this approach are now visible. The DOJ has alleged improper risk adjustment practices in settlements exceeding $670 million from two major health organizations. OIG audits published in March 2026 identified error rates between 81% and 91% in sampled high-risk diagnosis codes. CMS has finalized the exclusion of chart-review diagnoses that cannot be linked to clinical encounters, effective for payment year 2027. The regulatory environment is shifting the economics of add-only chart mining through multiple channels simultaneously.
Three Policy Mechanisms Closing the Revenue Path
The first mechanism is enforcement. In a March 2026 settlement valued at $117.7 million, the DOJ alleged that an add-only chart review program and false morbid obesity codes spanning multiple payment years resulted in improper payments to a major national insurer. The case was initiated by a former coding auditor who, according to the DOJ, observed the program's design from inside the organization. Combined with a separate $556 million settlement involving another major health organization, these cases suggest that program design choices, specifically the decision to only add codes without removing unsupported ones, can carry significant legal consequences.
The second mechanism is regulatory guidance. The OIG's February 2026 Industry-wide Compliance Program Guidance, its first update to MA compliance standards in 27 years, identified add-only chart reviews as a high-risk practice. It warned that failing to remove unsupported codes may constitute a compliance failure, and flagged health risk assessments that generate diagnoses never considered in patient care as an area of concern. While this guidance does not carry the force of law, it defines the framework OIG is expected to use when evaluating compliance during investigations and audits.
The third mechanism is payment policy. CMS's CY 2027 Final Rate Announcement finalized the exclusion of unlinked chart review reconciliation diagnoses from risk score calculations. According to CMS data, plans submitted approximately 88.8 million such diagnoses in 2023, and roughly 85% could not be matched to encounters. Separately, the bipartisan UPCODE Act (S.1105) proposes excluding all chart-review-only and health risk assessment diagnoses from risk adjustment, with the Congressional Budget Office estimating approximately $124 billion in savings over ten years.
Each mechanism, if fully implemented, would reduce the revenue that traditional chart mining generates. Together, they appear to be restructuring the economics in ways that make programs designed around add-only chart review increasingly difficult to sustain.
What May Replace Traditional Chart Mining
Retrospective review is unlikely to disappear. Plans will continue to need processes to reconcile clinical documentation with submitted codes. However, the function that appears positioned to replace traditional chart mining operates differently in several important ways.
First, it is two-way. Every review cycle identifies codes to add and codes to remove, producing a submission set that more closely reflects current clinical reality rather than accumulated historical additions. Second, it validates documentation quality before submission, evaluating every diagnosis against MEAT criteria (Monitoring, Evaluation, Assessment, Treatment) and building an evidence trail that auditors can follow. Third, it connects chart review findings to clinical care, routing identified conditions back to providers for confirmation and ongoing management so that coded diagnoses are also treated diagnoses.
This model may generate less revenue per review cycle than add-only chart mining because it removes unsupported codes that would have generated risk score credit under the prior approach. It also appears to generate less regulatory exposure, less audit liability, and less settlement risk. As enforcement continues to increase, including annual RADV audits of all 550+ MA contracts announced by CMS, the net financial position (revenue minus enforcement cost) increasingly appears to favor the two-way model.
A Transition That Warrants Prompt Attention
Plans still operating add-only chart mining programs face a regulatory environment that is moving in a clear direction through enforcement actions, compliance guidance, and payment policy changes. Each month such a program continues in its current form may accumulate additional codes without adequate support, additional exposure to potential DOJ scrutiny, and additional unlinked diagnoses that CMS has announced it will exclude from risk scores starting in 2027.
The transition to defensible retrospective hcc coding, built on two-way review, evidence validation, and encounter linkage, is increasingly becoming an operational priority rather than a strategic consideration for a future planning cycle. The regulatory signals are consistent, the enforcement precedents are documented, and the payment policy changes are finalized. Health plans that align their coding practices to these signals position themselves for both compliance and financial sustainability in the years ahead.
Disclaimer: This article is for informational purposes only and does not constitute legal, compliance, billing, or healthcare advice. The regulatory and enforcement actions referenced are based on publicly available government sources as of May 2026. Organizations should consult qualified legal and compliance professionals for guidance specific to their circumstances.
