Introduction

In the world of Medicare Advantage (MA), precision is everything. A single unsupported diagnosis code may seem minor — until it triggers a full-scale RADV audit, leading to contract-wide overpayment demands. Under CMS’s latest RADV audit methodology, the financial exposure tied to unsupported Hierarchical Condition Categories (HCCs) is more severe than ever before.

What Is an “Unsupported” HCC?

An HCC is deemed unsupported when the diagnosis code submitted by a Medicare Advantage Organization (MAO) cannot be validated by documentation in the medical record during a CMS-conducted RADV audit.

As detailed in CMS’s Payment Error Calculation Methodology for Payment Year 2013, an unsupported HCC results when:

The diagnosis was submitted by the MAO but not found in the medical record (MR),
No valid MRs were submitted at all for the sampled enrolee,
The submitted MR did not support the condition as per ICD coding guidelines.

Each unsupported HCC is labelled “Discrepant” in CMS audit terminology, signalling that the code was used inappropriately for risk adjustment payment purposes.

The Financial Domino Effect: How One Error Becomes a Contract-Wide Liability

CMS doesn’t just flag an unsupported HCC and stop there. Under contract-level RADV audit methodology, the agency extrapolates that one error across the entire Medicare Advantage contract — multiplying the financial impact across potentially thousands of enrolees.

Here’s how it works:

CMS selects a random sample of enrolees from an MA contract.
For each enrolee, it validates diagnoses using only one “best” medical record per HCC.
If an HCC is found to be unsupported, CMS calculates the monthly overpayment for that enrollee.
That overpayment is then extrapolated to all similar enrollees in the contract — regardless of whether their charts were reviewed.

According to CMS:
“The total overpayment amount… is the sum of the ‘RADV enrollee total payment error’ amounts for all sampled enrollees. If the sum is greater than $0, an overpayment condition exists.”
— CMS Payment Error Methodology

Real-World Implication:

If a single unsupported HCC (e.g., diabetes with chronic complications) results in a $3,000 monthly overpayment for one enrollee, and CMS extrapolates that error to 2,000 similar enrollees, the total financial recovery demanded could exceed $6 million.

Why MAOs Must Act Now:

CMS no longer gives leeway for missing documentation or coding assumptions. If a diagnosis isn't clearly documented, supported by clinical evidence, and coded per ICD guidelines, it doesn’t count. Period.

And since CMS audits are retroactive (often reviewing data up to 7 years old), a single lapse in documentation today could turn into a multi-million dollar clawback tomorrow.

Takeaway: Accuracy Is Your Audit Shield

Risk adjustment isn't just a revenue strategy — it's a compliance obligation. Your best defence against financial exposure? Ensuring every HCC submitted is:

Backed by valid face-to-face medical records,
Documented with clinical clarity,
Coded precisely according to CMS and ICD guidelines.

Pro Tip:

Leverage internal chart audits and AI-powered coding tools to identify unsupported HCCs before CMS does.

Final Thought:

One error may feel small. But under CMS’s RADV audit methodology, one missed HCC can financially impact your entire contract. Don’t wait for CMS to catch it — validate your risk scores now.