A federal watchdog has concluded that HumanaChoice, a Medicare Advantage plan run by Humana, Inc. under contract H5216, collected government payments tied to diagnosis codes that patients’ own medical records did not back up. The finding comes from a compliance audit covering payment years 2020 and 2021, built on a sample of enrollee records that mostly failed to hold up under review. Humana has disagreed with some of the findings and with every recommendation the auditors made.
The Audit Behind the $130.9 Million Figure
The Department of Health and Human Services’ Office of Inspector General examined HumanaChoice, a preferred provider organization based in Louisville, Kentucky, that Humana, Inc. administers under CMS contract number H5216. As of December 2021, HumanaChoice covered 1,730,650 enrollees across multiple states, and CMS paid the plan roughly $37.8 billion for the 2020 and 2021 payment years the audit reviewed.
Within that spending, auditors identified 68,701 enrollee-years tied to diagnosis codes flagged as high-risk for miscoding, associated with $165,672,058 in payments. From that pool, they sampled 220 enrollee-years and checked each diagnosis against the medical record behind it. Medical records failed to support the diagnosis codes in 178 of those 220 enrollee-years, producing $669,237 in overpayments inside the sample alone. Extrapolating that failure rate across the full pool, the inspector general’s office estimated HumanaChoice received at least $130.9 million in overpayments for 2020 and 2021, under Report A-05-24-00010, issued September 10, 2026 and posted to the inspector general’s site five days later.
How Medicare Advantage Ties Payments to Diagnosis Codes
Medicare Advantage works differently from traditional Medicare in one structural way: CMS pays each private plan a set monthly amount per enrollee, calculated by multiplying a base rate tied to the plan’s bid against a regional benchmark by an individual risk score. That risk score comes from mapping an enrollee’s diagnosis codes into government-defined categories called Hierarchical Condition Categories, each carrying its own numerical weight. More or higher-weighted categories mean a higher risk score, and a higher risk score means a bigger monthly payment to the plan.
A diagnosis code that isn’t backed by a documented clinical finding still raises that risk score, and the payment that follows it, even when no matching care was actually delivered. That is the mechanism the inspector general’s office tests when it periodically samples an insurer’s diagnosis codes against the medical records behind them, focusing on categories with a documented history of being submitted without adequate support. Across the whole Medicare Advantage program, the stakes are large: CMS paid MA organizations $494 billion in 2024, or 44 percent of all Medicare spending that year.
The Eleven Diagnosis Categories Under Review
Auditors did not review HumanaChoice’s records at random. Using data-mining techniques and input from medical professionals, the inspector general’s office had already grouped specific diagnoses into eleven categories considered prone to miscoding: acute stroke, acute myocardial infarction, embolism, five separate cancer types (lung, breast, colon, prostate and ovarian), sepsis, severe pressure ulcers and a category the report calls potentially mis-keyed diagnosis codes, where a data-entry error such as a transposed digit can turn one condition into an entirely different one on paper…