Humana, UnitedHealth, CVS Slide As CMS Targets Medicare Overpayments In ‘Aggressive’ Audit Plan

Shares of major U.S. healthcare firms came under pressure Wednesday following the Centers for Medicare and Medicaid Services’ announcement of increased auditing measures for Medicare Advantage plans. 

The agency plans to partner with the Department of Health and Human Services Office of Inspector General to recover past audit-identified uncollected overpayments.

CMS said it will initiate audits for all eligible Medicare Advantage contracts throughout each payment year under new audit procedures. 

The agency intends to allocate more resources to speed up audit completion from payment years 2018 through 2024 to tackle the extensive backlog.

Healthcare stocks saw significant pressure during after-hours trading in response to the announcement.

Humana (HUM) stock prices declined by 4.2% to settle at $235.5, UnitedHealth Group (UNH) shares decreased by 3.1% to reach $293.5, and CVS Health (CVS) decreased by 2.3% to end at $60.7.

Elevance Health (ELV) closed the session at $400.12 after falling 3%. Cigna (CI) closed the regular session with a 2.43% decrease to finish at $317.09. 

Centene (CNC) and Molina Healthcare (MOH) are additional publicly traded insurers operating in this sector.

The payment amounts for Medicare Advantage plans depend on risk adjustments, considering diagnosis details submitted for their members.

The CMS uses RADV audits to verify that medical records uphold the diagnoses reported by Medicare Advantage plans.

The agency acknowledged that it postponed these audits for several years, resulting in its expansion to tackle the backlog.

CMS expects to finalize all audits from 2018 to 2024 by early 2026.

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