Risk adjustment fraud is one of the fastest-growing areas of government healthcare enforcement. Designed to ensure fair reimbursement in Medicare Advantage and Medicaid programs, the risk adjustment system compensates insurers based on the health of their enrollees. Unfortunately, some organizations exploit this model by exaggerating diagnoses, manipulating coding, or falsifying documentation — all to inflate payments from the federal government.
These deceptive practices drain billions of dollars from taxpayers and undermine the integrity of public health programs. If you work within a Medicare Advantage organization, coding department, or healthcare provider network, you may be in a unique position to recognize the signs of this fraud. By coming forward, you can help stop these abuses and qualify for significant financial rewards under the False Claims Act.
At The Howley Law Firm, we provide experienced, confidential legal counsel to whistleblowers who report healthcare fraud. This guide explains how risk adjustment fraud occurs, how to identify it, and how to safely report it while protecting your rights.
What Is Risk Adjustment Fraud?
The risk adjustment system is intended to ensure that healthcare plans receive appropriate funding based on the health status of their enrollees. The logic is simple: plans serving sicker patients should receive higher payments than those with healthier populations.
Risk adjustment fraud occurs when insurers or healthcare providers intentionally manipulate diagnosis codes or documentation to make patients appear sicker than they really are — resulting in inflated reimbursements from Medicare or Medicaid.
Common Methods of Risk Adjustment Fraud
- Upcoding Diagnoses: Assigning severe or chronic conditions that the patient does not have.
- Improper Chart Reviews: Adding or exaggerating diagnoses during retrospective audits.
- False Documentation: Creating or altering records to justify inflated risk scores.
- Vendor Manipulation: Hiring third-party coding vendors who systematically inflate risk data.
- Pressure on Providers: Encouraging clinicians to document unsupported diagnoses.
When these practices occur, the result is clear: insurers and providers receive money they are not entitled to, and federal healthcare programs suffer significant losses.
Why Risk Adjustment Fraud Matters
Financial Harm to Federal Programs
The Centers for Medicare & Medicaid Services (CMS) estimate that billions of dollars are lost each year to inflated risk adjustment payments. This diverts funds from legitimate care and burdens taxpayers with unnecessary costs.
Impact on Patients
Falsified diagnoses can follow patients throughout their medical history, leading to unnecessary treatments, higher insurance premiums, or complications when seeking care for real conditions.
Federal Enforcement Efforts
The Department of Justice (DOJ) and the Office of Inspector General (HHS-OIG) have made risk adjustment fraud a major enforcement priority. In recent years, major insurers — including Cigna, Kaiser Permanente, and UnitedHealth Group — have faced multi-million-dollar settlements related to false risk data submissions.
For whistleblowers, this heightened scrutiny means now is the time to come forward with credible information.
Recognizing and Identifying Risk Adjustment Fraud
Fraudulent risk coding often hides behind complex data systems and layers of documentation. However, whistleblowers — especially those in coding, compliance, or management roles — can spot red flags early.
Common Red Flags
- Diagnoses added to patient charts without corresponding clinical notes.
- Pressure on staff to increase “risk scores” or add chronic conditions during audits.
- Routine chart reviews that always increase revenue, never decrease it.
- Vendors or managers directing coders to “capture every possible diagnosis” without medical evidence.
- Sudden spikes in per-member revenue or risk scores without any change in patient population.
Why Vigilance Is Critical
Healthcare employees play a vital role in protecting patients and taxpayers. Detecting risk adjustment fraud early prevents greater financial losses and ensures that care decisions remain guided by patient needs — not profit motives.
How to Report Risk Adjustment Fraud: Step-by-Step Guide
Knowing how to report risk adjustment fraud properly ensures your evidence is credible, your rights are protected, and your potential reward is preserved.
Step 1: Gather and Preserve Evidence
The strongest whistleblower cases rely on detailed documentation. Examples of valuable evidence include:
- Internal emails or memos discussing diagnosis coding targets.
- Audit reports showing false chart reviews or data manipulation.
- Coding instructions that encourage unverified diagnoses.
- Payment data showing inflated reimbursements after specific audits.
Avoid sharing or removing patient records directly — instead, consult with an attorney about what evidence can be lawfully used.
Step 2: Consult an Experienced Whistleblower Attorney
Before taking action internally or externally, speak with a lawyer experienced in False Claims Act litigation. An attorney can:
- Evaluate the strength of your evidence.
- Determine whether your information qualifies for a qui tam
- File the complaint confidentially, ensuring your protection.
At The Howley Law Firm, we help whistleblowers navigate this process step by step, ensuring your rights remain secure from the beginning.
Step 3: File a Confidential Whistleblower Complaint
Your attorney will file a complaint under seal in federal court. This means the company under investigation will not be notified while the DOJ and HHS-OIG review the evidence.
If the government intervenes and the case succeeds, whistleblowers are entitled to 15%–30% of the funds recovered — a substantial reward for taking the right step.
Step 4: Cooperate with Investigators
The government may request interviews, clarification, or additional documents. Your attorney will guide you through these interactions, ensuring confidentiality and legal protection at every stage.
Protections for Whistleblowers
Many employees hesitate to come forward out of fear of retaliation. The False Claims Act provides strong legal safeguards to protect whistleblowers who report risk adjustment fraud.
Your Legal Rights Include:
- Confidentiality: Your identity is protected while the case is under seal.
- Anti-Retaliation Protections: If you are demoted, harassed, or terminated for reporting, you may be entitled to:
- Reinstatement to your position.
- Double back pay for lost wages.
- Compensation for emotional and reputational harm.
These protections empower whistleblowers to act without fear — and The Howley Law Firm ensures these rights are enforced if retaliation occurs.
Consequences for Committing Risk Adjustment Fraud
Organizations and individuals found guilty of manipulating risk data face severe penalties.
Civil and Criminal Penalties
- Treble Damages: Repayment of three times the government’s loss.
- Civil Fines: Up to tens of thousands of dollars per false claim.
- Criminal Liability: Possible imprisonment for intentional fraud.
Corporate Accountability
- Loss of eligibility for federal healthcare programs.
- Damage to corporate reputation and stockholder trust.
- Increased government oversight and compliance monitoring.
For companies, these penalties often total hundreds of millions — and for whistleblowers, they often result in substantial recoveries and rewards.
The Howley Law Firm: Experienced Advocates for Whistleblowers
At The Howley Law Firm in New York, we have spent decades representing whistleblowers, healthcare professionals, and insiders in complex fraud cases — including risk adjustment fraud, Medicare Advantage overbilling, and Medicaid false claims.
Why Whistleblowers Trust The Howley Law Firm
- Deep Legal Expertise: Our attorneys have handled major False Claims Act cases nationwide.
- Proven Record of Success: We have helped clients recover millions while protecting their privacy and livelihoods.
- Confidential Consultations: Every discussion is private, and we never share your information without consent.
- Comprehensive Support: From evidence review to government coordination, we stand by your side through every step.
If you are considering whether to report risk adjustment fraud, we can help you assess your options confidentially and ensure you take action safely.
Stop Risk Adjustment Fraud and Protect Patient Integrity
Fraudulent billing in Medicare Advantage and Medicaid harms patients, honest providers, and taxpayers. When you expose these schemes, you not only uphold ethical healthcare — you help restore trust in our nation’s most important public programs.
At The Howley Law Firm, we believe that doing the right thing should never come at the expense of your safety or career. Our attorneys combine decades of courtroom experience with a deep understanding of healthcare law to ensure whistleblowers are protected, informed, and rewarded.
Contact us today for a confidential consultation. Speaking with an attorney is the first step toward justice, accountability, and protecting yourself while making a difference.
Frequently Asked Questions
It occurs when insurers or providers exaggerate diagnoses to increase government payments under the risk adjustment system.
To boost revenue by making enrollees appear sicker than they truly are, leading to higher reimbursements.
Upcoding, falsified chart reviews, inflated home assessments, and data manipulation by third-party vendors.
Through whistleblower reports, CMS audits, data analytics, and DOJ investigations.
Yes. The DOJ has secured multiple settlements and continues to pursue cases under the False Claims Act.
Treble damages, civil fines, and exclusion from Medicare and Medicaid participation.
Insurance executives, coding vendors, compliance officers, and healthcare organizations involved in false reporting.
Consult an experienced whistleblower attorney before reporting internally or publicly to protect your rights.
Because it represents one of the largest sources of waste in federal healthcare spending.
Robust compliance programs, ethical leadership, transparent auditing, and strong whistleblower protections.
