Texas court vacates 2023 RADV rule, CMS audit expansion plans in doubt

By Brian Murphy

Score a major win for Medicare Advantage (MA).

A Texas district court ruled on Thursday, Sept. 25 that CMS must vacate the final risk adjustment data validation (RADV) rule of 2023.

The court ruled that the CMS rule did not give adequate notice nor comment period to a groundbreaking piece of regulation that would have held MA plans to a higher standard of code validation.

Whether CMS is able to move forward with its dramatic expansion of MA audits as announced in May remains to be seen, but it certainly seems in doubt.

To recap, on Jan. 30, 2023, CMS issued a final rule adopting a new policy for calculating payment recoveries in MA audits. The final rule allowed CMS to recover suspected overpayments from audited MA contracts by sampling a small number of contract enrollees and extrapolating audit results across a contract’s entire enrollee population. It could then recover contract-wide repayments based on those estimates.

CMS affirmed as part of the RADV audit methodology that it would extrapolate RADV audit findings beginning with payment year (PY) 2018. With six years of audit scrutiny opened up, billions in recoupments were at stake. See fact sheet below for more information.

But the plans led by Humana pushed back, claiming that the final rule was never open to comment, and moreover violated a longstanding “actuarial equivalence” standard needed to account for the differences in capitated, contracted payments vs. traditional Medicare fee-for-service. CMS had previously applied a fee-for-service adjuster to MA; Humana claimed that eliminating the FFS adjuster held private MA insurers to an unfair standard compared to traditional Medicare.

On Sept. 25 the TX court sided with Humana and ordered CMS to vacate the rule.

We had noted that CMS did not seem to making any progress on its stated plan to hire 2,000 coders by Sept. 1; perhaps it was waiting on the outcome of this verdict.

Read the ruling below; it’s a manageable 16 pages and a pretty good recap as legal documents go.

We will continue to follow developments.

References

• STAT, Federal judge vacates rule that would have ramped up Medicare Advantage audits: https://www.statnews.com/2025/09/25/federal-judge-vacates-medicare-advantage-audit-rule/
• 2023 RADV final rule fact sheet: https://www.cms.gov/newsroom/fact-sheets/medicare-advantage-risk-adjustment-data-validation-final-rule-cms-4185-f2-fact-sheet
• Sept. 25 court ruling, Humana Inc. and Humana Benefit Plan of Texas vs. HHS: https://storage.courtlistener.com/recap/gov.uscourts.txnd.380836/gov.uscourts.txnd.380836.76.0_2.pdf