A federal audit has found that Priority Health likely received more than $4.4 million in improper Medicare Advantage payments. The finding adds to a growing pattern of scrutiny on MA risk adjustment practices across the industry.
Overview of the OIG Audit
The HHS Office of the Inspector General released its findings in March 2026, estimating that Priority Health collected at least $4.4 million in Medicare Advantage overpayments during 2018 and 2019. Auditors targeted the insurer’s Contract H2320, analyzing diagnosis codes submitted to CMS for risk adjustment purposes.
Notably, the OIG is conducting a broader series of audits based on data submitted by Medicare Advantage organizations. Priority Health is one of several plans facing this type of review. The audits focus specifically on high-risk diagnosis groups — areas where coding errors are most likely to inflate payments.
What Auditors Found
Auditors reviewed 300 sampled enrollee-years and concentrated on 10 high-risk diagnosis categories. Their findings were significant. Medical records failed to support the submitted diagnosis codes in 252 of those 300 cases. That translates to an error rate of 84%.
The sampled cases alone resulted in $828,010 in net MA overpayments. Auditors then projected this error rate across Priority Health’s full population to estimate total overpayments at more than $4.4 million. This extrapolation method is standard practice for OIG compliance audits.
How Diagnosis Coding Errors Drove Overpayments
The most common issue auditors identified was the improper coding of historical diagnoses as currently active. Risk adjustment payments rely on accurate diagnosis data. When a past condition appears as an active diagnosis, it raises the patient’s risk score — and consequently, the payment CMS makes to the plan.
Furthermore, the OIG report stated that Priority Health’s internal policies and procedures for preventing, detecting, and correcting noncompliance with CMS requirements could be improved. This suggests the problem was not isolated to a few clerical mistakes. Instead, it pointed to a systemic gap in compliance oversight.
Priority Health’s Response and Contest Outcome
Priority Health challenged 20 of the enrollee-years that auditors flagged. However, it succeeded in overturning only five of those challenges. As a result, auditors revised the total overpayment estimate slightly — from $4,575,972 down to $4,479,698.
The OIG formally requested that Priority Health repay that amount. Auditors also asked the insurer to identify any additional instances of noncompliance and to review its coding procedures to prevent future miscoding.
Priority Health issued a statement on April 9, 2026, confirming its cooperation with the audit. The insurer acknowledged the findings and indicated they align with broader industry trends. Priority Health also stated it is actively working to strengthen internal processes to ensure greater accuracy and integrity in its operations.
Next Steps and CMS Authority
While the OIG issues audit recommendations, CMS holds final authority over overpayment actions. This means the actual repayment terms and timeline rest with CMS, not the OIG. Priority Health will need to engage with CMS directly to resolve the financial liability.
What This Means for MA Plans
This audit is part of a wider federal effort to reduce improper payments in the Medicare Advantage program. MA plans that rely on risk adjustment revenue should treat this as a signal. Accurate diagnosis coding, strong internal compliance programs, and regular self-audits are essential safeguards.
Plans that fail to maintain tight coding standards face not only repayment demands but also reputational risk. The 84% error rate in Priority Health’s sampled records underscores how quickly small coding lapses can compound into multimillion-dollar liabilities.
