By Arun Hampapur, PhD – Co-Founder & CEO, Bloom Value; Fellow, IEEE
Disclaimer:
This article was originally published in Health IT Answers, "The UnitedHealth Probes: A Wake-Up Call for Medicare Advantage", July 15, 2025.
Introduction
The U.S. healthcare industry is once again in the spotlight—this time, with the scrutiny on UnitedHealth. The Department of Justice (DOJ) has launched a civil fraud investigation into UnitedHealth Group, which highlights the ethical challenges and complexities around risk adjustment in Medicare Advantage (MA). The increasing scrutiny has become a wake-up call for the industry, which has been walking a fine line between accurate coding and questionable practices that could compromise the integrity of the reimbursement system. The issue isn’t whether risk adjustment is necessary, but how far is too far, and at what cost?
What’s Under Scrutiny?
The DOJ investigation revolves around allegations of aggressive upcoding practices—adding unsupported or unnecessary diagnoses—that resulted in inflated risk adjustment factor (RAF) scores. These scores directly impact reimbursement levels in Medicare Advantage programs.
Recent whistleblower accounts, as reported by Yahoo Finance, have shed additional light on the nature of these practices within UnitedHealth. Former staffers revealed they were trained to apply specific diagnosis codes - such as peripheral artery disease and hyperaldosteronism, that triggered higher reimbursements, even when clinical evidence was limited or unclear. Some described software tools that pushed preselected diagnosis options and internal workflows that encouraged coding for maximum financial impact. These insider claims suggest a culture that may have prioritized coding intensity over clinical integrity, further amplifying the DOJ’s concerns.
The investigation has triggered bipartisan concern, with lawmakers scrutinizing whether risk adjustment practices have crossed ethical lines. CMS has responded with a series of measures, including intensified audits supported by advanced technology and larger teams. The nature of CMS’s response points to a shift from passive oversight to active enforcement. The future of MA funding—and the healthcare industry's credibility—is at a crossroads.
The Ethical Gray Zone of Risk Adjustment
Risk adjustment ensures that Medicare Advantage Organizations (MAOs) are compensated based on the health conditions of their members. Done right, it supports sustainability and better care.
Inaccurate coding, however, can lead to financial strain, while upcoding can trigger compliance risks.
Coding must reflect clinical reality, not internal metrics, financial incentives, or algorithmic suggestions.
What the UnitedHealth Case Reveals
The allegations suggest a broader issue: internal pressures possibly overriding clinical judgment. This concern is reinforced by independent, peer-reviewed findings. A 2025 Health Affairs Scholar study found an enrollment-weighted mean coding inflation rate of 8.4% among major MA insurers, with some contracts inflating scores by up to 22.2%. Nearly 68% of enrollees were in plans that outpaced Medicare’s own coding adjustments.
Another possibility is the thoughtless usage of Artificial Intelligence. If tools that recommend possible diagnoses are deployed without adequate clinician oversight, it can result in inaccurate or unsupported coding. The result: ethical and regulatory minefields.
This case is a systemic challenge - balancing fair reimbursement with compliance, transparency, and clinical integrity.
Systemic Impacts
Whether driven by AI misuse or unchecked practices, the effects ripple across the healthcare ecosystem:
Provider Overload: Flooding provider workflows with unsupported diagnosis codes disrupts clinical decision-making and takes time away from patient care.
Audit Exposure: Unsupported or inflated diagnoses invite CMS audits and potential clawbacks, draining resources, time, and damaging payer-provider relationships.
Patient Harm: Upcoding can lead to inaccurate health records, misdiagnoses, and unnecessary interventions, undermining care quality.
Erosion of Trust: Even practices that are technically compliant may still violate the underlying spirit of clinical integrity. The public’s trust and credibility in the entire system will erode if organizations are seen to be prioritizing financial outcomes instead of patient care.
The Path Forward
Heightened enforcement makes one thing clear: compliance isn’t enough. Risk adjustment must lead with ethics, transparency, and patient-centered care. Here’s how to future-proof programs:
Redefine AI as Augmented Intelligence
AI has already streamlined coding, surfaced potential diagnoses, and sped up workflows. But as coding regulations continuously evolve, it is no replacement for clinical oversight.
Augmented Intelligence combines AI’s speed with human expertise, offering a more accurate, responsible, and resilient approach. It transforms coding into a value-driven part of patient care, not just a compliance task.
Prioritize Clear Documentation
Every diagnosis coded should be based on sound clinical judgment, and the medical record documentation should prove that. Maintaining thorough and accurate records validates diagnoses and gives coders the confidence to face audits. The stronger the documentation, the more defensible the coding.
Ensure Provider Alignment
Providers play a vital role in accurate risk adjustment. Engage providers in the risk adjustment process as informed participants. Ongoing education, timely feedback, and access to the right tools can empower providers to document with precision, enabling coding that is both clinically appropriate and ethically responsible.
Establish Support for Ongoing Monitoring and Audit Readiness
Effective risk adjustment demands continuous attention. Regular audits, real-time tracking, and continuous monitoring help ensure compliance and identify areas for improvement. Think beyond bolt-on solutions. Risk adjustment requires more than tools and processes- it demands clinical oversight and a strong ethical guardrail.
Conclusion: A Turning Point
Risk adjustment isn’t just about coding - it reflects how the healthcare system balances accountability, ethics, and innovation while prioritizing patient care. As AI adoption grows, so must our guardrails and commitment to expert oversight.
This isn’t just about UnitedHealth. It’s a wake-up call for how the industry builds—and maintains—trust in the age of AI-driven risk adjustment. Organizations that prioritize defensibility will thrive in this new landscape.
