From Civil Penalties to $62M Settlements – Why Audit Readiness Matters More Than Ever

As of January 2025, the Centers for Medicare & Medicaid Services (CMS) imposed civil monetary penalties on several Medicare Advantage and Part D plan sponsors due to non-compliance in key areas, including:

• Part C Maximum Out-of-Pocket (MOOP) Limit Requirements: Some plans failed to cap enrollees' annual out-of-pocket expenses for covered services, leading to members being charged more than the allowable limit.

• Coordination of Benefits (COB) and Low-Income Subsidy (LIS): Inaccurate coordination with other insurance providers and misapplied subsidies caused financial discrepancies and overcharges for low-income beneficiaries.

• Part C Cost-Sharing Requirements: Plans did not adhere to CMS-established cost-sharing structures like copayments and coinsurance, resulting in incorrect amounts being charged.

For example, one health plan was fined $99,064 for failing to reprocess prescription drug claims correctly for LIS beneficiaries, resulting in inappropriate charges.

And the Stakes Just Got Higher: $62M Settlement with Seoul Medical Group

Adding to the urgency, the U.S. Department of Justice recently announced a $62 million False Claims Act settlement with California-based Seoul Medical Group (SMG) and related entities.

The allegations? Submitting inaccurate diagnosis codes to boost risk scores and inflate Medicare Advantage reimbursements. This case is one of the largest enforcement actions involving an Independent Practice Association (IPA) and underscores CMS’ intensifying scrutiny on risk adjustment practices and data integrity.

What This Means for Medicare Advantage & Part D Plans

These actions make it crystal clear: CMS is watching—closely. Whether it’s cost-sharing, LIS coordination, or risk adjustment coding, non-compliance now carries more reputational and financial risk than ever before. With CMS program audits kicking off April 1st, plans must take a proactive stance:

• Audit Readiness – Ensure timely, accurate documentation and clear internal processes.

• Universe Data Validation – Avoid common submission errors that lead to findings.

• MOOP & Cost-Sharing Oversight – Monitor financial safeguards for beneficiaries.

• LIS & COB Accuracy– Prevent subsidy errors and billing mishaps that affect low-income members.

  
  

How Rebellis Group Can Help

At Rebellis, we help health plans get ahead of CMS scrutiny. Our experts support:

• Mock CMS Audits

• Universe File Testing & Review

• Risk Adjustment & Coding Audits

• Corrective Action Plan Development

• End-to-End Audit Readiness Strategy

Whether your organization is preparing for a program audit or wants to avoid becoming a headline, we’re here to guide you—every step of the way.

Don’t miss our upcoming webinar! CMS’ evolving regulations and legal challenges are reshaping the healthcare landscape. Join us Wednesday, April 17 at 1PM ET on what these potential changes mean for your plan—and how to stay ahead.

Register Now

Need support on audit readiness or risk adjustment compliance? Let’s connect.