Decoding Medicare Advantage Coding Intensity

(Authors: Jeannie Fuglesten Biniek and Nolan Sroczynski for The Kaiser Family Foundation Published: Jul 1, 2026)

In recent years, federal payments to Medicare Advantage plans, and how they are adjusted for enrollee health status, have come under increased scrutiny. Medicare Advantage plans receive a capitated amount for each enrollee, and these payments are “risk adjusted” based on the diagnosis codes reported by the insurer to the Centers for Medicare & Medicaid Services (CMS) for each enrollee. Plans receive higher payments for enrollees who are sicker and expected to have higher health care spending, and lower payments for enrollees who are healthier and expected to have lower health care spending. The purpose of this risk adjustment is to ensure plans receive adequate payments to treat sicker, higher-cost patients and reduce incentives to enroll primarily healthier, lower cost, beneficiaries. However, since the approach to risk adjusting payments relies heavily on the diagnosis codes recorded for Medicare Advantage enrollees, it provides a strong financial incentive for private insurers to capture as many diagnosis codes for each enrollee as possible, which increases payments and contributes to higher Medicare spending. Continue reading here…

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