By Sriparna Roy
March 2 (Reuters) – The Centers for Medicare & Medicaid Services intends to impose sanctions that would suspend enrollment in Elevance Health’s Medicare Advantage prescription drug plans starting March 31, pushing the company’s shares down more than 3%.
Elevance disclosed in a filing on Monday that CMS notified the health insurer on February 27 of its intention and indicated that the proposed sanctions relate to alleged non-compliance in submitting certain required risk-adjustment data for services provided before April 3, 2023 under the plans, which cover prescription drug costs for older adults.
In the risk-adjustment model, insurers are paid more when their patients are sicker. The agency adjusts the payment amounts based on health status and demographic factors, and so certain diagnosis codes can increase the payment amount to a health insurer.
Since November 13, 2018, Elevance has failed to submit data corrections for diagnosis codes it identified as unsupported by medical record documentation through CMS’s required electronic systems, according to the agency’s February 27 notice.
Instead, Elevance has repeatedly provided this information via encrypted external USB flash drives, a method that the company has explicitly rejected.
Despite repeated clear directives from CMS that encrypted files do not satisfy regulatory obligations, the agency said Elevance continued this practice as recently as October 10, 2025.
The action will take effect unless CMS determines the issues identified have been satisfactorily addressed. Elevance would need to provide a written rebuttal by March 10.
Elevance said in a statement to Reuters that it is currently reviewing the letter and will engage constructively and transparently with CMS.
The health insurer said it had revised its practices in April 2023 and the suspension does not impact its current members enrolled in the plans.
An intra-year pause on new enrollment is unlikely to materially affect earnings but is a negative regulatory signal that adds uncertainty as CMS expands its risk-adjustment data validation audits, said Barclays analyst Andrew Mok.
CMS is also imposing communications suspensions until Elevance corrects these deficiencies and demonstrates they will not recur.
(Reporting by Sriparna Roy and Sahil Pandey in Bengaluru; Editing by Krishna Chandra Eluri and Shilpi Majumdar)
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