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Shares of Elevance Health dropped 8% on Monday after the insurer revealed it had received notice from the U.S. Centers for Medicare and Medicaid Services that enrollment for its Medicare Advantage prescription drug program could soon be suspended.
The agency alleges that Indianapolis-based Elevance has failed to submit required information to federal regulators since 2018. The suspension, which would be effective at the end of this month, would not impact the nearly 2 million people who are currently enrolled in Elevance’s Medicare Advantage plan. CMS sent its notice to Elevance on Feb. 27.
Elevance shares fell to $293 on Monday after the company disclosed the proposed sanctions in a filing with the U.S. Securities and Exchange Commission. It marked Elevance’s lowest closing price since August. Shares were down another 2.5%, to $286, mid-morning Tuesday.
Elevance spokesperson Leslie Porras told IBJ the company is reviewing the letter from CMS.
“We stand firmly behind the compliance and integrity of our Medicare Advantage program, which is supported by rigorous oversight, comprehensive monitoring, and established governance processes,” Porras said in an email. “We value our longstanding relationship with CMS and will continue to engage constructively and transparently. Our focus remains on delivering high-quality coverage and service to our Medicare Advantage members.”
Medicare Advantage plans cover prescription drug coverage for adults ages 65 and up. Under the risk-adjustment model, Medicare pays private insurers a set amount per member, and insurers are paid more when patients are sicker. The model is intended to ensure that health insurers do not selectively choose healthy clients.
Since Nov. 13, 2018, Elevance has failed to submit data corrections for diagnosis codes it identified as unsupported by medical record documentation through CMS’ required electronic systems, according to the notice. Insurers are required to submit the unverified diagnosis codes and return any associated overpayment within 60 days.
The agency said Elevance repeatedly provided the information via encrypted external flash drives — a method CMS has rejected.
“Use of external media to submit protected health information outside CMS systems creates audit and data integrity risks inconsistent with CMS controls and federal security standards,” the notice says.
Elevance continued the practice as recently as Oct. 10, 2025, according to the notice.
CMS also alleges that Elevance routinely certified the accuracy and completeness of its risk-adjustment submissions, despite repeated communication from CMS that their reporting did not satisfy regulatory standards.
“Elevance possessed specific, documented knowledge of the unverified diagnosis codes through its own medical record review processes (or other processes) yet continued to represent to CMS that its risk adjustment data submissions were accurate, complete, and truthful,” the notice says.
CMS says the unsupported diagnosis codes span 2016 to 2024 and affect multiple beneficiaries.
“The potential financial impact of these unsupported diagnoses is substantial and ongoing,” the notice says.
Elevance said in its securities filing that CMS notified the health insurer of its intent to impose sanctions that relate to “alleged noncompliance” by the company with certain Medicare Advantage risk adjustment data for services submitted before April 3, 2023. Elevance says the company “revised its practices in April 2023 following the issuance of additional regulatory guidance.”
The agency requests that Elevance submit all data corrections and unverified diagnosis codes from Nov. 13, 2018, through Oct. 10, 2025, through proper channels or face suspension of its Medicare Advantage prescription program, effective March 31.
Elevance has until March 10 to submit a rebuttal.
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