A federal judge in the Northern District of Texas vacated CMS’s 2023 RADV Final Rule and remanded it to the agency—effectively putting extrapolation-without-an-FFS-adjuster on ice for now. Treat this as breathing room, not absolution. ¹ ²
The RADV landscape is unsettled; court action has reset the board, but not the stakes. While the ultimate contours of the audit rule play out, payers still have decisions to make about reserves, models, operations, and provider engagement. Rather than debate what might happen, we have compiled actionable recommendations from leading analyses—law firms, consultants, industry coverage, and CMS materials—and translated them into a practical, “do-now” checklist for health plans.
Think of it as a field guide for the limbo period. We surfaced what multiple credible sources agree on (freeze risky assumptions, tighten documentation, pressure-test exposure) and what’s smart even if the pendulum swings again (strengthen prospective accuracy, clean data at the source, sharpen appeals posture). Each recommendation is attributed so readers can see who said it and why, then adapted into concrete steps: what to do, who should own it, and how to measure progress.
This is not legal advice, and it’s not a prediction. It’s a synthesis of current best-available guidance to help you act with discipline while the rule is in flux. Use it to align finance, actuarial, compliance, SIU, and clinical teams around a common operating picture—and to avoid rework when the next decision lands. If you’re re-setting your RADV playbook, start here, then tailor by contract, risk profile, and audit posture.
What the court actually held (plain English).
The court found an Administrative Procedure Act problem: the Final Rule wasn’t a “logical outgrowth” of the proposal, so stakeholders lacked fair notice to comment. That APA defect alone justified vacatur; the court didn’t bless or ban extrapolation on the merits. Translation: CMS lost on process, not necessarily on substance—leaving room for appeal or a fresh rulemaking that cures the notice defect. ³ ⁴
What’s paused—and what isn’t.
Vacated: the 2023 framework enabling extrapolation from PY2018 forward without an FFS adjuster. Still live: legacy RADV mechanics, OIG and DOJ oversight, False Claims Act exposure, and plan-level program-integrity expectations. Think “reprieve,” not “amnesty.” ⁵ ⁶
How we got here.
In 2023, CMS finalized a RADV policy that removed the FFS adjuster and authorized extrapolation beginning with PY2018—arguing that MA error rates shouldn’t be tethered to FFS documentation error. Plans countered that the abrupt shift, plus retroactive-feeling exposure, overstated repayment risk. Litigation followed; the Texas decision is the current inflection point. ⁷ ⁸
Finance & bids: recalibrate without relaxing.
Revisit loss models and reserve methodologies that assumed worst-case extrapolation. Build a sensitivity matrix that spans three forks:
1) government wins on appeal;
2) CMS re-proposes a narrower, procedurally cleaner rule;
3) status quo persists longer than expected.
For CY26 pricing, you may realize near-term relief on clawback assumptions, but don’t rip out risk buffers—show your board and auditors the deltas with line-of-sight to appeal timelines. Update MD&A where methodology changes are material, and consider liquidity cushions proportional to contract-level exposure. ⁴
Compliance posture: don’t stand down.
The safest move is to double-down on prospective accuracy while the courtroom dust settles. Keep chart retrieval humming, maintain strict query hygiene, refresh coder QA sampling, and push targeted physician education on documentation specificity (e.g., recency, MEAT, and chronic condition persistence). Track KPIs that matter if scrutiny returns: HCC capture rate, error mix, denial overturn rate, and audit cycle-time. Preserve a ready-to-run RADV playbook so you’re not rebuilding muscle if the pendulum swings back. ⁶
Provider contracting & operations.
With immediate extrapolation risk reduced, stabilize network relationships: clarify audit/recoupment clauses, right-size medical record obligations, and de-escalate retro battles where practical. More importantly, invest in point-of-care tools that make correct documentation the path of least resistance—smart templates, condition carry-forward with evidence prompts, and close-the-loop workflows between coders and clinic teams.
30/60/90-day action plan.
30 days: Freeze RADV-rule assumptions in financial models; stand up a cross-functional SWAT (actuary, legal, SIU, compliance, ops) to catalog open audits, exposure bands, and disclosure needs.
60 days: Refresh audit playbooks; align vendor SOWs to current posture; roll out a focused provider training sprint (top ten documentation misses).
90 days: Prepare comment-letter scaffolding for any re-proposal; finalize bid sensitivity tables and board-ready decision memos; simulate two appeal timelines and their reserve impacts.
What to watch next.
Expect a DOJ/CMS appeal to the Fifth Circuit and/or a new NPRM that walks the APA tightrope more carefully. Industry groups will weigh in; some states may test their own levers. Your job: keep leadership grounded in scenario math, keep operations focused on prospective accuracy, and stay nimble as CMS signals its next move. ² ⁴
Conclusion
The Texas ruling doesn’t end RADV—it resets the board. Treat extrapolation-without-FFS-adjuster as paused, not dead. Use the window to convert uncertainty into discipline: rerun reserves with clear forks (appeal win, new NPRM, prolonged status quo) and show boards the bid sensitivities, liquidity cushions, and disclosure impacts.
Do not stand down on compliance. Keep retrieval humming, sharpen coder QA, and push targeted provider training so documentation specificity becomes routine. Operationally, stabilize networks, refresh audit/recoupment clauses, and streamline record-sharing to reduce friction when scrutiny returns.
Prepare to influence what comes next. Build comment scaffolding now—positions, data, and examples—so you can respond the moment CMS re-proposes. If the government wins on appeal, you’ll re-activate extrapolation response immediately; if CMS revises the rule, you’ll shape the contours. Reprieve secured. Momentum yours to lose. Now move.
Footnotes
