Elevance Health has set aside $935 million to cover potential costs tied to its ongoing risk adjustment data dispute with CMS, which threatens the insurers’ ability to enroll new members into some of its Medicare Advantage plans.

CFO Mark Kaye disclosed the charge during the company’s first quarter earnings call on April 22, saying the figure reflects Elevance’s current best estimate of what the issue could cost as it works toward a resolution with the government.

CMS notified Elevance in late February of its plan to impose intermediate sanctions on the insurer’s MA prescription drug contracts, including the suspension of new member enrollment and certain marketing activities. The agency alleged “substantial and persistent noncompliance” with risk adjustment data submission requirements.

According to CMS, Elevance submitted data corrections for unsupported diagnosis codes from November 2018 through October 2025 via encrypted external USB flash drives rather than the agency’s required electronic systems. The company sent seven letters to CMS over that period saying it did not plan to use those systems, while CMS sent six letters directing it to comply.

On the earnings call, President and CEO Gail Boudreaux said that CMS has given Elevance until July 31 to address the issues, beyond the May 30 extension the agency granted last month. CMS also exempted 11 specific contracts and certain employer group retiree plans from any potential sanctions.

“Certainly, we appreciate the extension of that time frame because it reflects, I think, the complexity of the work required to complete this,” she said. “Based on the steps that CMS has prescribed and the current timeline … we believe and expect that if we complete those steps that the sanctions will not go into effect.”

Ms. Boudreaux also characterized the issue as a historical payment dispute rather than a current compliance concern.

“It’s not about how we operate the business today, and it doesn’t change the confidence … about the integrity of our current risk adjustment practices, our compliance or our governance,” she said. “Since receiving the notice from CMS in February, we’ve moved very quickly to engage directly and quite constructively with the agency on this matter.”

Elevance has said it revised its practices in 2023 following additional CMS guidance, and that the alleged noncompliance relates to claims from before that date. Mr. Kaye previously framed the dispute as a “broader policy and payments” disagreement over how retroactive corrections should be treated under the risk adjustment framework in place at the time.

Elevance had nearly 1.9 million MA members as of March 31.

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