Dr. Eshelman is a board-certified physician in internal medicine and clinical informatics. Her work at Inovalon involves providing actionable, relevant health data analytics to health plans and providers to improve their ability to care for patients with speed and accuracy, while being patient-centric.
Every year, the Centers for Medicare and Medicaid Services (CMS) conducts Medicare Advantage Risk Adjustment Data Validation (RADV) audits on Medicare Advantage (MA) plans to validate the accuracy and completeness of their data used in risk adjustment.
These audits can be intense and strenuous for MA plans due to the impact that accurate reporting of conditions has on risk adjustment payment. Depending on the MA plan’s validation rates, their risk adjustment factor (RAF) score can be negatively impacted. This will become even more significant going forward with CMS extrapolating RADV audit results across and MA plans entire contract enrollment. RADV audits are an important tool CMS uses to get repayment from MA plans for overpayments.
This blog sheds light on how health plans can work to remain compliant in their coding by identifying potentially over-coded conditions early on. This will minimize potential recoupments by CMS if a RADV audit occurs.
Understanding CMS RADV Audits
CMS and The Department of Health and Human Services’ Office of the Inspector General (OIG) have identified “High-Risk Groups of Diagnoses” to focus on when auditing MA plans.
RADV audits are CMS’s primary way to address improper overpayments made to MA plans. During a RADV audit, documentation is reviewed to confirm that any diagnosis submitted by an MA plan for risk adjustment is supported by the patient’s medical record.
As the healthcare environment shifts towards value-based payment models, Hierarchical Condition Categories (HCC), the set of medical codes linked to specific clinical diagnoses, becomes even more pertinent.
HCCs determine payment accuracy by being the direct link to a specific patient condition. HCC coding also analyzes health record documentation to identify reportable conditions and accurately assigns ICD-10-CM codes to the conditions.
The RADV Final Rule
CMS published a RADV final rule on February 1, 2023. 88 Fed. Reg. 6643. The purpose of the final rule was to outline the audit methodology, recovery process, and related policies that CMS employs in their RADV audits.
Additionally, in the final rule published, it was announced that CMS will extrapolate RADV audit findings across the audited MA contract starting with the PY 2018 RADV audits. The agency also left itself discretion to rely on any statistically valid method for sampling and extrapolation that is determined to be well-suited to a particular audit.
Rather than applying extrapolation beginning for payment year 2011 audits as proposed, CMS is finalizing a policy whereby it will not extrapolate RADV audit findings for PYs 2011 through 2017 and will begin extrapolation with the PY 2018 RADV audit. Critically, CMS also decided not to apply a fee-for-service (FFS) Adjuster in RADV audits, will require that MAOs remit improper payments identified during RADV audits in a manner specified by CMS. The decision not to apply a FFS Adjuster reverses the agency’s position announced in 2012 and will mean that each unsupported HCC identified during a RADV audit will be treated as an overpayment. Humana is currently challenging the final rule in federal court, but CMS is moving forward with implementation while litigation proceeds.
The Proactive Approach
With the decision to eliminate the FFS Adjuster and other new rulings, MA plans may struggle during RADV audits. Although certain aspects in a RADV audit remain out of the hands of the MA plans, there are steps that can be taken which could assist the MA plan in reaching its compliance goals.
CMS and OIG continually adjust their audit focus bases on the modeling for the highest risk HCCs, which can make it difficult for MA plans to manage. However, MA plans can stay ahead of the curve by identifying and addressing their own potentially over-coded conditions before CMS comes in.
Waiting for CMS to identify over-coded conditions is not an ideal situation for MA plans due to the challenges associated with recoupment of premium and increased scrutiny that poor RADV audit performance can bring. Therefore, it is beneficial for MA plans to deploy a proactive approach to managing RADV audits with the help of clinically-informed expert analytics.
Don’t wait for CMS to identify the commonly over-coded conditions, stay ahead of the curve, and proactively manage claims with Inovalon’s regulatory and compliance expertise. Invest in an effective risk adjustment software and build a proactive approach to risk score accuracy.
Contact our team to discover how our cloud-based solutions can support your risk adjustment reporting processes.
The CMS final rule can be accessed here: https://www.govinfo.gov/content/pkg/FR-2023-02-01/pdf/2023-01942.pdf
A CMS press release announcing the rule can be accessed here:
https://www.cms.gov/newsroom/press-releases/cms-issues-final-rule-protect-medicare-strengthen-medicare-advantage-and-hold-insurers-accountable
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