Five unanswered questions about CMS' new Medicare Advantage audit rule

In January, CMS said it will implement stricter auditing practices around Medicare Advantage plans, but payers and policy experts say they have a lot of questions about the next steps forward.

The new risk-adjustment data validation audit rule is expected to leave commercial payers collectively on the hook for up to $4.7 billion in repayments to the federal government over the next decade. The final rule will only apply to contracts dated from payment year 2018 and up. 

Nearly every major insurance company has been accused of or settled allegations of MA fraud in recent years, which the industry disputes. Payers are accused of exploiting the program through "upcoding" schemes that make patients appear sicker on medical records than they actually are — thereby leading to higher payments from CMS. Some diagnoses are at a higher risk for being miscoded, which can also result in overpayments.

During fourth quarter earnings calls with investors over the last month, payer executives made it clear they are still evaluating how to respond to the new rule and are awaiting more information from CMS around how the changes will be applied to MA plans.

"The lack of fee-for-service adjustment and the as yet undefined sampling and extrapolation methodology leaves a number of open questions as to the viability of the final approach," Centene CEO Sarah London said Feb. 7.

Five key unanswered questions:

  1. How will CMS determine which MA plans to audit?

  2. What methodology will CMS use for audits going forward?

  3. How will CMS decide when to extrapolate its results?

  4. Is there a specific sampling methodology and error estimation strategy that CMS will use?

  5. Will CMS' audits be coordinated with OIG offices? 

Sean Creighton is managing director at Avalere Health, a Washington, D.C.-based healthcare consulting firm. He said payer executives need to be engaged in the policy response and any advocacy that takes place around the new rule.

"This is a multifaceted issue and health plans can best prepare by developing enterprise level work streams to address implications for the 2024 bid, potential liability and financial accruals, compliance and coding practices, and provider contracting," he said. 

The new rule may also increase regulatory burden on providers, who could face more scrutiny over how they document a MA patient's medical conditions.

"The level of effort for providers could easily change under this new policy," said Michael Stearns, MD, specialized consulting director of medical informatics at Wolters Kluwer.

"Then you look at the additional costs to avoid denials or queries from payers. [Organizations] might want to hire internal staff on the provider side to do reviews before they send the documentation off," he said. "This is all theoretical, but it's likely to happen."

MA experts had expected increased oversight around the public-private program this year, which recently hit a milestone of 30 million enrollees.

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