Today, Monday January 30, 2023, CMS issued long overdue regulations governing Risk Adjustment Data Validation (RADV) audits for Medicare-Advantage Organizations (MAOs). https://public-inspection.federalregister.gov/2023-01942.pdf
In my opinion, CMS Administrator Chiquita Brooks-Lasure and her lieutenants are one smart set of cookies! Along with OMB, HHS Secretary Becerra, and of course President Biden. They have fashioned a compromise regulation that every reasonable entity should find satisfactory.
The finalized regulations call for no extrapolated fines for RADV audits conducted for Payment Years 2011 through 2017. Extrapolation of audit findings to a contract’s total enrollment will begin with Payment Year 2018 and onward.
Despite MAOs appearing to convince themselves that a FFS Adjuster had to be part of RADV audits “or else” (“Give us [big] FFS Adjuster or we give you litigation”), CMS has finalized the RADV regulations WITHOUT a FFS Adjuster. CMS writes, “As described in the final rule, and consistent with a recent D.C. Circuit Court decision in UnitedHealthcare Insurance Co. v. Becerra, 16 F.4th 867 (D.C. Cir. August 13, 2021, reissued November 1, 2021), cert. denied, 142 S. Ct. 2851 (U.S. June 21, 2022) (No. 21-1140), the requirement for actuarial equivalence in MA payments applies to how CMS risk adjusts the payments it makes to MAOs and not to the obligation to return overpayments for unsupported diagnosis codes, including overpayments identified during a RADV audit.”
A somewhat surprising feature of the Final Notice is that now CMS intends to collect extrapolated fines from OIG audits beginning with Payment Year 2018, in addition to RADV audits. The HHS-OIG has also released several reports over the past few years that also demonstrate a high risk of improper risk adjustment payments in the MA program, and has identified the MA program as one of the top management and performance challenges facing HHS for several years due to the high rate of improper payments.
Even though CMS will not be collecting extrapolated fines from the 2011, 2012, and 2013 RADV audits, the MAOs are not “out of the woods.” Cortex Analytics has analyzed the RADV audit results from the 2011-2013 Payment Years (Did Your Health Plan Rip Off Medicare? | Kaiser Health News (khn.org)). For the entire RADV audit sample of 90 contracts over the three years (2011, 2012, and 2013), the projected extrapolated fines (based on the 2018 NPRM formula) total 3.69% of premium paid to them by CMS.
Let’s assume that for the Payment Year 2018 RADV audit, CMS comes up with results similar to the pooled results above and announces a claw back from 30 MAO contracts of 3.7 percent of premium. What if one of those contracts belongs to your HMO? Is your MAO prepared to reduce profits by 3.7 percent?
The Cortex Analytics software platform, and particularly CortexRisk, is designed to help MAOs conduct RADV-compliant data collection and suspecting geared to obtaining the most accurate risk scores possible. With today’s announcement from CMS on the RADV audit paradigm, it is time for MAOs to engage in meaningful and aggressive risk adjustment compliance activities. This does not mean that MAO profits must fall, as we know that many MAOs do not sufficiently manage their encounter data with an eye toward collecting every dollar of risk adjusted premium that is due from CMS.
If you would like to learn how CortexRisk can assist your MAO with achieving optimal and compliant risk scores, please click the REQUEST DEMO box in the upper right corner of this page. In the alternative, you can schedule a brief telephone call with Richard Lieberman to discuss your needs by clicking: https://calendly.com/cortexanalytics/15-minute-meeting