CMS RADV Final Rule is Here: How to be Proactive - Omega Healthcare

CMS RADV Final Rule is Here: How to be Proactive

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The Increased Scrutiny Presented by the RADV Final Rule Requires Providers to Remain More Proactive with their Health Plans and Collaborate Better

Providers and payers must work together to minimize the impact of takebacks and improve the health of members.

The long-anticipated final rule governing Risk Adjustment Data Validation (RADV) audits was issued January 30, 2023, by the U.S. Department of Health and Human Services (HHS) through the Centers for Medicare & Medicaid Services (CMS). The intent is to strengthen Medicare Advantage (MA) by restoring its payment oversight program to ensure accurate payments and hold insurers accountable, as well as ensure access to benefits and services for the people who need them. The impact of the ruling, which has been delayed for four years by the pandemic and industry pushback, will be felt across the industry.

Although there are many questions and concerns, the new provisions open up the opportunity to build and improve working partnerships between health plans and providers. Now is the time to have important conversations about who will take on responsibility for payment recoupments that may result from RADV audits.[1] Plans should work closely with their providers to coordinate how medical records are maintained for audit. Strong collaboration is needed between stakeholders to develop value-based care partnerships that align documentation and coding needs with optimal care delivery.

Significance of the RADV final rule

At the heart of this final rule are more than 30 million people who receive their Medicare benefits through MA. By issuing the new final rule, CMS is taking steps to improve the overall spend on the program, so it is funded to its fullest potential for participants.

The final rule not only proposes a series of technical updates to the MA risk adjustment model to improve payment accuracy, but also aims to increase audits of MA insurers likely to recover an estimated $479 million per year starting in 2018 and a combined recovery of nearly $5 billion between 2023 and 2032. Ninety federal audits of billings from 2011 through 2013 show widespread overcharges and errors in payments to MA plans for seniors with about $12 million in non-extrapolated overpayments.[2]

CMS is responsible for making accurate payments to MA organizations while safeguarding federal taxpayer dollars, as well as ensuring continued access to benefits and services for people with Medicare. In 2018, CMS proposed changes to the CMS and OIG audit process including extrapolation of audit findings across contracts or populations starting with audits conducted for payment year 2011. This resulted in strong pushback from stakeholders.

With the latest final rule, CMS will instead identify MA plans through statistical modeling and data analytics that are at highest risk for improper payments. Offering some relief, CMS ruled to extrapolate CMS and OIG audit findings beginning with payment year 2018 and only collect non-extrapolated overpayments from 2011 through 2017. And they will not likely make extrapolated recoveries for payment year 2018 until calendar year 2025.[3]

On a call with reporters January 30, Department of Health and Human Services Secretary, Xavier Becerra, expressed the ruling provides CMS appropriate oversight and ensures the integrity of the Medicare program.[4]

Medicare Advantage health plan concerns

The ruling continues to raise questions in the MA risk adjustment community with speculation that litigation could be around the corner. For now, the ruling provides CMS the power it was lacking and refocuses stakeholders on the importance of accuracy when performing HCC coding activities.

Matt Eyles, president and CEO of the insurers’ lobby AHIP, said the rule is unlawful and flawed. Some argue that it comes at a great cost and fails to address conspicuously bad diagnosis coding violations. Analysts also predict plans will reduce benefits to protect their margins.[5] Some plans may pull out of markets, and beneficiaries could be faced with increased costs, fewer plan choices and reduced supplemental benefits under the MA program.[6]

Also of concern to plans, the new ruling will not apply a Fee-for-Service (FFS) adjustment factor to offset error rates.[7] The FFS adjuster, applied since 2012, was meant to account for differences in documentation requirements when comparing MA to traditional Medicare. CMS followed through with eliminating the FFS adjuster which they initially proposed in 2018. CMS cited a 2018 study that found the adjuster had a negligible effect of less than 1% on average in favor of health plans and noted errors in FFS claims don’t have any “systematic effect” on MA risk scores.

Health plans are also concerned about the final rates that will be published April 3, but the Advance Notice of MA rates for 2024 released on February 1 may alleviate some concerns with the Biden administration proposing a 1.03% increase in MA and Part D plan payments. The comment period prior to the final rate release in early April will be quite active as health plan leaders consider the combined impact of the final RADV rule coupled with proposed changes in the Advanced Notice.[8]

Next steps and how to be proactive

Audits are resource intensive, often pulling skilled people away from mission critical tasks. The ability to improve documentation and coding for risk adjustment by providers and payers is challenged due to the lack of skilled resources. The consequences of not being prepared, however, can’t be ignored. This is why it’s more important than ever to explore options to improve the accuracy and completeness of documentation and coding ahead of audits. Risk-bearing entities will need an effective, proactive strategy to be prepared for the expected impact.  

Risk-bearing entities can expect CMS’ audit activities to ramp up quickly. Partnering with a third party such as Omega Healthcare’s risk-adjustment coding experts can provide strategic advantages in preparing for audits. Omega Healthcare is a leading provider of risk-adjustment coding services to health plans and providers. With broad expertise in MA, ACA, and Medicaid plans and experienced coders in hierarchical condition coding, its team has unique insight into the challenges, requirements, and operations of all stakeholders, which enables it to deliver accurate and complete results for clients. 

Learn more about how Omega Healthcare can help organizations improve risk-adjusted coding and achieve HCC compliance. 

Best Practices to Achieve HCC Compliance

Chris Rigsby, SVP Payer Solutions at Omega Healthcare, has led successful member and provider engagement initiatives at both health plans and solution vendors in the payer market. His extensive industry experience in risk adjustment and quality of care working with ACA, Medicaid and Medicare Advantage plans helps him effectively build value-based care partnerships between payers and healthcare providers centered around improving patient outcomes.

[1] “CMS releases RADV final rule: Unwelcome changes ahead for Medicare Advantage plans,” Ana Handshuh, Rise Health, January 23, 2023

[2] “Audits—Hidden Until Now—Reveal Millions in Medicare Advantage Overcharges,” Fred Schulte and Holly K. Hacker, KHN, November 21, 2022

[3] “RADV Final Rule and its Implications for Plans,” Steven D. Hamilton, ReedSmith, February 1, 2023

[4] “Medicare Advantage plans lose out in final RADV audit rule that ditches fee-for-service adjuster,” Robert King, Fierce Healthcare, January 30, 2023

[5] “Biden administration seeks to recoup $4.7 billion from Medicare Advantage plans,” Adriel Bettelheim and Maya Goldman, Axios, January 30, 2023  

[6] “Overview and Implications of CMS’s Proposed Changes to MA RADV,” Avalere, August 23, 2022

[7] “Medicare Advantage plans lose out in final RADV audit rule that ditches fee-for-service adjuster,” Robert King, Fierce Healthcare, January 30, 2023

[8] “AHIP Responds to CMS 2024 Advance Rate Notice for Medicare Advantage and Part D Plans,” Insurance News Net, February 1, 2023

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