The Latest CMS Ruling: What This Means for Medicare Advantage Organizations

On January 30, 2023, the Centers for Medicare & Medicaid Services (CMS) finalized a new rule to overhaul risk adjustment audits performed on Medicare Advantage plans. This ruling directly impacts CMS’ Risk Adjustment Data Validation program, which focuses on the substantiation of diagnostic information submitted for risk adjustment consideration.

While CMS has performed several variations of RADV audits throughout the years, this updated ruling is CMS’ attempt to modernize the process by reviewing more recent data with clearly defined parameters regarding overpayment formulas.

As a result, CMS shared the following associated with the long-anticipated ruling, including:

  • Starting with Payment Year 2018, CMS will extrapolate results from a contract-level RADV audit to the entire plan. All RADV audits prior to PY2018 will not be subject to the extrapolation methodology.
  • CMS will not adjust the overpayment amount based on a similar amount calculated by fee-for-service (FFS), known as the FFS adjuster

What this new ruling means for Medicare Advantage organizations

This announcement will likely generate mixed emotions within the Medicare Advantage organization world. The good news is that CMS will not be applying extrapolated results prior to PY2018. The concern of recouping extrapolated funds from legacy data and processes in previous years has now been eliminated. MAOs have evolved their risk adjustment programs and CMS’ ruling in this area reflects their acknowledgment of these efforts.

With the continual focus on risk mitigation and documentation efforts for risk adjustment programs, MAOs are in an advantageous position to perform better in RADV audits than before. In addition, this accelerated timeframe enables CMS to conduct RADV audits shortly after a payment year officially closes. Again, this ensures an MAO’s risk mitigation efforts are realized most effectively if they’re selected for a contract level RADV.

However, the MAO landscape was likely disappointed to learn CMS will not implement a Fee-For-Service (FFS) adjuster as part of the overpayment formula. MAOs have been arguing for an FFS adjuster stating erroneous diagnosis codes are included in the FFS data when establishing RADV baselines. The reasoning for this type of adjuster is to compensate for the differences in risk adjusted Medicare Advantage and FFS data–therefore reducing the amount of exposure from RADV audits. While the FFS adjuster has not be been applied to date, the removal of this provision will have negative financial impacts for MAOs selected for a contract-level RADV.

Now is the time to assess your current risk mitigation strategy

At this moment, the RADV ruling will have direct implications for MAOs. Therefore, a pervasive risk mitigation strategy is considered a vital component of a successful risk adjustment program. This requires orchestration and participation across the organization to establish a compliance threshold for ensuring the accuracy and comprehensiveness of diagnostic information shared submitted to CMS for risk adjustment consideration. The objectiveis toachieve complete, accurate and compliant clinical documentation, while balancing the administrative impossibility of reviewing and validating 100% of documented conditions. Greater oversight of encounter, and supplemental, data will be an essential step in an MAO’s risk mitigation effort.

Ensuring comprehensive and accurate data will require greater attention to detail of both adjudicated and supplemental diagnostic data capture. This heightened focus will necessitate leveraging analytics for enhanced targeting, oversight capabilities, and for the substantiation of diagnostic data. If information does not meet an MAO’s compliance threshold, the appropriate processes should be enacted to ensure this information is not included in a member’s risk adjustment diagnostic profile.

Proactive risk mitigation through advanced data analytics, combined with clinical experience, will be an imperative

A critical step in any risk mitigation plan is to ensure a robust analytic process, combined with clinical expertise, is implemented to identify scenarios that suggest confirmation of diagnostic data from adjudicated and supplemental data. CMS explicitly states that they will be using data and analytics to identify those at the highest risk for improper payments, and so should you.

Multiple proactive strategies should be implemented, including but not limited to:

  • Augmenting retrospective chases to validate high-risk captured conditions (e.g., OIG’s top 9 mis-documented HCCs, single occurrence conditions, clinically questioned conditions relative to member history) and not simply chasing for net adds.
  • Proactive provider education driven by patient panel-specific coding history.
  • Shift to prospective strategies, achieving complete, accurate, and compliant clinical documentation at the point of care.

If you have any questions about implementing these tactics or would like to review your current strategy, reach out to us below.

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