The Age of Audits: Why You Need to Re-evaluate Your Risk Adjustment Strategy
This article was written by Rick Monaco and Pat Petty of GHG Advisors, a sister company to Pareto Intelligence.
Within one week of each other, two (2) Medicare Advantage Organizations (MAOs) were spotlighted for allegedly overstating the health status of Medicare Advantage members to receive millions in additional risk adjustment premiums.
In Medicare Advantage (MA), health plans are reimbursed on a per-member basis, which is adjusted to reflect the health status of covered beneficiaries. This health status is determined by the data collected during face-to-face visits with providers (such as diagnostic codes). Consequently, a plan will receive an additional premium if the health status of the Medicare Advantage population is overstated.
In September 2020, GHG Advisors shared a blog post focused on the Department of Justice’s (DOJ) increased focus on risk adjustment and compliance, which evaluated how MAOs utilized chart reviews to enhance risk adjustment payments for Medicare Advantage beneficiaries.
Of the two (2) cases mentioned above, the DOJ is investigating a whistle-blower accusation, whereas the other is engaged in an audit by the Office of Inspector General (OIG) to validate the health status of their population. OIG audits are similar to Risk Adjustment Data Validation (RADV) audits, where samples of diagnosis codes for a number of beneficiaries with at least 1 Hierarchal Condition Category (HCC) for a given payment year are reviewed to determine if there is supporting medical record documentation for those conditions. In a DOJ/OIG audit, the government may enforce a ruling against the plan and recoup any overpayments. In an RADV audit, CMS is the governing body over the process and is responsible for overpayment reconciliation.
While both organizations vehemently deny fraudulent activity or wrongdoing, they join a long list of health insurers who faced similar scrutiny around the integrity of diagnoses supported by clinical services.
OIG Audits: Not An Isolated Incident
The allegations against these two organizations follows a recent trend of OIG investigations and lawsuits alleging the overpayment of risk adjusted dollars to MAOs. For years, CMS has been preparing the industry for the day when investigative audits would translate into financial penalties for MAOs. These are not the only organizations whose data collection or submission practices has been scrutinized.
Consider the following:
October 2018: $270M settlement
April 2019: $30M paid to “resolve allegations that certain of those entities, including hospitals and medical foundations, submitted unsupported diagnosis codes to MA plans that inflated risk adjustment scores and caused overpayments to the Plans.”
March 2020: Department of Justice (DOJ) files a False Claims Act (FCA)
August 2020: DOJ files a FCA lawsuit
March 2021: OIG audit investigates claims resulting in $14.5M in overpayments.
April 2021: OIG alleges a risk adjustment program “improperly collected nearly $200 million in 2015 by overstating how sick some patients were, according to a new federal audit, which seeks to claw back the money.”
If this doesn’t catch the attention of the Medicare Advantage ecosystem, nothing likely will.
The Challenge: Risk Accuracy
Throughout the years, MAOs (and 3rd party vendors alike) have enacted strategies to ensure comprehensive data collection and data interrogation for supporting their risk adjustment initiatives. Whether the strategies require external collaboration or are wholly internalized, the OIG identified a core theme in the examples shared above: risk enhancement has outpaced risk accuracy.
Historically, most plans utilized chart reviews as the primary method for capturing supplemental codes – which translates into financial gain. However, the examples previously shared are a reminder that MAOs have an obligation to delete diagnosis codes if they are explicitly aware it cannot be substantiated within a medical record. Failure to do so will result in overpayments from CMS and create a liability for the MAO.
What should MAO executives do now?
GHG poses the following questions that executives should ask their internal risk adjustment teams, including:
Are my risk adjustment programs designed to collect only additional member diagnoses for submission to CMS?
- Do I have a risk adjustment mitigation program in place to survey diagnoses submitted on claims to determine if there is a documentation risk (i.e., no documentation support for the diagnoses)?
- Has an independent review of the risk adjustment program been completed to assess for compliance risk?
Per CMS, all MAO’s must attest annually that information that plan sponsors submit for the purposes of risk adjustment are “accurate, complete, and truthful, and acknowledge that the information will be used for the purposes of obtaining federal reimbursement.” MAO’s must start to evaluate their own risk adjustment programs to ensure their programs are appropriately meeting this standard. This is an effort that truly requires a cross functional and collaborative effort to fully support the organization (e.g., finance, legal, risk adjustment, compliance, etc).
Additionally, a solid analytic strategy will allow MAOs to:
- Gain meaningful insights into diagnostic profiles for member condition suspecting and validation of potential condition ‘irregularities’
- Understand KPIs that gauge organizational performance and opportunities for course-correction where necessary
- Leverage and integrate findings to support complimentary initiatives
Alongside the analytic foundation, a holistic risk adjustment strategy to facilitate complete and precise documentation during the point of care is recommended.
Moving Forward: Assessing Risk Adjustment Programs
MAO's need to start assessing whether their risk adjustment programs are solely intended to support only risk score improvement initiatives versus risk score accuracy. GHG recommends that MAO’s re-evaluate their risk adjustment strategies to ensure they are taking the appropriate steps to mitigate any potential exposure to audit findings.
Learn more about our Revenue & Payment Integrity Solutions here.
GHG is the leading solutions and consulting firm for government-sponsored health programs. Their team of experts consists of seasoned veterans who have served at every decision-making level of leading health plans, PBMs and state and federal agencies.