Last November, the Centers for Medicare & Medicaid Services (CMS) notified health plan leaders responsible for 60 Medicare Advantage (MA) contracts that they were selected for a risk adjustment data validation (RADV) audit for payment year 2018 (PY18).
Whether or not a plan received a RADV audit notification from CMS, leaders should understand the impacts of the final rule changes and how the new methodology for ensuring risk adjustment accuracy and recovering improper payments could affect their organizations.
The Impact of Extrapolation
During a RADV audit, CMS requires plans to submit a sample of medical records so the agency can validate risk adjustment data and identify potential overpayments. If CMS determines that the medical records lack the necessary documentation to support the diagnoses reported by the plan for the purpose of receiving risk-adjusted payments, the plan is at risk.
The final rule included a significant policy change allowing CMS to apply extrapolation starting with the PY18 RADV audits currently underway. CMS may now select a sample of enrollees’ medical records and extrapolate the findings to the entire plan contract to calculate an improper payment amount. As a result, a single contract could be at risk for millions in financial penalties if CMS determines the diagnoses were not supported by medical records.
CMS will also no longer use the fee-for-service (FFS) adjuster, which permitted a certain level of payment error in RADV audits. With the elimination of the adjustment factor to calculate overpayments, plans no longer have that margin of error — further underscoring the need to focus on accuracy.
Preparing for Current and Future Audits
To reduce the risk of significant penalties resulting from the new methodology, MA plans should consider these steps when preparing for a current or future RADV audit:
Assemble subject matter experts for an audit preparedness/response team that meets year-round — not just during an audit. The team should include senior leadership and key stakeholders from legal, regulatory, compliance, coding, finance, and analytics. If the plan works with external partners for coding, medical record review, analytics, or other risk adjustment services, they should also participate. The team should then develop a matrix assigning responsibilities and creating accountability, as well as a playbook that includes timelines for communicating with providers for medical record requests and other steps.
Review CMS memos and tools. Everyone on the audit response team should receive RADV training with current resources and sign up for CMS notifications and tools on the RADV program through CMS’s Registration for Technical Assistance Portal (REGTAP). The U.S. Department of Health and Human Services Office of the Inspector General (OIG) also has a toolkit for MA plans to help decrease improper payments, which OIG and CMS say represent nearly 10% of all MA payments. Plans should also make sure that the leaders designated to receive audit notifications from CMS are the correct contacts so that valuable audit preparation time isn’t lost.
Ensure medical records are accessible from providers and vendors. Streamlining medical record requests can help reduce provider abrasion and administrative burden. To support provider responsiveness, contract language should require office staff to send medical records to the plan within a reasonable timeframe and at a reasonable cost. Plans should also make sure they have copies of charts from medical record review services and any other vendors.
Gather the best medical records to validate risk adjustment for audited hierarchical condition categories (HCCs). When selecting medical records to request, plans should prioritize accuracy over volume to help minimize financial risks and potential abrasion. If resources allow, plans should review all risk-eligible visits and locations from the entire measurement year being audited. If resources are more limited, they should prioritize reviewing charts that are most likely to validate the requested HCC and include all required documentation, according to CMS’s RADV medical record checklist.
Leverage coding software to improve accuracy. Capturing all diagnoses and HCCs when coding should be a top priority. Artificial intelligence (AI) tools like natural language processing (NLP) can uncover errors during routine retrospective chart reviews and in advance of an audit. Software systems can also double-check and triple-check manual chart reviews, which should be conducted by several members of the audit response team before records are submitted to CMS.
Conduct multiple quality assurance (QA) reviews. In normal operations or during an audit, MA organizations should have a QA plan that details the cadence of chart reviews, new coder checks, and other procedures. This can identify problematic documentation patterns so that plans can work with providers to improve accuracy. Plans may also want to consider an outside second-level review combining NLP and human expertise to correct unsupported conditions missed during the first-pass review.
Submit data in the correct format to CMS and share feedback with providers. MA plans that received notification about a RADV audit in November are required to submit their medical records sample by April 21. Plans should establish clear, administrative processes to avoid simple errors like uploading incorrect charts. Once plans receive RADV results from CMS, they should share any patterns or error trends with providers. Plans should also continue to share the results of their routine retrospective chart reviews, which can uncover more timely issues to correct through targeted provider education.
Dispute and appeal erroneous findings if needed. If a health plan decides to appeal the findings of a RADV audit, CMS has released guidance on the process. However, for an appeal to be valid, MA plans must follow RADV rules and regulations and meet all necessary requirements. Plans have up to 60 days to appeal medical record review determinations and payment error calculations.
Prioritizing Accuracy in Risk Adjustment
When CMS’s RADV audit results become available, they should provide valuable lessons on how plans can proactively improve their risk adjustment strategies in the future. This is true not only for the audited organizations but also for plans that were not selected for this round of RADV audits.
By striving for greater accuracy in risk adjustment, MA plans can drive better care for their members and be better prepared for future audits.
Katie Sender
Katie Sender, MSN, RN, PHN, CRC, is vice president of clinical and coding services for Cotiviti.
