Today, January 30, 2023, the Centers for Medicare & Medicaid Services (CMS) released long-awaited regulations governing Risk Adjustment Data Validation (RADV) audits for Medicare Advantage Organizations (MAOs). Read the full announcement here.
In my opinion, CMS Administrator Chiquita Brooks-Lasure and her team have crafted a compromise regulation that reasonable entities should find satisfactory. Along with OMB, HHS Secretary Becerra, and President Biden, they have set forth finalized regulations that call for no extrapolated fines for RADV audits conducted for Payment Years 2011 through 2017. Starting from Payment Year 2018 and onward, extrapolation of audit findings to a contract’s total enrollment will commence.
Despite MAOs believing that a FFS Adjuster was essential for RADV audits, CMS has finalized the RADV regulations without one. CMS states, “As described in the final rule… 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.”
A notable aspect of the Final Notice is that CMS plans to collect extrapolated fines from Office of Inspector General (OIG) audits beginning with Payment Year 2018, in addition to RADV audits. The HHS-OIG has released multiple reports highlighting the high risk of improper risk adjustment payments in the MA program, identifying it as a significant management challenge for HHS.
Even though extrapolated fines will not be collected from the 2011, 2012, and 2013 RADV audits, MAOs are not “out of the woods.” Cortex Analytics has analyzed RADV audit results from 2011-2013, showing projected extrapolated fines totaling 3.69% of premiums paid by CMS across 90 contracts.
If the results from the Payment Year 2018 RADV audit yield similar findings, could your HMO withstand a clawback of 3.7% of premium from CMS?
Cortex Analytics’ software platform, particularly CortexRisk, is designed to assist MAOs in conducting RADV-compliant data collection aimed at achieving accurate risk scores. With today’s CMS announcement, it’s time for MAOs to engage in proactive risk adjustment compliance activities without sacrificing profits, as many fail to manage encounter data effectively to capture all entitled risk-adjusted premiums.