CMS intends to increase RADV audits
The Centers for Medicare & Medicaid Services (CMS) intends to significantly increase risk adjustment data validation (RADV) audits, including yearly audits for both Medicare and small group/individual commercial insurance, as required by the Affordable Care Act (ACA).
Risk adjustment is predictive modeling that assesses members? risk for incurring medical expenses above or below the average during a defined time. Demographics and health status are used to determine health plan payments, which can also assist with care management needs.
Diagnoses are collected and their specificity drives risk categorization, called hierarchical condition categories (HCCs). Sicker patients have higher risk scores than healthier patients, which assists with financial forecasting of medical expense and other financial implications. HCCs must be captured annually. Risk adjustment resets every Jan. 1.
CMS provides risk-adjusted premium revenue to Medicare Advantage Plan insurers based on HCCs, which makes it critical to capture and report diagnoses at their highest specificity level. It?s even more critical for documentation to substantiate the diagnoses. This revenue is intended to cover costs to Medicare members: if it?s not accurately captured, the result is higher out-of-pocket expenses for the patient population.
The RADV audit is intended to verify the diagnosis codes submitted for payment through medical record documentation. This ensures risk-adjusted payment integrity and accuracy.
In RADV audits, CMS selects 30 plan contracts and audits 201 members each to validate the diagnosis-driven HCCs submitted during the year. The records also must meet certain for Medicare Advantage Plan criteria, including patient name and date of birth on each page, and specific provider signature guidelines. This can be a challenge because the 201 members could comprise more than 500 HCCs, which means retrieving and reviewing over 1,000 records in a 16-week period. The records that best represent the HCCs are submitted to CMS via the Centralized Data Abstraction Tool (CDAT). CMS then provides a pass/fail for each HCC. Insurers can appeal a disagreement.
The payment error calculation begins by dividing the Medicare Advantage Plan plans? members into three strata based on risk scores, sampling 67 members from each of the 201-member samples. After CMS reviews the records, failed HCCs result in an extrapolated recovery for all members in the relevant stratum. This can result in extraordinary penalties for the plan.
CMS has only completed three RADV audits, so far, for a limited number of insurers. This process is moving to an annual process for all plans. In January 2016, CMS issued a Request for Medicare Advantage Plan, advising of their intent to audit every Medicare Advantage Plan yearly. This would be conducted in either a traditional RADV for Medicare Advantage Plant, or using recovery auditors to audit targeted HCCs.
The ACA requires yearly RADV audits on commercial lines of business beginning in the summer of 2016. Insurers and providers must be diligent to ensure correct documentation and coding, focussing on common errors such as active versus history of cancer and acute condition billing in the office setting.