Blog Archives
Risk Adjustment Audits Are Here!!! Watch Out MAOs!
Risk adjustment is hugely important in Medicare Advantage (MA). Risk adjustment is intended to financially adjust taking into account the underlying severity of beneficiaries’ health conditions and appropriately compensate private insurers with vastly varying expectations for expenditures. In each year, plans receive higher payments in direct proportion to documented risk: A 5 percent increase in documented risk leads to a 5 percent increase in payment. Yet, because MAO have considerable control over the documentation, it is common for insurers to erroneously document patient risk and receive inflated payments from CMS, at least according to several CMS and OIG Reports.
Enter Risk Adjustment Data Validation (RADV) audits.
These are the main corrective action for overpayments made to Medicare Advantage organizations (MAO) when there is a lack of documentation in the medical record to support the diagnoses reported for risk adjustment
CMS has conducted contract-level RADV audits by selecting about 30 contracts for audit annually (roughly 5 percent of MA contracts). CMS then selects samples from each contract of up to 201 beneficiaries divided into three equal strata (low, average, and high risk). Auditors then comb through each beneficiary’s medical records to determine whether diagnoses that the MA plan submitted are supported by documentation in the medical record. From this process, auditors can calculate an error rate for the sample, which can then be extrapolated to the rest of the contract. For instance, if auditors determine that an insurer overcoded a sample’s risk by 5 percent, auditors could infer that plans under that contract were overpaid by 5 percent. Historically, however, CMS has only sought to collect the overpayments identified for the sample of audited beneficiaries. Not any more!
A CMS Final Rule, published February 1, 2023, addresses extrapolation, CMS’ decision to not apply a fee-for-service (FFS Adjuster) in RADV audits, and the payment years in which these policies will apply. Once it goes into effect on April 3, 2023, CMS estimates it will result in the recoupment of $4.7 billion in overpayments from MA insurers over the next decade.
As for extrapolations, CMS will not extrapolate RADV audit findings for PY 2011-2017 and will begin collection of extrapolated overpayment findings for any CMS and OIG audits conducted in PY 2018 and any subsequent payment year.
The improper payment measurements conducted each year by CMS that are included in the HHS Agency Financial Report, as well as audits conducted by the HHS-OIG, have demonstrated that the MA program is at high risk of improper payments. In fiscal year (FY) 2021 (based on calendar year 2019 payments), OIG calculated that CMS made over $15 billion in Part C overpayments, a figure representing nearly 7 percent of total Part C payments.
The HHS-OIG has also released several reports over the past few years that demonstrate a high risk of improper payments in the MA program.
Looking forward – Expect more MAO audits.
P.S. I will be presenting a webinar on Monday, March 20, 2023, via the Assent platform regarding:
FTC ELIMINATING NON-COMPETE AGREEMENTS HOW THAT WILL AFFECT HOSPITALS AND LTC
DATE : MARCH 20, 2023 | EST : 01:00 PM | PST : 10:00 AM | DURATION : 60 MINUTES
Feel free to sign up and listen!!
Audit the Medicare Payors…It’s Not Always the Providers That Commit Fraud
Today, I am going to write about America’s managed care problem. We always talk about providers getting audited. It is about time that the payors get audited. In particular, for Medicaid, States contract with managed care organizations, which are prepaid, and, for Medicare, Medicare Advantage companies, which are prepaid.
Managed care in Medicare is MA organizations. Managed care in Medicaid is MCOs. These MCOs and MAs need to be held accountable for the misuse of funds.
Today, capitated, managed care is the dominant way in which states deliver services to Medicaid enrollees. And MA is becoming the dominant way to receive Medicare.
Under these prepaid programs, these private companies are paid a flat fee per month depending on the number of consumers to provide whatever care is required for patients based on age, gender, geography and health risk factors. The more diagnoses a person has, the more the company is prepaid. To compensate plans and providers for potential costs of care for individual patients with long-term conditions such as diabetes, heart disease or cancer, Medicare boosts the monthly payment to Medicare Advantage plans under a “risk adjustment” for each additional condition. The system differs from the traditional “fee for service” payment, in which Medicare pays hospitals and doctors directly each time they provide a service.
If companies add more risk adjustment codes to a Medicare Advantage beneficiary’s medical record to receive higher payment — but don’t spend money on the additional care — they make more money. Same as MCOs denying care or terminating providers, the tax dollars line the executive pockets instead of reimbursing providers for providing medically necessary care.
Maybe the answer is remaining with the fee-for service model. Prepaying entities creates a financial incentive to bolster beneficiaries’ health problems then cross your fingers that the health problems never come to fruition either because the beneficiary remains healthy or the health problem was fabricated.
MCOs and MA companies must be supervised by the single agency. These companies cannot have the ability to refuse medically necessary services or terminate provider at will for whatever reason with no repercussions. It’s not fair to the recipients or providers. Maybe it’s time to switch our telescopic lens from auditing providers to auditing MCOs and MAs. Let’s get these RAC, ZPIC, and TPE auditors focused on the stewards of our tax dollars, the prepaid entities.
42 CFR §431.10 dictates a single state agency for Medicaid, which is the Department in each State. CMS is the single agency in Medicare. CMS and State Departments are ultimately responsible for the private MCOs and MAs, but really are allowing these companies autonomy to the deficit of our tax dollars.
If you recall, earlier this year, The American Hospital Association urged the Justice Department to use its authority under the False Claims Act to create a fraud task force to investigate commercial insurers that routinely deny patients access to services. This was due to the April 2022 OIG report that “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns about Beneficiary Access to Medically Necessary Care.”
Instead of audits of providers or concurrently in audits of providers, we need to audit the payors. Both MCOs and MAs. What’s good for the goose is good for the gander.
