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Blog   |   9.21.17

3 Reasons Why You Can’t Ignore Compliance

It’s the elephant in the room.

Industry insiders estimate that each year, some 90% of HCC codes are submitted by health plans to the Centers for Medicare and Medicaid Services (CMS) without review, because they come directly from physician claims. A lack of review exposes health plans and their managers to a large liability risk, and the chickens are coming home to roost— CMS, the Department of Justice, and the Office of the Inspector General are all taking action to have stronger oversight over the risk adjustment program. And the effects of these investigations are farther reaching than they might initially look.

We take a deep dive below into three reasons we can’t pretend to not see the compliance elephant stomping around the room.

#1 Stay out of the Regulatory Crosshairs and Limit Financial Exposure

The number one reason to care about compliance – not doing so could lead to billions of dollars in government penalties, under the False Claims Act (FCA).

False claims occur when a vendor requests payment from the government (makes a claim) when they “knew or should have known, that the claim was fraudulent.” Penalties for violating the FCA are up to three times the claim amount, plus an additional $11,000 – $21,000 per claim.
Given this, it’s easy to see how inaccurate and non-compliant coding activities could expose plans to billions of dollars of risk.

In May of 2017, the Office of the Inspector General filed a lawsuit against a large payer that alleges it obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in their largest Medicare Advantage Plan— and therefore violated the FCA.

As the OIG’s actions reverberated, senators and congresspeople began to lean on the Department of Health and Human Services (HHS) and CMS to conduct more oversight over Medicare Advantage plans.

Senator Chuck Grassley (R-Iowa), the influential chairman of the Senate Judiciary Committee, in April asked CMS officials to explain why they failed to collect almost $125 million arising from coding errors identified at five MA plans that underwent an audit in a single year. Additionally, as reported by Salon, “The Government Accountability Office (GAO) , the watchdog arm of Congress, has sharply criticized CMS for its failure to ferret out overcharges and in April 2016 called for “fundamental improvements” in audits of Medicare Advantage plans. GAO also found that CMS has spent about $117 million on Medicare Advantage audits, but recouped just under $14 million in total.”

#2 Stay out of the Press and Limit Reputational Damage

In today’s politically charged environment, it definitely isn’t any good to land on the front page of a major national newspaper. Indeed, The New York Times has covered the topic of risk adjustment fraud extensively over the last six months, even placing the topic on the front page of the print edition at one point. In one article, whislteblower Benjamin Poehling is quoted as saying, “You or I or the average person is probably appalled by this,” Mr. Poehling said. “But the scheme here was not about delivering better care to members — the thing you would expect from a health care company. It was about increasing the bottom line.”

Damage to a plans public reputation can affect it’s perception by its members, for whose patronage it must compete for against other Medicare Advantage plans.

#3 Make Good Use of Taxpayer Money

Lastly, health plans, as good corporate citizens also have a duty to make responsible use of payments from CMS, which are made possible by taxpayer funds.

In August, Apixio Chief Marketing Officer, Mark Scott discussed on Managed Healthcare Executive ,the rising popularity for ‘Medicare for all’. Support amongst the public, and policy makers alike for single-payer health care has been increasing in recent years, with noted acceleration after the passing of the ACA (Affordable Care Act), but a failure of the industry to improve its compliance record could result in a collapse of support.

Health plans, if seen as failing to manage tax dollars under the Medicare Advantage programs will have a difficult time finding a place in any potential single payer system.

A way forward with improved compliance programs

So, what is the way forward for health plans?

As regulators ramp up their interest and capacity to conduct audits, payers will find it ever harder to scale their coding programs, without implementing technology. AI and machine learning technologies such as those employed by Apixio, allow for streamlined and faster coding, without sacrificing accuracy or increasing costs versus traditional manual coding. Whatever the solution, it needs to be enacted fast— compliance will be at the front and center of any successful risk adjustment program going forward.

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Andrew Raymore