The Center for Medicare Services (CMS) has announced its intent to use a new extrapolation policy to audit Medicare Advantage insurers’ reimbursement data, focusing on ensuring the accuracy of diagnosis data submitted for payment. The Risk Adjustment Data Validation (RADV) Final Rule will now carry a higher risk of penalties for unsupported diagnoses and is estimated to recover over $4.7 billion in overpayments in the next decade, starting in 2023. With the completion of 30 RADV audits for payment years 2011-2013, 80% of contracts have been identified as having overpayments due to unsupported diagnoses.

The key takeaways from the RADV Final Rule are:

• RADV will extrapolate audit data back to the 2018 performance year instead of 2011, as proposed
• CMS can still recoup payments from 2011-2017, but not based on the new extrapolation policy
• CMS is not applying the Fee-For-Service (FFS) Adjuster in RADV audits

Apixio recognizes the challenges and opportunities this policy presents to Medicare Advantage Organizations (MAOs), and here are strategies to help navigate on next steps:

• Proactive Analysis: MAOs should be aware of the potential financial impact of RADV errors, including extrapolation that could significantly impact financial performance and overpayment recoveries flow-down from the insurer to the provider. We recommend sampling previous payment years, addressing any errors, accruing for future RADV recoveries, and ensuring that risk-bearing providers understand the potential impact of unsupported diagnoses.
• Centralize Health Data Management: Build data-sharing relationships with providers on retrieving and retaining charts. Evaluate the current state of how you manage charts for RADV and how easily and securely your organization can access the relevant charts in the event of an audit. Centralized health data management for charts could be useful to pull charts for RADV and across your enterprise to reduce administrative waste and minimize provider abrasion.
• Look Both Ways: Industry experts have shared that health plans should prepare for increased RADV and OIG audit activities between now and 2025 to account for more recent payment years. We advise taking immediate action to shore up the compliance structure, policies, and processes related to risk adjustment activities. Looking both ways for retrospective chart reviews should be part of your coding activities to accurately document supported and unsupported codes.
• Invest in Your Prospective Strategy: A successful risk adjustment strategy includes utilizing efficient techniques to ensure a diagnosis code on a claim is also supported in the medical records for everything submitted to CMS for risk adjustment-related reimbursement. Taking a proactive stance with a prospective strategy is crucial to supporting providers in accurate coding and complete documentation efforts. Payment recoveries could impact providers taking on risk for MA contracts.

At Apixio, we are committed to empowering healthcare organizations in an ever-evolving value-based care landscape. We aim to help payers and providers take proactive measures to ensure compliance and sustainability in administrative and care delivery workflows.

Check out our latest guide to understand the updated regulations and hear from our SVP of Strategy & Product, Sam Diederich, as he shares the top three strategies to help avoid risk during this time. Download the guide.