When it Comes to the RADV Final Rule, the Best Defense is a Good Offense

This article is published in collaboration with Omega Healthcare.

After a four-yearlong delay, the long-awaited Risk Adjustment Data Validation (RADV) final rule is now in place. The purpose of the rule is to improve payment oversight of Medicare Advantage (MA) plans, ensure accurate payment for providers, and improve members' access to benefits.

Why the RADV Final Rule is Significant

A total of 90 federal billing audits from 2011 through 2013 uncovered substantial overcharges and payment errors to MA senior plans, along with approximately $12 million in non-extrapolated overpayments.

Thirty million people depend on MA plans to receive their Medicare benefits. The final rule helps ensure appropriate steps are taken so that the program is fully funded while at the same time protecting taxpayer dollars. It does this by proposing technical updates to the MA risk-adjusted model to enhance accurate payments and also to increase the number of MA payer audits. The result is expected to include nearly $5 billion in recoveries from 2023 to 2032.

As described in the final rule, CMS will use data analytics and statistical modeling to identify MA plans at the highest risk of inaccurate payments. Audit extrapolations will begin with payment year 2018, and only non-extrapolated overpayments will be collected from 2011 to 2017. Extrapolated recoveries for 2018 will likely not be made until 2025. In this way, the final ruling enables more effective Centers for Medicare and Medicaid Services (CMS) oversight and enhanced integrity of the Medicare program.

MA Plan Pushback

While the final ruling emphasizes the value of accurate Hierarchical Condition Category (HCC) coding, many stakeholders in the risk adjustment community expect an outbreak of litigation in the not-too-distant future. Some industry leaders, such as AHIP President and CEO Matt Eyles, believe the law is “unlawful and fatally flawed,” while others say the rule doesn’t address blatant code violations.

RADV may force some MA programs to reduce member benefits to maintain financial viability while others may exit the market altogether, leaving individuals with fewer options and, potentially, increased costs.

Another pushback is due to the elimination of a fee-for-service (FFS) adjustment factor, which has been in use since 2012, for offsetting error rates. The purpose of the risk adjustment factor was to allow for the variances between traditional and MA plan documentation requirements.  CMS argues that its research shows the adjustment factor has had limited impact on MA plan risk scores.

Adding to concerns over the final RADV ruling, CMS’s recent release of 2024 payment terms for MA confirms a three-year transition to the new model, which is projected to reduce the risk adjustment portion of MA payments by $7.6 billion, a decrease of 2.16 percent.

The Best Defense is a Good Offense

Everyone dreads audits. They’re not only resource intensive, but they typically require the focused attention of the most skilled team members, taking them away from more case-critical projects. The best defense for risk-bearing organizations is to proactively address measures to improve coding and documentation quality before the next audit.

One of the most effective measures health plans can take is to develop and maintain good relationships with their providers. Before value-based care, there were no incentives for health plans and providers to work together on a member’s care plan. Health plans often worked around the provider, sending nurses to a member’s home without the provider’s knowledge to assess risk. Now that health plans and providers share equally in the risk, it’s more important than ever that they work in tandem to improve risk adjustment factor scores.

A major challenge is that health plans often don’t have the resources or expertise necessary to expand focus on HCC coding, documentation improvements, and audit readiness. Many lack the resources to build relationships with each of their providers. A way to improve this is partnering with a coding partner.

An independent external team of risk-adjustment coding professionals can partner with an organization to help them be better prepared for an audit. A coding partner can provide additional resources and expertise in MA, Affordable Care Act, and Medicaid plans, as well as in HCC coding. Such an independent partner keeps the organization’s goals in mind and can help provide strategic insight into ways to improve payer and provider operations and identify requirements to improve risk adjustment processes overall.

While no one enjoys the administrative time and cost required to conduct or receive an audit, the spirit of the rule is clear: to improve the health of MA plan members. To achieve this goal, providers and payers must work together to reduce audit requirements, minimize the impact of takebacks on providers, and focus on improving patient outcomes. Enlisting the expertise and resources of a risk adjustment partner will be a crucial factor to the success of payers and providers under the new RADV rule.

Chris Rigsby is the senior vice president of payer solutions at Omega Healthcare. He has led successful member and provider engagement initiatives at both health plans and solution vendors in the payer market.

About Omega Healthcare

To learn more about Omega Healthcare’s risk-adjustment coding and HCC compliance services, download the whitepaper, Best Practices to Achieve HCC Compliance.