Medicare Advantage audits could save $4.5 billion over a decade, CMS says
CMS said its proposed rule for Risk Adjustment Data Validation (RADV) audits could save $4.5 billion in recouped savings over a decade.
The proposed rule, which was part of the telehealth proposal last month, calls for audits to confirm that Medicare Advantage (MA) payers are providing supported medical record documentation for what they’re owed.
CMS found that more than 8% of MA payments were incorrect in fiscal year 2017. That’s more than $14 billion in improper payments, including 35% that were underpayments.
Federal policymakers, regulators and investigators have bought up the issue of overpayments in the past. The Department of Justice has been involved in multiple cases involving MA payments.
CMS’ proposal calls for digging into data for a sampling of members to explore any possible improper payments or overpayments. CMS said the change involves improving “program integrity,” as well as recovering improper payments.
Responding to the audit proposal, Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP), said in a statement that health insurers are committed to providing “clarity and certainty” for the MA program but question the proposal.
“AHIP supports program oversight to protect taxpayers and beneficiaries – but audits must be conducted in ways that are methodologically and actuarially sound, and are legally appropriate, to avoid highly inaccurate findings that could undermine the ability of MA plans to deliver for the 20 million Americans they serve,” Eyles said.
Eyles said AHIP is concerned that CMS’ proposal reverses a position that “the adjuster is legally and actuarially required.” AHIP is also worried about methodological issues brought to light in a recent study by the Wakely Consulting Group, which could cause highly random and arbitrary results. Retroactively applying the proposed rule would “exacerbate these problems,” AHIP said.
Payers have increasingly turned to MA as a growth area. From the largest MA payers like UnitedHealthcare and Humana to more modest MA populations like Cigna, they all view the marketplace as a place for expansion. MA has grown in premiums from $69.9 billion in 2007 to $202.7 billion in 2017. It represented one-quarter of overall industry premiums in 2017.
One reason is the continuous stream of healthy seniors who become eligible for Medicare daily. Another key is the advantageous payment model that includes risk-adjusted payments. While payers view the payment model positively, investigators and regulators see a program fraught with possible overpayments.
CMS is attempting to capture some of those improper payments through the proposed rule. The proposal likely won't affect the MA market's momentum but may cause the payers to lose some of the money they’ve come to expect from the program.
- America's Health Insurance Plans AHIP Comments on CMS Proposal to Change Medicare Advantage Risk Adjustment Data Validation Audits