Is your Organization prepared for the CMS RADV Final Rule?
RADV
What is Risk Adjustment Data Validation (RADV) Program?
RADV program is the process the Centers for Medicare & Medicaid Services (CMS) uses to ensure that Medicare Advantage Organizations (MAO) submit accurate risk adjustment data and recover any improper payments made based on inaccurate information.
In simpler words, RADV is the way CMS ensures that all the diagnosis codes submitted for risk adjustment payments are supported by medical records. If the codes are not supported, CMS recalculates the payment and recovers the differential from MAOs.
CMS uses the RADV program to protect the integrity of Medicare, ensure Medicare beneficiaries receive high-quality care, and safeguard taxpayers’ money.
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A brief history of the RADV Program
The history of the RADV program dates back to payment year (PY) 1999 when only 10% of payments made to MAOs were risk-adjusted. From PY 1999 to PY 2003 audit period, CMS focused primarily on providing educational information to help MAO to improve the accuracy of their risk adjustment data. During this period, CMS only recovered payments from the small Medicare Advantage (MA) plans audited, as the results of audits were not extrapolated to the contract level.
In 2004, CMS started risk-adjusting payments to MAOs. However, CMS didn’t start the recovery of improper payments until 2007, as it considered 2004 to 2006 as the RADV program’s pilot years. In 2007, CMS conducted two sets of RADV audits and recouped $13.7 million. Like previous audits, the results were not extrapolated to the contract level, and recovery was limited to those MAOs sampled in the audit.
After the 2007 RADV audit, CMS paused the program for three years 2008, 2009, and 2010. It used the break to review and improve its methodology. In 2010, CMS made an informal proposal to extrapolate samples from Medicare Fee-For-Service (FFS) to calculate Medicare Advantage (MA) contract-level risk adjustment payments. However, MAO raised concerns about the proposal, stating it can result in an understatement of treatment costs and underpayments.
Then in 2012, CMS issued a new methodology on its website, which it plans to use for RADV audits starting from PY 2011. This methodology included using FFS (Fee-For-Service) Adjuster and Extrapolation, but CMS never applied the FFS Adjusters.
In 2018, CMS proposed a new RADV Rule that codifies the methodological approach it intends to adopt for PY 2011 and subsequent years into its regulation. The proposal also removed the use of FFS Adjuster and added extrapolation as proposed in 2012. However, the 2018 RADV proposed rule was not finalized until 2023.
On January 30, 2023, CMS released the RADV final rule that addresses FFS Adjusters and extrapolation. Below is the summary of the critical components of CMS RADV Final Rule:
- CMS RADV Final Rule departed from the 2018 rule that proposes to apply exploration to RADV audits from 2011. It states that extrapolation will only begin from PY 2018.
- CMS will only recover non-extrapolated overpayments in audits between PY 2011 and PY 2017
- CMS RADV Final Rule didn’t mention any specific exploration methodology that it will use for Part C audits.
- Further, the Final Rule focuses RADV audits on areas with the highest risk of improper payments. However, it didn’t define what will qualify as high risk.
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What impact can RADV audit have on health plans?
RADV audits pose significant risks to health plans, especially those with errors in their risk adjustment documentation. If CMS discovers that the data your organization submitted are incorrect and incomplete, it may recalculate your payments and recover any overpayments made to your plan. Your organization may also face steep financial penalties and litigations.
In addition, RADV audits can affect your health plan’s reputation. If CMS finds errors in your submission during the RADV Part C audit, it could reduce consumers’ confidence in your plan. Further, RADV audits impact health plans’ operations as organizations now have to invest more to improve their coding practices and documentation to reduce the risk of errors in their risk adjustment data.
CMS RADV FINAL RULE
Why having compliance coding in your organization is more important now than ever
Following the new CMS RADV Final Rule, it is now critical for Medicare organizations to ensure that all diagnosis codes submitted are accurate and supported by medical records. Failure to comply with this requirement can lead to significant financial penalties and reputation damage.
To avoid these risks, it is now essential for health plans to incorporate Medicare Advantage Compliance Audit as a crucial part of their operations. By implementing a compliance plan, your team can effectively identify and correct errors and discrepancies in your risk adjustment documentation before they get to the RADV audit level.
Aside from helping health plans avoid financial penalties and reputation damage, Medicare Advantage Compliance Audits can also assist MAOs in identifying areas for improvement in their coding and documentation processes. By doing so, organizations can improve the quality of care delivered to their patients.