The federal government is examining how it can beef up medical record auditing of Medicare Advantage insurers, which have been accused of exaggerating patient diagnoses to pad their payments. New procedures outlined by the feds will lead to heftier payment recoveries, perhaps tens of millions of dollars more compared with past audits.
The latest federal notice comes a few months after the CMS outlined a plan to expand Medicare's Recovery Audit Program to Medicare Advantage, the private, managed-care version that competes with traditional Medicare.
Last week, the CMS released a request for information that targeted Medicare Advantage risk-adjustment data validation (RADV) audits. Medicare insurers are paid lump sums based on the health status, or risk scores, of their members. During RADV audits, the government requests a sample of medical records to determine if an insurance company's risk scores are legitimate and worthy of higher payments. Risk scores are developed from house visits and clinic assessments that are coded and initiated by the insurer.
RADV audits serve as the federal government's primary policing tactic to find and recover overpayments made under Medicare Advantage.
In the request notice, the CMS asked coding vendors and healthcare consulting companies to submit plans on how they could help the agency with its RADV audits. Responses are due by March 29.
If the CMS decides to award contracts, the winning parties would review up to 100,000 medical records from Medicare Advantage plans and examine up to 40,000 appeals from insurers. Contractors are expected to have certified coders on staff.
Upcoming RADV audits are expected to result in “much more significant recoveries,” according to the CMS, because the agency will extrapolate results. For example, a Medicare plan will have the medical records of a small subset of its members reviewed for accuracy. But instead of clawing back overpayments only on that sample, the CMS will extend the error rate across the entire contract, a method that insurers and providers have heavily criticized.
The contract-level RADV audits have been conducted in only two batches thus far, yielding about $13.7 million in recouped Medicare payments. The extrapolation audits, which already have been conducted on hospitals for fee-for-service Medicare claims, likely will force insurers to refund tens of millions of dollars more than the pilot audits.
The CMS has lined up RADV audits for 60 plan contracts (PDF) that span the 2011 and 2012 payment years. UnitedHealth Group, the largest Advantage insurer by membership, has nine of its contracts in the crosshairs. Aetna and Humana, which are in the process of merging, each have six contracts set for RADV audits.
No timeline was given for the award of potential RADV contracts, nor has there been any update to Medicare Advantage RACs, which would house RADV audits under one centralized program.