Medicare Advantage plans: Should healthcare organizations care about payer audits, fines? Hint: Yes

You are a CDI Director at a large integrated healthcare system, with oversight of staff working in acute care hospitals and clinics. You have patients with Aetna and Kaiser Permanente. Then the news hits:

Kaiser agrees to pay $556M to settle false claims act (FCA) allegations for inflated risk adjustment coding.

Aetna, $117M for similar allegations.

What do you do?

Celebrate?

No one would blame you. Payers have done great harm to the provider side of the house with unfair denials and flat-out terrible, non-compliant risk adjustment coding practices. I can think of very few things more outrageous than an MA organization denying a diagnosis on the IP side from your hospital, and then later submitting the very same dx to CMS for risk adjustment purposes and its own reimbursement.

So yes, a bit of schadenfreude for these fines is warranted.

But these payouts should also give you pause for a few reasons.

• They are an opportunity to evaluate your own coding practices.
• They may result in a financial hit for your organization, depending on your contracts
• You will feel the pinch in other ways, including tighter pre-authorization.

FCA settlements for alleged upcoding should raise some questions for you, CDI Director.

Here are some questions you need to ask:

• Are you coding conditions with sufficient supporting documentation and evidence of treatment? Would your claims hold up to a similar audit?
• Does your organization have risk-based contracts in play? If so, it might be at risk for recoupments if they include clawback clauses. For example, language about if a code was unsupported—you (provider) submitted them, we (payer) accepted them—we will recoup the money in the event of an unfavorable audit. This is worth a conversation with your contracting and compliance departments. Many organizations don’t realize they’ve effectively agreed to backstop the payer’s risk adjustment exposure through contract language.
• What does this mean going forward? MA organizations will seek ways to shift risk and protect their margins. When payers get burned on risk adjustment, they revert to tighter validation requirements pre-payment, more aggressive audits, and contract terms that push documentation risk downstream to providers.

Admittedly these big FCA settlements have not appeared to materially impact providers … yet. But the Aetna settlement is for claims submitted between 2018-2023. I consider these early signals of future pain.

Increased federal scrutiny of MA risk adjustment doesn’t stop at the plan level. It tends to cascade downstream—plans validate more aggressively, and providers become the source of truth (and liability) for every coded condition.

So the reality of the latest FCA settlement of the day: MA now covers more patients than traditional Medicare. The risk they and their contracted healthcare organizations bear is considerable.

Their bad behavior is on them, but it has broad and potent consequences for everyone.