New RADV rule coming soon; get your HCC compliance in order

The buzz is officially starting to build around the impending release of the Medicare Advantage Risk Adjustment Data Validation (RADV) final rule, which is expected to be published on or before Feb. 1 after years of delay.

I hate to sound melodramatic (actually I don’t, healthcare reimbursement isn’t typically this dramatic and I need some drama this AM), but this is something approaching a showdown. For example, in the rule CMS may move forward with removing a fee-for-service (FFS) adjuster used to calculate payments to the big MA plans. The FFS adjuster admits that some diagnosis codes will always be reported in error and so limits what CMS can claw back; removing that provision would hit the payers where it hurts most—in the pocketbook.

But removing it would also lead to more coding rigor, which in turn leads to more provider burden, at a time when providers need it least.

This country is a tipping point between public and private healthcare, Medicare and Medicare Advantage (MA). 2023 is the year when more Medicare-age beneficiaries will be covered under MA plans than traditional Medicare (see KFF Foundation article below). 2023 might also be the year when CMS steps up, flexes its regulatory muscle, and puts some powerful and profitable payers in check.

CMS has the authority to do so; this is after all MEDICARE Advantage and CMS ostensibly has ultimate oversight of the private payers drawing from the Medicare Trust Fund, not the other way around. But the MA organizations include some big, powerful entities, and there is legal precedent around the FFS adjuster.

Also expected in the rule is guidance on the dreaded practice known as extrapolation, whereby RADV auditors who discover coding errors can not only require repayment for said errors, but make the assumption that said errors are pervasive and occur over a longer time frame and greater population than the claim sample. Extrapolation takes an audit that discovered tens of thousands of dollars in payment error and boosts the recoupment to tens of millions. This is a lot of money at stake; a 2017 GAO report stated that CMS made more than $16 billion in improper payments to MA organizations in 2016 alone.

As they say, stay tuned. And put in the effort now to get your HCC assignments audited and compliant.

Meanwhile I highly recommend the articles linked below, in particular the Avalere piece which provides a nice history of this issue.

RISE News: https://www.risehealth.org/insights-articles/regulatory-roundup-what-to-expect-in-the-final-medicare-advantage-radv-rule-the-latest-aca-marketplace-enrollment-data-and-more

Avalere: https://avalere.com/insights/what-to-expect-in-the-final-medicare-advantage-radv-rule

KFF Foundation: https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-enrollment-update-and-key-trends/