The Centers for Medicare and Medicaid Services (CMS) announced a final rule that takes aim at reducing overpayments to Medicare Advantage (MA) plans.
The final rule specifically involves the MA Risk Adjustment Data Validation (RADV) program that CMS uses to recover improper risk adjustment payments made to MA plans. CMS will extrapolate RADV audit findings starting with the 2018 payment year. The move could reclaim overpayments of an estimated $479 million from 2018 and $4.7 billion over 10 years, CMS officials told media outlets on Jan. 30.
“CMS has a responsibility to recover overpayments across all of its programs, and improper payments made to Medicare Advantage plans are no exception,” HHS Secretary Xavier Becerra said in a statement. “For years, federal watchdogs and outside experts have identified the Medicare Advantage program as one of the top management and performance challenges facing HHS, and today we are taking long overdue steps to conduct audits and recoup funds. These steps will make Medicare and the Medicare Advantage program stronger.”
The move comes as the number of Americans who have been covered by MA plans, which are provided through private insurers, has significantly grown over the past several years. Nearly 30 million individuals receive their Medicare benefits through MA, according to CMS. Oversight of payments made to Medicare Advantage Organizations (MAOs), which are the private companies that contract with CMS to provide Medicare benefits, is part of CMS’ statutory obligation and fiduciary duty. And the final rule is consistent with oversight of the Medicare FFS and MA programs.
“CMS is committed to protecting people with Medicare and being a responsible steward of taxpayer dollars,” CMS Administrator Chiquita Brooks-LaSure said. “By establishing our approach to RADV audits through this regulation, we are protecting access to Medicare both now and for future generations. We have considered significant stakeholder feedback and developed a balanced approach to ensure appropriate oversight of the Medicare Advantage program that aligns with our oversight of Traditional Medicare.”
The final rule is a big change from the originally proposed rule to extrapolate audits beginning in fiscal year 2011. CMS will not extrapolate RADV audit findings for years 2011-2017, and instead will begin with fiscal year 2018. The agency will rely on any statistically-valid method for sampling and extrapolation that is determined to be well-suited to a particular audit. The RADV audits will be focused on MAO contracts that, through statistical modeling and/or data analytics, are identified as being at the highest risk for improper payments, CMS said.
It is likely that MA plans will challenge the final rule, as they could potentially face millions in overpayments. UnitedHealthcare and Humana are two of the largest MA plan providers.
See the final rule here.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."