CMS finalizes RADV rule for Medicare Advantage plans

Medicare Advantage carriers will be on the hook for errors made in diagnostic coding reaching back to 2018 under a final rule the Centers for Medicare and Medicaid Services issued Monday.

The Medicare Risk Adjustment Data Validation, or RADV, regulation took five years to complete after its draft version published in 2018 and attracted vehement opposition from the health insurance industry.

“What we’re doing here with the RADV final rule is to provide to the Medicare Advantage plans clarity. We’re providing to them our long-term vision and approach to RADV audits and it will allow us to hold MA [organizations] accountable for receiving payments to which they are not entitled,” CMS Center for Program Integrity director Dara Corrigan told reporters during a briefing Monday.

CMS expects to recover $479 million from payment year 2018, and projects it will recoup more than $4 billion over the 10-year period beginning that year, Corrigan said.

In addition to planning clawbacks of money CMS determines shouldn’t have been paid, the agency will stop applying a fee-for-service adjuster to its audit findings, which had been used to ensure payments under fee-for-service Medicare and Medicare Advantage were actuarially equivalent.

Executives from Humana, CVS Health’s Aetna and Centene expressed concerns about the proposed rule at the J.P. Morgan Healthcare Conference this month. Several plans have indicated they would sue CMS if the adjuster were not included in the final rule.

Michael Bagel, associate vice president of public policy at the Alliance of Community Health Plans, said in an interview before the final rule went public that the trade group for nonprofit insurers had concerns about the proposed methodology for determining when insurers would have to repay the government, and how much.

CMS pays private Medicare carriers based on documented risk scores that reflect the health their members. Regulators are concerned that this creates a financial incentive for insurers and providers to upcode and exaggerate patient conditions to generate additional reimbursements.

Medicare Advantage insurers generated an estimated $17 billion through overpayments last year, according to the Medicare Payment Advisory Commission, which advises Congress on policy.