Changes to impact Medicare Advantage Organizations and future patient assessments

On February 1, 2023, the Centers for Medicare & Medicaid Services (CMS) published its final rule to begin the implementation of extrapolation to Risk Adjustment Data Validation (RADV) audit findings beginning with payment year (PY) 2018. In publishing this new rule, CMS notes that the following areas are most likely to attract closer scrutiny.

• Contracts with the highest coding intensity scores,
• Contracts with high rates of unsupported diagnoses in prior contract-level RADV audits, and,
• Contracts with high enrollment that also have either high rates of unsupported diagnoses in prior contract-level RADV audits or high coding intensity scores.

The RADV final rule will have implications for contracted and at-risk providers who complete the clinical documentation to support risk adjustment and vendors who support accurate Hierarchical Condition Categories (HCC) capture. Extrapolation is on the immediate horizon and Medicare Advantage (MA) stakeholders are advised to prepare for the impact of the new RADV final rule changes.

Further scrutiny of MA payments remains a possibility despite the finalization of this rule. For example, two United States senators have co-sponsored a bill aimed at reducing overpayments to MA Plans by focusing on the patient assessments that drive MA payments. Senators Cassidy and Merkley note that MA plans have a financial incentive to make beneficiaries appear sicker than they may be to receive a higher Medicare reimbursement. This reflects the shift from the payment methods of traditional Medicare based on the cost of treatment versus MA’s approach to payments based on the health of individual patients.

The proposed legislation aims to address this issue by instituting measures to reduce incentives to inflate the severity of illness of patients:

• Developing a risk-adjustment model that uses two years of diagnostic data instead of just one year.
• Limiting the ability to use old or unrelated medical conditions to inflate the cost of care.
• Ensuring Medicare is only charged for treatment related to relevant medical conditions.
• Closing the gap between how a patient is assessed under traditional Medicare and Medicare Advantage.

Medicare Advantage Organizations (MAOs) and providers completing patient encounters are cautioned to pay close attention to their documentation. Follow all pertinent guidelines to ensure accurate recording of diagnosis codes for each encounter and the medical necessity of the services provided. Only document diagnosis codes for conditions treated during the encounter, and any conditions that impact the clinician’s medical decision making (MDM) for the services provided.

This final rule became effective on April 3, 2023.