RISE’s Risk Adjustment Policy Committee weighs in on the Centers for Medicare & Medicaid Services’ proposed changes to Medicare Advantage risk adjustment data validation provisions.

The Centers for Medicare & Medicaid Services (CMS) has been collecting feedback since last fall on a new proposed rule regarding risk adjustment validation (RADV) audits for Medicare Advantage (MA), and the window on public comments closes on Wednesday, August 28. 

RELATED: CMS proposed rule: Big changes to RADV audits could lead to hefty penalties for Medicare Advantage plans

The proposal takes some aggressive steps and changes the financial stakes significantly for MA organizations (MAOs). Not all MAOs will be exposed equally, according to a July 2018 study from Wakely Consulting. This very uneven financial risk exposure represents a real potential for inequities if CMS implements the current proposal.  

There are several reasons that the consulting firm comes to this conclusion. Wakely’s concerns center on the sampling methodology, which it believes introduces a high degree of randomness that exposes different MAOs to risks of chance rather than to the intended risks around coding integrity. Indeed, the firm asserts that even running the same audit twice on the same contract may come up with two significantly different penalties due to the random sampling method. Similarly, two different plans might have the same error rates, but would end up with very different penalty amounts. Additionally, considering multiple scenarios, larger plans are more likely to have exaggerated results due to the distortions of the relatively small sample of 67 members in each tier that get leveraged across a larger base when extrapolated. There is also the potential for random selection of acute cases like breast cancer that would distort the findings when generalized across the whole population.

In addition to Wakely’s concerns about the RADV sampling methodology, RISE, AHIP, Oliver Wyman, and several Blues plans have also  expressed additional concerns about the CMS methodologies involving the risk adjustment rates, apart from the RADV program. They are especially concerned with the issue of the Fee-for-Service Adjuster (FFS), which still has not been settled. CMS assessed the FFS adjuster as required by legislation and initially reported that the FFS adjuster did not make any material difference in the calculations and, therefore, could be eliminated in the annual rate development process. Yet, given pushback from the industry, CMS agreed to accept additional public comment before finalizing its approach.

RISE’s view

RISE's Risk Adjustment Policy Committee supports the public policy in regards to the use of risk adjustment and RADV. All MA plans should be protected from the burden of illness selection bias involved in enrolling individuals in the MA program, and they should also be held accountable to repay whatever is owed to the taxpayers. However, the committee is also concerned that the methodologies have the potential for “randomness” and could unfairly penalize individual MA plans.

Additionally, RISE recognizes that, for all intent and purposes, the challenge of educating grassroots providers on proper ICD-10 coding and documentation is resting upon the efforts of MA plans across the country. Given that enormous task, some MAOs have the advantage of sheer scale and resources in moving the needle on provider performance.  That is the nature of the competitive marketplace. However, RISE would like to see the methodologies worked out so that the federal government eliminates any financial risks to these smaller MAOs due to methodological random errors and not due to coding and documentation integrity.