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RADV Audits Reveal Widespread Medical Billing ErrorsThe Centers for Medicare and Medicaid (CMS) uses Risk Adjustment Data Validation (RADV) audits to recover improper payments in the Medicare Advantage (MA) program. According to a recent report published by the Center for Public Integrity (CPI), recently released findings of RADV audits have revealed pervasive overcharging from as far back as 2007. The audits pertaining to 37 Medicare Advantage programs show that, except for two of the 37 health plans, the rest were overpaid by thousands of dollars.

MA plans pay higher rates for sicker patients and lower rates for people in good health based on a risk score formula also known as the Hierarchical Condition Categories (HCC) model. Insurance companies submit the beneficiary’s diagnosis in the medical chart to Medicare. The agency calculates what it costs to treat the patient based on this information and pays the insurer with different rates for different diseases and related complications.

More than 17 million older adults are enrolled in MA plans and Medicare paid the plans more than $160 billion in 2014. Overcharging results in heavy losses of taxpayer dollars. CPI had filed a lawsuit in 2014 seeking release of billing data and other records by the Medicare agency. The investigation exposed consistent overbilling patterns for the sample of 201 patients examined at each MA plan. Key findings:

  • The audits could confirm that, for more than 20,000 medical conditions, only 60 percent were paid to treat. Certain conditions such as diabetes with serious complications, depression and some forms of cancer had much lower confirmation rates.
  • Scrutiny of about 70 medical conditions revealed that health plans were three times as likely to overbill Medicare for these conditions.
  • Diabetes and depression were the medical conditions for which severity was the most upcoded. For instance, while insurers were inclined to report that the beneficiaries had eye or kidney problems, the audits failed to find sufficient evidence to prove that these complications actually existed in nearly half the cases, and sometimes more. Other categories prone to overpayments included major depressive bipolar and paranoid disorders, and drug/alcohol dependence.
  • In the 37 audited plans, unsupported medical diagnoses led to overpayments of $10,000 per patient for more than 150 patients. Errors in medical billing led to Medicare overpaying $2,000 or more per patient for at least 3,500 people in the 2007 sample group.
  • Insurers are still involved in recovery processes.

In a report submitted to Congress in April, 2016, the GAO stressed that fundamental improvements are needed in CMS’s effort to recover substantial amounts of improper insurance payments. Accordingly, efforts are on to step up the federal audits and errors uncovered in a RADV audit would be subject to a penalty that is extrapolated across the whole population.

Insurers should ensure that MA plans have accurate, comprehensive evidence for every diagnosis coded. As it is not known which beneficiaries or records will be audited, all of the information needs to be verified. Physicians need to document diagnosis thoroughly during the patient’s office visit. Missing documentation would be challenged during an RADV audit. These challenging tasks are best left to professionals.

Leading medical billing companies offer customized mock RADV audit services and pre-audit services for MA plans for insurers. A professional company can also help physicians’ practices ensure comprehensive documentation and accurate HCC coding. Mock RAVD audits can help:

  • Identify ICD-10 code assignment errors in medical records
  • Assess medical chart information for compliance with submitted HCC codes
  • Identify documentation deficiencies and errors

Reliable medical billing and coding companies help both insurers and health care providers optimize compliance with MA guidelines.