Medicare Advantage ClaimsThe Centers for Medicare & Medicaid Services (CMS) has announced a proposal to expand its Recovery Audit Program to Medicare Part C or Medicare Advantage (MA) plans. This means that physicians’ practices will have to pay special attention to ensuring error-free medical billing and coding of MA claims and take proactive steps to reduce their risks of falling prey to recovery audits.

Payments made to Medicare managed care organizations are based on risk adjustment and reflect the health relative status of the MA plan beneficiaries. This practice aims to improve the accuracy of Medicare’s payments to MA organizations and reduces the incentives for plans to select only the healthiest beneficiaries.

CMS scrutinizes the diagnosis information reported by MA organizations and calculate risk scores for each enrollee using the Hierarchical Condition Category risk adjustment model. The risk score is calculated based on the enrollee’s demographic characteristics and health conditions.

Set up on January 1, 2010, the aim of the Recovery Audit Program is to fight fraud, waste and abuse in the Medicare program. It detects overpayments and underpayments for Medicare claims so that CMS can implement actions to prevent improper payments in all 50 states. Under the program, Recovery Audit Contractors (RACs) – private companies hired by CMS – have the authority to review medical records at short notice. An RAC demand letter would contain details of the problem with a claim, such as the coverage, coding or payment policy that was violated, a description of the overpayment made, recommended corrective actions, and explanations on the provider’s right to submit a rebuttal statement prior to recoupment of any overpayment and appeal and more.

Till now, the evaluation by the Recovery Audit Contractors (RACs) was confined to Medicare Part A (hospital) and Medicare Part B (physician and DME) claims. Medicare Advantage Risk Adjustment Data Validation (RADV) audits are conducted to recover improper payments under Medicare Part C. However, RADV determinations have progressed at a relatively slow pace since MA Plans were first approved and implemented. So now, CMS plans to include MA plans as well in the RAC program. Under the current proposal:

  • The RAC will conduct RADV reviews to determine whether all criteria were met prior to setting a RADV score to a patient, thereby determining the reimbursement value based on risk.
  • The RAC will work with CMS to develop “condition-specific RADV audits,” focused on high-risk conditions such as diabetes”, which have a higher probability of errors.
  • The RACs and CMS will also collaborate to develop tools for these audits.

Hospitals and individual and group practices that are members (or are considering joining) the Medicare Advantage program should be prepared for more audits, more findings, and more demands for repayment. One of their best options is to get professional support from an experienced medical coding company to plan for RAC/RADV reviews. Services that can be expected would include:

  • Expert assistance both before and after these audits
  • Data import, record retrieval and medical record review
  • MRA/HCC coding with validation for RADV
  • Adherence to ICD-10 coding
  • Submission of accurate and complete data before CMS deadlines
  • Reducing future errors by improving documentation and coding practices

As of now, CMS audits about 5 percent of MA organization contracts on an annual basis. However, CMS is considering contracting with a Part C RAC to conduct comprehensive and condition-specific audits and increase the proportion of MA organizations contracts that are subject to an RADV audit. For hospitals and physicians practices, having certified professional coders review their coding and documentation for accuracy would become even more crucial.