For more information about this blog post, please contact Ryan L. O’Neill, Labinot Alexander Berlajolli, Jessica T. Osterlof or Samantha T. Baccaro.

The U.S. Department of Health and Human Services ("HHS"), through the Centers for Medicare & Medicaid Services ("CMS"), issued a final rule early last year which, among other things, implemented stricter audits of Medicare Advantage plans, by striking the fee-for-service adjuster from risk adjustment data validation audits. The rule implements changes to the Medicare Advantage Risk Adjustment Data Validation ("RADV") program, which CMS uses to recover improper risk adjustment payments made to Medicare Advantage ("MA") plans.

CMS stated in the corresponding Fact Sheet that the RADV final rule will help CMS to protect the MA program by “addressing instances where Medicare paid Medicare Advantage Organizations ("MAOs") more than they otherwise should have received because the medical diagnoses submitted for risk adjustment payment were not supported in the beneficiary’s medical record.” Specifically, the final rule changed that, as part of the RADV audit methodology, CMS would extrapolate RADV audit findings beginning with payment year 2018. The final rule estimates that the government would not start to collect recoveries for 2018 payments until 2025. CMS reasoned that the final rule protects the program from exploitation through practices such as upcoding schemes.

A year into this final rule, it is likely that entities should start seeing an uptick in audit activity. The full text of the final rule may be accessed here. The audit process itself was modified as explained in our January 16, 2024 blog post.