CMS Finalizes Medicare RADV Rule, Insurers Pledge to Put Up a Fight

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule that will increase the amount federal authorities can recoup from Medicare Advantage organizations (MAOs) that were overpaid due to incorrect diagnostic coding.

The Medicare Risk Adjustment Data Validation (RADV) final rule means that CMS will also stop applying a fee-for-service adjustor to its audit findings, which Modern Healthcare explains has been used to ensure that payments to fee-for-service Medicare and Medicare Advantage were equivalent.

Previously, CMS has reviewed samples of claims to ensure that those samples were correctly paid, but under the new rule, it will extrapolate the error rates and apply them to the entire plan. According to the CMS Fact Sheet, the agency intends to retroactively apply the rule to audit findings beginning in payment year 2018.

Trump-era CMS Administrator Seema Verma, who oversaw the introduction of the rule in 2018, told the New York Times that the agency will likely be sued for its plans to apply the rule retroactively, calling it “extremely unfair and problematic.”

Insurers said as much themselves in a press release from America’s Health Insurance Plans (AHIP), which called the rule “fatally flawed,” and threatened to raise rates and reduce benefit offerings in response.

But legal concerns are far outweighed by the financial benefit to the Medicare program, with CMS estimating it could recoup as much as $4.7 billion over a decade. U.S. Department of Health and Human Services (HHS)

Secretary Xavier Becerra conceded in a CMS press release that the rule is long overdue and will benefit the Medicare program in the long term:

Protecting Medicare is one of my highest responsibilities as Secretary, and this commonsense rule is a critical accountability measure that strengthens the Medicare Advantage program. CMS has a responsibility to recover overpayments across all of its programs, and improper payments made to Medicare Advantage plans are no exception. For years, federal watchdogs and outside experts have identified the Medicare Advantage program as one of the top management and performance challenges facing HHS, and today we are taking long overdue steps to conduct audits and recoup funds. These steps will make Medicare and the Medicare Advantage program stronger.