The Impact of Fast-Track RADV Audits on Healthcare Organizations

In Medicare Advantage (MA) plans, Risk Adjustment Data Validation (RADV) audits serve as an important bulwark against overpayments by ensuring that diagnosis codes submitted by health plans for Medicare enrollees are complete, accurate, and supported by clinical documentation. Unfortunately, due to their limited size and scope, these audits have not been as successful as CMS would like: the federal government estimates that MA plans may be overbilling the government by $17 billion annually, while estimates from the Medicare Payment Advisory Commission (MedPAC) place improper payments at over $43 billion per year.

In an effort to enhance oversight and reduce improper payments, CMS recently announced a major expansion to its RADV audit strategy for MA plans. The ultimate objectives are to encourage accurate reporting of patient diagnoses, ensure plan compliance with federal guidelines, and protect the integrity of the Medicare program, which has struggled for years to combat fraud, waste, and abuse.

CMS’ Strategy

The main components of CMS’ audit strategy are:

• Comprehensive annual audits of all eligible MA contracts, which will impact an estimated 550 MA plans (compared to ~60 contracts per payment year in previous audits)
  • The number of audited records will also increase from 35 in previous years to up to 200 records per plan
• Complete the backlog of audits for payment years (PY) 2018–2024 by early 2026
• Partner with Health & Human Services’ Office of the Inspector General (HHS-OIG) to recover overpayments identified in previous audits

To support this initiative, CMS plans to massively scale up its audit capacity by increasing its medical coder workforce from the current staff of 40 to approximately 2,000 by September 1, 2025. In addition, CMS will leverage advanced technology to more efficiently review records and identify unsupported diagnoses.

What This Means for Payers

Before CMS’ new strategy was announced, health plans had an extended period after the final submission deadline to submit closed-period deletes, but that is set to change. CMS is significantly shortening the deletion submission window for PY2020–2024—and going forward, closed-period deletes may no longer be submitted after the final submission deadline has passed.

RADV audits will also carry a much larger potential financial impact. As announced in the January 2023 Final Rule, beginning with PY2018 (2017 dates of service) CMS will extrapolate audit findings over broader populations instead of just the records sampled. In other words, any penalty will not be limited to the individual overpayments CMS may find in the course of an audit; rather, CMS will assume the same rate of overpayment across your entire population and calculate their recoupment amount accordingly. These extrapolated audits could lead to substantial government recoupments, which would significantly financially impact payers and providers.

What This Means for Providers

While payers will bear the brunt of the initial impact of the fast-tracked RADV audits, provider organizations may also experience ripple effects of their own. As MA plans take a closer look at their documentation, their provider partners may see an uptick in requests for medical record and chart reviews.

Because MA plans will be aiming to avoid even the possibility of an improper payment, providers may encounter more prior authorization and utilization management hurdles and an increase in denials or payment delays. And if a plan is found to have received improper payments, any providers in a risk-sharing arrangement with that plan could be expected to cover at least some of the cost of government recoupments.

To avoid the potential fallout from the RADV audits, providers should examine their risk-bearing contracts to minimize any potential impact. Providers should also take the following steps:

• Ensure clinical and administrative teams are fully up to speed on compliant risk adjustment coding and documentation practices
• Perform more frequent and rigorous coding queries and audit communications
• Implement prospective risk adjustment strategies and two-way reviews (with a particular focus on HCC codes commonly targeted for RADV audits)
• Conduct robust internal audits of documentation and processes
• Follow the guidance in the OIG toolkit for known high risk diagnosis codes

How Edifecs Can Help

If you’ve been doing everything right up to this point, then the increased pace of audits shouldn’t really matter. But if you haven’t, this is an opportunity (if not an imperative) to get things in order—and there’s very little time to do it.

The first deadline for submitting known closed deletes for 2020–2023 dates of service (DOS) is less than a week away, and from there, healthcare organizations have roughly 7 months to ensure their PY2025 data for 2024 dates of service (DOS) can withstand the scrutiny of a RADV audit. If you’re relying on manual workflows or outdated software, there simply won’t be enough time to get caught up. Our Risk Adjustment Clinical Suite and Coding Suite can help your organization achieve ongoing compliance while optimizing financial performance.

Our solutions leverage our market-leading natural language processing (NLP) and machine learning (ML) to help health plans more effectively identify missed or improperly coded conditions and perform claims reviews to facilitate deletion of non-compliant codes.And because we believe in intervening earlier in administrative workflows, our solutions also support prospective risk adjustment with.

The fast-tracked RADV audits are part of recent sweeping changes that show CMS is serious about ensuring compliance and documentation accuracy—and your organization must be too. The right practices, supported by the right technology and solutions, can help you successfully navigate the financial minefield of RADV audits.