What Health Plans Need to Know
This white paper draws from insights shared during CERIS’s recent Becker’s Healthcare webinar, “Regulatory Pressures and Compliance Modernization: What Plans Need to Know.” Panelists included Cereasa Horner, Director of Policy and Payment Integrity at CERIS, Steven Hamilton, Partner at Crowell & Moring LLP, and Payal Nanavati, Counsel at Crowell & Moring LLP. Together, they discussed how the Centers for Medicare & Medicaid Services (CMS) is intensifying its oversight of health plan payments—and what payers can do now to prepare.
Introduction: Increased Government Scrutiny
In recent years, government oversight of health plan payments has intensified significantly. Federal agencies are prioritizing the detection and correction of improper payments within Medicare Advantage (MA) and other risk-based programs, leading to an unprecedented level of CMS audit and enforcement activity.
At the center of this scrutiny is risk adjustment, the process by which MA plans are reimbursed based on the medical complexity of their members. Payments vary depending on the diagnosis codes submitted, most of which originate from providers. CMS aggregates these codes into Hierarchical Condition Categories (HCCs) that aim to reflect each member’s health status and expected costs.
To verify the accuracy of those payments, CMS conducts Risk Adjustment Data Validation (RADV) audits, which are its primary enforcement tool for identifying and recovering overpayments. These audits examine whether diagnosis codes submitted by plans are adequately supported by medical records. While RADV audits have been ongoing for years, enforcement has increased considerably.
“Even compared to just five years ago, government activity has ramped up significantly. A key example of that is the increased enforcement by the current administration and its prioritization of Medicare Advantage risk adjustment and RADV audits.” – Steven Hamilton, Partner at Crowell & Moring LLP
The challenge for payers is that CMS has not yet provided full clarity on how it will apply or interpret certain RADV methodologies going forward. Despite this uncertainty, the expectation is clear: audits are happening, and payers must be prepared.
Health plans should begin implementing processes, oversight practices, and documentation standards today that will withstand scrutiny tomorrow.