Health Reform WK-EDGE Audit of auditing reveals five areas that can be improved
Wednesday, May 18, 2016

Audit of auditing reveals five areas that can be improved

By Melissa Mitchell, J.D.

In an attempt to engage in oversight of the CMS risk adjustment data validation (RADV) audits of payments made to Medicare Advantage (MA) organizations, the Government Accountability Office (GAO) was asked to engage in its own audits of the CMS RADVs. The GAO found that "fundamental improvements" to the RADV audits were needed to ensure the recovery of improper payments. As such, the GAO made five recommendations to HHS for this area (GAO Report, No. GAO-16-76, May 9, 2016).

RADV audit process. Payments to MA organizations are risk adjusted to reflect the health status of each enrolled beneficiary and the projected spending amount for services covered under Medicare. The RADV audits review MA contracts in an effort to, according to the GAO report, "facilitate the recovery of improper payments from MA organizations that submitted beneficiary diagnoses for payment adjustment purposes that were unsupported by medical records." The GAO report also indicated that in a separate national audit CMS estimated that $14.1 billion in improper payments were made to MA organizations in 2013. These improper payments were largely based on unsupported diagnoses.

Audit of the audit. The GAO review of the RADV process revealed that the methodology employed by CMS did not yield a selection of MA contracts that have the "greatest potential for recovery of improper payments." Further, the GAO highlighted that the RADV process has experienced "substantial delays" as prior contract-level audits have been being reviewed for years. In short, the GAO found that CMS "lacks a timetable to annually conduct and complete audits," and the goal of eventually conducting audit annually is in jeopardy.

ACA expansion. Another discrepancy that was pointed out in the GAO report of the MA payment audit process was based on the provision of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), which required CMS to expand the recovery audit contractor (RAC) program to include oversight of MA payments by the end of 2010. To date, CMS has not implemented this expansion. While the agency did issue a request for information on how a MA RAC could be incorporated into the RADV framework in December of 2015, it currently does not have a specific plan or timetable on this incorporation.

Recommendations. The GAO report recommended the following five key areas in which CMS could make improvements to its RADV process: the accuracy of CMS’ calculation of coding intensity; the selection of contracts for contract-level RADV audits; the timeliness of the audit process; the timeliness of the contract-level appeal process; and the development of a specific plan and timetable in which to expand the RAC program to MA contract review as it was mandated by the ACA. HHS concurred with these recommendations and "affirmed its commitment to identifying and correcting improper payments in the MA program."

ReportsLetters: GAOReports AgencyNews MedicarePartCNews

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