CMS Announces Plans to Expand RACs to Medicare Advantage and Part D Plans

A tremor was felt across the healthcare industry as CMS released a request for information (RFI) that outlined the planned expansion of Medicare’s Recovery Audit Program. Under this program the government pays private recovery audit contractors (RACs) to assess medical records at hospitals and doctor offices to find instances of overpayment. The first set of audits, based on payment data for 2007, yielded $13.7M in overpayments returned to the government, and CMS predicts much more significant recoveries in years to come.

Providers complain that the current audits already represent a major administrative burden and that the expansion of the program, as required by the Affordable Care Act, will make matters worse. Currently CMS only performs 30 risk adjustment data validation (RADV) audits a year or approximately 5% of all Medicare Advantage contracts; however, their stated goal is to conduct either a comprehensive or condition-specific RADV audit for all plans each payment year. The audits were initially created to combat known instances of risk score inflation where some providers systematically adjusted medical records to make patients appear sicker than they actually were. Several high-profile DOJ investigations are underway including Humana, Aetna and others.

CMS hopes to shift RADV responsibility to RACs enabling each contractor to keep between 9% and 12.5% of recouped fees. Comments on the RFI, issued just before Christmas, are due by February 1, and although the actual impact won’t be felt for several years, there are steps that providers and plans can already take improve data quality and risk calculations in order to minimize disruption from RAC audits:

  1. Perform end-to-end data quality analysis to address common gaps
  2. Perform your own suspect analytics to identify missing, incomplete or inaccurate records including:

a. Prescription drug data
b. Quality compliance metrics
c. Historically occurring diagnostic codes
d. Clinical laboratory results
e. Continuity of care data

3. Address root causes workflow and training issues driving issues identified in your internal audits

The stakes are high and the fines are increasing, so it pays to stay one step ahead of the CMS Recovery Audit Program. For help auditing your current data quality and risk scores, contact the experts at Mile High Healthcare Analytics at 720-446-7785 or .