Omnibus HHS Announces Stricter Auditing Standards for Medicare Advantage Plans

On January 30, 2023, the U.S. Department of Health and Human Services published a final rule on Medicare Advantage audit standards.

In the final rule, the agency announced it will strike the fee-for-service adjuster from the risk adjustment data validation audits (RAD-VA), a tool that would have calculated a permissible level of payment errors and limited audit recoveries to payment errors above that level.

The rule is less strict than the initial 2018 proposed draft. At that time, CMS proposed  to retroactively implement the stricter auditing standards to contracts dating back to 2011. The final rule will only apply to contracts dated from payment year 2018 and up.

According to a statement to the Wall Street Journal, the agency estimates it will recover $479 million in overpayments from 2018, and projects it will recover around $4.7 billion over the next decade.

Payers have been accused of exploiting the program through elaborate “upcoding” schemes that make patients appear sicker on medical records than they actually are — thereby leading to higher payments from CMS.

To read the CMS Fact Sheet on the Final Rule, see here.

To read the Final Rule, see here.