CMS RADV Rule Increases Medicare Advantage, Provider Audits

Tighter scrutiny of Medicare Advantage insurers could lead to stricter scrutiny of patient codes provided by providers and physician assistance companies that help clinicians take on patients’ risk.

This could dampen an already tepid market for value-added primary care start-ups and digital health companies, and exacerbate contract disputes between insurers and companies such as Oak Street Health and Agilon Health. said Jason Silberberg, partner in the health litigation division of Frier Levitt and colleagues. -Chairman of the Law Firm’s Value Care Litigation Team.

“Medicare Advantage Organizations will do everything they can to try to offset the large losses they incur for providers,” said Silberberg, who primarily represents providers. “One of the ways I could take it is that they are effectively pushing the fraud narrative on vendors.”

On February 1, the Centers for Medicare and Medicaid Services is due to finalize a risk adjustment data verification rule that will increase the amount of overpayments that Medicare Advantage insurers must return to the government. Private Medicare operators made about $17 billion in overpayments last year, according to a report by the Medicare Payments Advisory Panel, a federal expert group that makes policy advice to Congress, released this month.

The insurance industry is preparing to fight politics. Industry lobbying group AHIP, which declined to comment, will reportedly take legal action if the rule is passed as is. Medicare Advantage heavyweights Humana, Aetna and Centene of CVS Health also signaled they would fight the regulation in court.

The Public Health Plans Alliance called on CMS to reopen the comment period on the rule, which has been under review since 2018. “The comments that [CMS is] the rules used to develop this rule are several years out of date and therefore require additional revision and re-examination,” said Michael Bagel, associate vice president of public policy for Alliance of Community Health Plans, a trade group for non-profit insurance companies.

Insurers could ask the court to suspend the rule, Silberberg said, delaying its implementation. But the “sue to stop” strategy has so far failed, he said. The Supreme Court hit the industry in June when it refused to hear UnitedHealth Group’s objection to a ruling that Medicare Advantage insurers are liable for False Claims Act claims when they fail to pay back overpayments. This opened the door to more Justice Department lawsuits against Medicare Advantage providers.

Companies like Oak Street Health and Agilon Health bear the greatest legal and financial risk if the Medicare Advantage audit process changes, Silberberg said.

Insurers typically pay these risk-bearing providers flat monthly rates to cover the expected costs of members. Providers who care for sicker patients and document more risk codes receive higher per capita rates. So these companies have a financial incentive to collect as many codes as possible and possibly exaggerate the condition of patients, Silberberg said. Insurers that enter into savings-sharing agreements with these companies often also pay out bonuses when they help meet savings goals.

Agilon Health cited CEO Steven Sell’s comments at the JP Morgan Healthcare conference this month, where he said the proposed rule did not pose a significant risk to the physician services company. “The way we do it is in line with the plans. We achieve results based on cost management,” he said. Sell ​​said the company has a robust, peer-reviewed risk adjustment process in place and doesn’t expect Medicare Advantage to change its deals with Agilon Health because of regulation.

Sell’s tone contrasted sharply with Agilon Health’s brief amicus curiae report in the UnitedHealth Group case last March, in which the company wrote that collecting additional Medicare Advantage overpayments would have “negative consequences.” [that] predictable and inevitable” for Agilon Health and other companies whose capitation rates are determined by how much CMS pays insurers.

Oak Street Health, a primary care provider based in Chicago, declined to comment.

But the subsequent impact of enhanced auditing standards won’t be felt immediately, as contracts between insurers, service providers and technology companies typically run for three years, said Fred Bentley, managing director of ATI Advisory, a healthcare research and consulting firm.

Many insurers include clauses in these contracts that allow them to claim reimbursement for expenses that CMS believes were overpaid, Bentley said. When doctors are found to have submitted incorrect patient codes, he said, insurers can also refund any bonuses given for helping to meet savings targets.

“It’s good to make sure you collect all the information about your patients’ clinical conditions,” Bentley said. “But this cannot be a growth driver. It may change the calculus or underlying economics for these [provider] groups and what they need to focus on to be successful.”

Not everyone is convinced that increased auditing will hurt the Medicare Advantage industry. The ability of insurers to file administrative appeals against audits reduces financial and legal risks, said Mark Miller, executive vice president of health care for charity Arnold Ventures. According to Miller, who was MedPAC’s chief executive from 2002 to 2017, a more effective approach would be to recover overpayments already discovered by MedPAC.

“If people were serious about Medicare Advantage oversight, then MedPAC has determined that it costs about $20 billion annually,” Miller said. ” [Health and Human Services] the secretary has the power to seize, and Congress can legislate and repel. But this is not being actively considered.”

Insurers and providers could get some relief if the legal standard for false claims cases were raised, as CMS suggested last month. Under the agency’s draft plan, Medicare Advantage insurers would be held liable for violations of the False Claims Act when they “knowingly” make false claims, a higher bar for regulators than the current negligence standard.

Silberberg said it would make it harder for the Justice Department to sue insurers and Medicare Advantage providers for non-repayment of overpayments. “Maybe the government is thinking, ‘Well, we’re going to hit them with a hammer on this side, and we’re going to give them some Band-Aid on the other side,'” he said.

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