Insurers criticize risk adjustment overhauls for MA plans

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Insurers have directed their scrutiny toward the overhaul to risk adjustments that have been proposed for Medicare Advantage plans, telling the Centers for Medicare and Medicaid Services that the plan unfairly targets prior audits as far back as 10 years.

In a request for comments that were due last week, insurance industry group AHIP told CMS that the proposed changes to the Risk Adjustment Data Validation (RADV) audits "undermine confidence in CMS' willingness to be a fair partner with the private sector."

"It injects uncertainty and risk into the system," wrote AHIP. "If finalized, the rule could cause seniors and hardworking taxpayers to see higher costs, reduced benefits, and fewer MA plan options."

WHAT'S THE IMPACT?

In 2018, CMS issued a proposed rule that would make significant changes to the RADV audits, and the agency indicated an intent to finalize a rule by November 1. The RADV audit changes have drawn most of the ire from insurers, with AHIP saying CMS' approach "is improper and should be withdrawn."

CMS proposed to apply the regulation retroactively to hundreds of RADV audits, some that date back to plan year 2011 and have data more than a decade old, said AHIP, suggesting that retroactive rulemaking is inappropriate and legally impermissible.

AHIP also criticized the RADV rule for failing to account for errors in fee-for-service (FFS) Medicare data. The Medicare Act requires CMS to adjust payments to MA plans for risk factors, including health status, to ensure "actuarial equivalence," the insurer group said. Various analyses have concluded that to meet this actuarial equivalence standard, CMS must adjust any discrepancies found in MA plan documentation to reflect the rate of errors in FFS data submitted by Medicare providers. 

AHIP cited a technical study showing that CMS found significant errors in the FFS data. In 2012, CMS also agreed that this "FFS adjuster" was needed, but the agency reversed its view in the 2018 proposed rule and proposed to apply RADV without adjustment, said AHIP.

The group also levied criticism at CMS' proposal to use the audit results from a small sample of enrollees to project discrepancies in an MA plan's broader population, with AHIP claiming CMS lacks the statutory authority to do so. 

Better Medicare Alliance, in its own letter to CMS, said that if the forthcoming RADV rule is finalized as proposed, it "has the potential to create disruption for plans and providers, which may, in turn, affect premiums and benefits for beneficiaries."

THE LARGER TREND

AHIP reiterated its belief that CMS should withdraw the 2018 RADV proposal, close out prior audits, develop an appropriate FFS adjuster that reflects input from industry stakeholders, and apply any changes to the RADV audit methods prospectively so MA plans can incorporate them into bids. 

Going forward, the contract-level RADV audit process must be completed more swiftly, and notifications and appeals processes should occur in a more timely manner, said AHIP.

AHIP had recommendations for CMS beyond just the RADV audit process, including allowing plans to use information from sources beyond medical claims to identify and confirm enrollee health conditions, and allowing diagnosis codes to be identified during audio-only encounters to be reported for risk-adjustment purposes.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com