CMS to expand RAC program to Medicare Advantage: 6 things to know

Medicare's Recovery Audit Contractor program was implemented nationwide for Medicare Parts A and B by January 2010. The Affordable Care Act calls for the program to be expanded to cover Medicare Advantage plans, and now CMS has provided an outline as to how that expansion may be achieved.

Here are five things to know about the expansion of the RAC program to Medicare Advantage, according to CMS.

1. Under the Balanced Budget Act of 1997, payments made to Medicare managed care organizations are adjusted to reflect the relative health status of their enrollees. "Risk adjustment improves the accuracy of Medicare's payments to Medicare Advantage organizations and reduces the incentives for plans to risk select only the healthiest beneficiaries," according to CMS.

2. CMS calculates a risk score each year for each Medicare Advantage enrollee. CMS examines demographic characteristics and health conditions to predict each beneficiary's relative cost. CMS relies on diagnosis information reported by Medicare Advantage organizations to determine the health conditions for each beneficiary. CMS then uses the Hierarchical Condition Category risk adjustment model to calculate risk scores.

3. CMS conducts Risk Adjustment Data Validation audits to validate the accuracy of diagnosis data submitted to CMS for payment by Medicare Advantage organizations and to recover net overpayments associated with inaccurate diagnosis data. Currently, CMS audits about 5 percent of Medicare Advantage organization contracts per payment year. "Our ultimate goal is to have all MA contracts subject to either a comprehensive or condition-specific RADV audit for each payment year," said CMS in a recently released request for information.

4. The condition-specific audits would focus on conditions, such as diabetes, that have a higher probability of being erroneous.

5. To increase the percentage of Medicare Advantage organizations contracts that are subject to some type of RADV audit, CMS is considering contracting with a Part C RAC to perform comprehensive and condition-specific audits.

6. Comments on the Medicare Advantage RAC program must be received by 10:00 a.m. EST on Feb. 1, 2016. CMS said it will determine the next steps for procurement of a Part C RAC after reviewing the comments received in response to the request for information.

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