CMS says it will recoup $1B in improper Medicare payments by 2020

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CMS said it is poised to claw back $1 billion from Medicare Advantage organizations by 2020 through widespread audits, according to a proposed rule.

Here are five things to know:

1. The rule, set to hit the federal register Nov. 1, concerns risk adjustment data validation audits for Medicare Advantage organizations. RADV audits occur after the final risk adjustment data submission deadline for each Medicare Advantage contract year. They confirm that Medicare Advantage organizations' self-reported risk adjustment data — or diagnosis codes used to depict how sick beneficiaries are — match medical record documentation.

2. Under the proposed rule, CMS wants to use extrapolation in RADV contract-level audits beginning with 2011 and subsequent audits. By doing so, CMS thinks it will recoup $1 billion in improper payments by 2020, and $381 million each subsequent year.

3. While CMS spent $150 million completing RADV audits for the 2011-13 payment years, few recoveries have been sought by the agency. In fiscal year 2017, CMS found 8.31 percent of Medicare Advantage payments, or $14.4 billion worth, were erroneous.

4. For the RADV audits, CMS will sample how Medicare Advantage organizations billed for some 200 enrollees for each contract and extrapolate that sample data to calculate an overall payment error for the plan.

5. "As we stated earlier, audits for payment years 2011, 2012, and 2013 have been conducted according to this methodology, but contract-level recoveries have not yet been sought," CMS said. "We are now providing additional notice and again welcoming public input on the agency's methodology for calculating a contract-level payment error in RADV audits, including the sample sizes used in these contract-level audits."

For the full proposed rule, click here.

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