Pre-Submission Risk Adjustment Audits: Preventing Medicare Advantage Plans from Draining Medicare Funds Dry

Author:Casie C. Rodenberger
Position:J.D. Candidate, The University of Iowa College of Law, 2018; M.S.W., Washington University in St. Louis, 2012; B.A., The University of Portland, 2011
Pages:841-870
SUMMARY

The Centers for Medicare and Medicaid Services ("CMS") pays private organizations on a capitated payment rate to provide medical services to Medicare beneficiaries in the Medicare Advantage Program. To decrease the risk of the capitated payment model, CMS uses risk adjustment to increase payment for beneficiaries with a higher risk score. The risk adjustment data submission process is at great... (see full summary)

 
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Pre-Submission Risk Adjustment Audits:
Preventing Medicare Advantage Plans
from Draining Medicare Funds Dry
Casie C. Rodenberger*
ABSTRACT: The Centers for Medicare and Medicaid Services (“CMS”) pays
private organizations on a capitated payment rate to provide medical services
to Medicare beneficiaries in the Medicare Advantage Program. To decrease
the risk of the capitated payment model, CMS uses risk adjustment to increase
payment for beneficiaries with a higher risk score. The risk adjustment data
submission process is at great risk for mistake given the complex nature of risk
adjustment and fraud because Medicare Advantage plans stand to increase
profit margins with higher risk adjustment data scores. CMS has overpaid
Medicare Advantage plans by millions of dollars in the risk adjustment
process. The current CMS process to validate and recover overpaid funds is
not sufficient given the volume of payment errors and the inefficient system.
CMS should require Medicare Advantage plans to comprehensively audit
diagnosis data before being submitted for risk adjustment to reduce the
number of payment errors that lead to overpayment. CMS should also improve
the data validation procedures to make recovery a more efficient process.
I. INTRODUCTION ............................................................................. 842
II.MEDICARE ADVANTAGE AND SYSTEMS OF PAYMENT ...................... 845
A.TRADITIONAL MEDICARE ......................................................... 845
B.MEDICARE ADVANTAGE ........................................................... 847
C.CAPITATED PAYMENT AND RISK ADJUSTMENT ........................... 849
D.RISK ADJUSTMENT DATA VALIDATION ...................................... 852
E.FALSE CLAIMS ACT .................................................................. 856
III. THE BURDEN OF RISK ADJUSTMENT .............................................. 858
A.RISK ADJUSTMENT DATA SUBMISSION PROCESS ......................... 859
*
J.D. Candidate, The University of Iowa College of Law, 2018; M.S.W., Washington
University in St. Louis, 2012; B.A., The University of Portland, 2011. Thank you to the Volume
103 editors of the Iowa Law Review for their help and guidance. I would also like to thank my
parents for their never-ending encouragement.
842 IOWA LAW REVIEW [Vol. 103:841
B.THE STRUGGLES ASSOCIATED WITH RADV ............................... 862
C.THE UNINTENDED COST OF RISK ADJUSTMENT ......................... 863
IV.RISK ADJUSTMENT AUDITS AND RADV PROCESS
IMPROVEMENTS ............................................................................. 866
A.MEDICARE ADVANTAGE PLAN INTERNAL AUDITS ...................... 867
B.IMPROVING THE RADV PROCESS .............................................. 869
V.CONCLUSION ................................................................................ 870
I. INTRODUCTION
In the current political climate, conversations about the government’s
role in subsidizing for its citizen’s services are common. Often, the
conversations focus on the greatest cost offender. In 2015, national health
expenditures accounted for nearly 17.8% of the U.S. Gross Domestic Product
(“GDP”).1 Historically, private payers represented the majority of the payment
source for national health expenditures, but this trend has been slowly
shifting.2 The federal government currently accounts for 28.7% of national
healthcare expenditures.3 It is anticipated by the Centers for Medicare
& Medicaid Services (“CMS”) that the federal government’s share of
healthcare spending will only continue to rise given the aging population that
will be eligible for Medicare, the expansion of subsidies programs under the
Affordable Care Act (“ACA”), and the cost of the possible replacement of the
ACA entirely.4
1. National Health Expenditure Fact Sheet, CTRS. FOR MEDICARE & MEDICAID SERVS., https://www.
cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/
nhe-fact-sheet.html (last updated June 14, 2017, 3:11 PM) (explaining the expenditure amount
reached three trillion, which is about $9,990 per person).
2. See EARL DIRK HOFFMAN, JR. ET AL., U.S. DEPT OF HEALTH & HUMAN SERVS., CTRS. FOR
MEDICARE & MEDICAID SERVS., BRIEF SUMMARIES OF MEDICARE & MEDICAID: TITLE XVIII AND
TITLE XIX OF THE SOCIAL SECURITY ACT 3 (2007), https://www.cms.gov/Research-Statistics-Data-
and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/downloads/Medicare
MedicaidSummaries2007.pdf (describing that there has been a shift from a majority of private
funding toward public funding due to cost sharing methods and out of pocket costs).
3. See National Health Expenditure Fact Sheet, supra note 1 (noting that private households
also have a majority share of 27.7%, while private businesses and state and local government have
a minority share at 19.9% and 17.1% respectively).
4. HOFFMAN ET AL., supra note 2, at 4–5; see Exec. Order No. 13,765, 82 Fed. Reg. 8351
(Jan. 20, 2017) (indicating that the Trump Administration intended to repeal the ACA, but the
plan to take its place had yet to be decided on). In an attempt to replace the ACA, the House
passed the American Health Care Act. Mara Lee, Fate of Obamacare Now is in the Senate, MOD.
HEALTHCARE (May 4, 2017), http://www.modernhealthcare.com/article/20170504/NEWS/
170509944. However, the replacement of the ACA remains in limbo as the vote for the Senate
replacement proposal, a Better Care Reconciliation Act, was delayed and the measure to partially
repeal the ACA, the Healthcare Freedom Act, was rejected. See Juliet Eilperin et al., Senate Rejects

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