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From Health Law Daily, June 24, 2015

HCCA webinar covers Medicare audit readiness and risk adjustment

By Bryant Storm, J.D.

Medicare risk adjustment and audit readiness were the subjects of a June 23, 2015 Health Care Compliance Association Webinar. The presenters, Scott Weiner, the president and founder of Quadralytics, LLC, a managed care organization consulting service, and Sally Sjobeck, a principal consultant at Quadralytics, focused on what a risk adjustment entails and what steps plans and providers can take to prepare for a potential Medicare audit.

Risk adjustment. The presenters defined risk adjustment as “method used to adjust bidding and payment based on the health status and demographic characteristics of an enrollee.” The purposes of risk adjustment include allowing providers to pay appropriate reimbursement, paying plans accurately in accordance with the health status of the beneficiaries they enroll, and assist in future forecasting. The webinar discussed two models of risk adjustment, prospective and retrospective. Prospective risk adjustment uses historical diagnosis to predict future medical needs and expenses, whereas retrospective risk adjustment uses historical information to predict medical needs and expenses for the current period.

Audits. Much of the webinar focused on the CMS hierarchical condition categories (HCC) model, which is used by CMS, to adjust Medicare capitation payments to private health care plans for the health expenditure risk of their enrollees. The webinar also discussed risk adjustment data validation RADV audits. In terms of the likelihood of an audit, the presenters suggested that the likelihood of a RADV audit is about 5 percent per year. They also suggested that this might increase amid growing emphasis among politicians to combat overbilling. Additionally, CMS has suggested that if a plan is perceived as failing in one area, CMS is going to increasingly operate on the presumption that the plan is noncompliant in other areas as well, which could lead to additional auditing.

Penalties. The presenters discussed that although in the context of HCC audits, no direct financial penalties will result from the 2014 and 2015 payment year audits, an audit could lead to future audits or financial penalties because of HHS Office of Inspector General action, whistleblower lawsuits, and enforcement under the federal False Claims Act (FCA).

Errors. In terms of the most common errors identified in audits, the presenters said that they most often see circumstances where “the encounter visit note does not substantiate all diagnoses submitted for that date-of-service.” Other common errors include incorrect designation of a condition as active rather than chronic. The presenters warned that these kinds of documentation errors will become more important and more relevant with the implementation of the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10). Additionally, illegible signatures and improperly authenticated electronic health records are other common errors identified. In the context of EHRs, the presenters pointed to the use of templates and cutting and pasting as key risk factors leading to these compliance problems.

Tips. To provide assistance with what can be done today, the presenters suggested that organizations: assess organizational readiness, assess data quality, identify potential inaccuracies and high risk providers, validate existing charts, acquire and abstract charts where gaps and potential discrepancies exist, trend chart findings to identify areas of risk and opportunities, and engaged in targeted provider engagement for high risk providers.

Companies: Health Care Compliance Association; Quadralytics, LLC

MainStory: TopStory ComplianceNews ReimbursementNews PaymentNews AuditNews RiskNews PartANews PartBNews ProgramIntegrityNews HITNews EHRNews CMSNews

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