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RAC Audits

There are heavy controversies surrounding the tactics used by the RAC audits to date. But despite this, they have been instrumental in saving Medicare significant money through the audits of Medicare Part A and Medicare Part B claims. In the year 2014, RAC returned $2.57 billion dollars in “improper payments” to the Medicare program. The agency is so pleased with the results that it has invited recommendations on ways to most effectively expand RAC to Medicare Part C, also called Medicare Advantage (MA). This will also be helpful in assessing the accuracy of risk adjustment payments made to MA plans.

Medicare pays MA plans a flat amount per enrollee to cover the Medicare-covered benefits for each enrollee. These payments being risk adjusted, there has been growing concern that the MA plans are over blowing the risk scores, by going with codes which usually lead to higher risk scores. How this works is that the more diagnoses or conditions attributed to the enrollee, the higher their risk score is likely to be. Still, every diagnosis does not necessarily call for medical care.

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RADV Audits

CMS does its own audits called Risk Adjustment Data Validation (RADV) audits, which are meant to verify that the diagnosis data submitted for RA payments are accurate. The RADV audits have been run on only a small sample of plans every year, although CMS is considering expanding its authority at this time and start using the RAC program for purposes of program integrity. This will involve performing its own audits on MA plans that are not subjected to an RADV audit.

This plan is has not been finalized, although the RFI indicates that CMS is seriously considering the expansion of RAC audits to MA plans sometime soon.

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