sk adjustments submitted by MAOs. Most significantly, CMS will begin applying contract-level extrapolation to its RADV audit findings beginning with audits of calendar year 2018, which will significantly increase MAO exposure based upon alleged overpayment findings.Documentation standards for risk-adjusted diagnosis codes remain unchanged—CMS rejected MAO requests to include a fee-for-service adjuster that would have required parity in documentation standards between MA and fee-for-service programs.The changes should spur MAOs to redouble efforts to ensure the accuracy of diagnostic coding for risk adjustment purposes. MAOs should be prepared to engage coding, statistical, and legal experts to address adverse results.Endnotes Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021, 88 Fed. Reg. 6643 (Feb. 1, 2023) (to be codified at 48 C.F.R. pts. 442). 42 U.S.C. §1395w–23(a)(1)(C). 88 Fed. Reg. 6643, 6645.Id. at 6663.Id. at 6651.Id. at 6654.See id. at 6657.Id. at 6643, 6644, 6656–57, 6660.Id. at 6655.Id. at 6653–52, 6658.Seeid.Id. at 6652; see also 31 U.S.C. §3729(a)(1)(G).[View source.]

cause CMS believes that the new model will better direct resources to beneficiaries with higher health care costs. CMS states that the new model improves or maintains predictive accuracy based on its examination of predictive ratios across the subgroups of beneficiaries, including dual-eligibles. Further, CMS notes that “[t]he risk adjustment model used for MA payment is not designed to drive clinical behavior to look for specific conditions or to be the sole purpose for MA organizations or health care providers to identify and treat conditions that are potential precursors to adverse medical events or complicating factors in the identification and treatment of other conditions.” See Rate Announcement at p. 76.Other Activities to the MA Program that May Impact Risk AdjustmentIn addition to the Rate Announcement, CMS recently finalized new regulations for conducting MA Risk Adjustment Data Validation (RADV) audits, effective April 3, 2023, which will be codified at 42 C.F.R. 422. See88 Fed. Reg. 6643 (Feb. 1, 2023). In the Advance Notice, CMS predicted that the changes to the risk scores and HCC updates will help prevent overpayments by improving the accuracy of payments made to MAOs. CMS further stated:“Separate from the proposals in the 2024 Advance Notice, CMS also recently finalized policies for the [RADV] program. The RADV program is the primary audit and oversight tool to address improper payments in the MA program. … CMS will extrapolate RADV audit findings beginning with Payment Year 2018 as part of our statutory and fiduciary responsibilities to reduce and recover improper expenditures of taxpayer dollars.”SeeAdvance Notice FAQs.Also of note is the Medicare Payment Advisory Commission (MedPAC) March 2023 report, which includes recommendations to address disparities in coding intensity and other coding differences between Medicare FFS and MA that have led to increasingly inflated risk-adjusted payments. See March 2023 Report to the Congress: Medicare Payment Policy, MedPAC

As a result of a new rule published on February 1, 2023, at 88 Fed. Reg. 6643, Medicare Advantage (MA) organizations soon will be facing enhanced exposure from Risk Adjustment Data Validation (RADV) audits. Under the new rule, effective for audits of payment years 2018 and after, Centers for Medicare & Medicaid Services (CMS) will use extrapolation to calculate MA organizations’ repayment obligations based on RADV audit findings. While CMS did not adopt any specific extrapolation methodology and plans to use methodologies appropriate to the specific audit, it will be focused on contracts identified as being high-risk for improper payments using statistical modeling, data analytics, or both. CMS does commit to disclosing the extrapolation methodology used in connection with any particular audit so that MA organizations will know how their repayment obligation was calculated. Notwithstanding its prior proposal to do so (https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/recovery-audit-program-parts-c-and-d/Other-Content-Types/RADV-Docs/R