News: RADV audits to intensify in 2020, OIG says

CMS reported that it plans to begin audits that would include chart reviews for validity of diagnoses in 2020 after a recent study by the Office of Inspector General (OIG). The study  found potential issues with the extent to which chart reviews are leveraged by Medicare Advantage Organizations (MAOs) and overseen by CMS.

OIG conducted the study due to concerns that MAOs used chart reviews to increase risk adjusted payments inappropriately, according to the statement released by the OIG, which said “unsupported risk adjusted payments are a major driver of improper payments in the Medicare Advantage (MA) program.”

The MA program provided coverage to 20 million beneficiaries in 2018 at a cost of $210 billion. Because CMS risk-adjusts payments based on diagnosis severity and gives higher payments to sicker beneficiaries, the OIG felt this might create financial incentives for MAOs to make beneficiaries appear as sick as possible.

For this study, the OIG “analyzed 2016 MA encounter data to determine the 2017 financial effects of diagnoses reported only on chart reviews and not on any service record in the encounter data that year.”

The study found that MAOs almost always used chart reviews as a tool to add (rather than to delete) diagnoses, noting that more 99% of chart reviews in the study added diagnoses. In addition, reported diagnoses for chart reviews and not on any service records resulted in roughly $6.7 billion in risk-adjusted payments for 2017.

CMS based an estimated $2.7 billion in risk-adjusted payments on chart review diagnoses that MAOs did not link to a specific service provided to the beneficiary, much less a face-to-face visit. The study notes that “although limited to a small number of beneficiaries, almost half of the MAOs reviewed had payments from unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016.”

The study raises concerns about the completeness of charts submitted to CMS, the validity of diagnoses on chart reviews, and the quality of care provided to patients. Yet, CMS has not reviewed the financial impact of chart reviews in the encounter data on risk-adjusted payments, nor have they performed audits that validate diagnoses reported on chart reviews in the encounter data against patients’ medical records.

The OIG recommends that CMS provide oversight of MAOs that had payments resulting from unlinked chart reviews for patients who had no service records in 2016 and encouraged CMS to follow through audits and validate diagnoses reported on chart reviews. The OIG recommends that CMS reassess the risks and benefits of allowing unlinked chart reviews to be used as sources of diagnoses for risk adjustments.

Editor’s note: To read the OIG’s full statement, click here. To learn more about risk adjustment and CDI programs’ role, click here.